data released by the US Bureau of Labor Statistics (BLS) on Tuesday showed that the cost of truck transportation in the United States fell month by month in October, and the producer price index (PPI) for long-distance vehicle transportation services in the United States fell 3.1 percent from September. But the LTL PPI was largely flat, down only 0.3 percent after rising 0.3 percent last month.
What is the difference between vehicle freight rate and LTL freight rate?
The freight rate of the whole vehicle and the freight rate of the goods transported by the whole vehicle in the railway transportation is called the freight rate of the whole vehicle. The shipper consigns a consignment of goods in a single consignment note, which, according to its weight, volume or nature, is required to be carried by a single truck, which is called a complete cargo. Because the efficiency of vehicle transportation is higher and the transportation cost is lower than that of LTL transportation, the freight rate of vehicle goods is lower than that of LTL. Lower vehicle freight rates can encourage shippers to use vehicle transportation, which is conducive to making full use of transportation tools and improving transportation efficiency.
The freight rate stipulated by the for the use of less-than-truckload means is called the freight rate of less-than-truckload goods. LTL cargo refers to goods that the shipper consigns to the transport department and does not require the use of a separate truck in terms of weight, volume or nature. The freight rate of LTL goods is higher than that of vehicle goods, because the same kind of goods are transported the same distance, and the transportation cost of LTL transportation is higher than that of vehicle transportation.
Bob Costello, chief economist of the American Trucking Association (American Trucking Associations), said at a press conference at Bank of America in early November that inflation, changes in consumer spending and weaker home construction activity were the main factors contributing to the decline in freight traffic. But not all regions of the United States are declining, and freight volume in the Southwest is up 5.8 percent, balancing the national average. This shows that although the U.S. freight transportation has basically stabilized this year, the strong performance of the Southwest region last quarter highlights the good momentum of the U.S. trade activity with Mexico. In August, the total value of Mexico's imports and exports with the United States surpassed the level of Canada and the United States.
The PPI measures the change in all-inclusive selling prices over time, including fuel and other expenses, not just the base rate. PPI largely favors contract pricing, as these rates account for the lion's share of LTL and vehicle transport pricing, but also include spot truck loading rates.
's latest PPI data confirms other reports showing trucking costs falling but still higher than a year ago, including the October Cass Freight Index, published on Monday. The Cass Extrapolation Freight Index, based on average freight rates for ground modes such as truck, rail, LTL and parcel, was 3.6 percent lower in October than the previous month, but 7.9 percent higher than in October 2021.
data shows that demand across the trucking sector is uneven, as inventory repositioning, pre-holiday shipping and resilient industrial production make the situation confusing for carriers and shippers. Shippers will start saving on transportation costs in the coming year from 2021 and 2022, but overall trucking costs are still significantly higher than in previous years of the pandemic and are likely to remain high.