Deja Vu - Is it 2017 Again?
Analysis from our friend Dr. Jason Miller at Michigan State University:
Here is a look at the relative change in four key time series since January 2017. This includes: (i) spot market rates (from Truckstop.com), (ii) contract rates (from the Bureau of Labor Statistics [BLS] Producer Price Index Program), (iii) diesel prices (from the Energy Information Administration), and (iv) weekly earnings for NAICS 484 (from the BLS) on a relative scale back to January 2017.
So what is the data actually telling us? Contract rates are up about 11.7% from Jan 2017 [using June 2019 as the comparison]. Spot market rates are actually up 12.9% [using June 2019 as the comparison]. The "pain" folks are feeling on the spot market is the fact we have seen rates plunge from the record-high levels in early through mid-2018. However, costs have gone up by an equal or greater amount. Weekly earnings are also up 11.3% [using June 2019 as the comparison], but diesel prices have been even more elevated recently, with diesel being 18% higher in June 2019 than Jan 2017. As we have discussed several times, small carriers are especially hurting with the elevated diesel because they buy fuel at the diesel price, as opposed to the mega carriers, which buy at the wholesale price, or even lower (termed the "rack" price ).
Jason Miller, PhD Assistant Professor of Logistics Department of Supply Chain Management Eli Broad College of Business Michigan State University