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FTR analysis confirms tonnage surplus in U.S. trade with Mexico

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A truck crosses the border between Mexico and the United States in Nuevo Laredo, Mexico. FTR estimates that truck loads into and out of Mexico make up just 1.5% of all U.S. truck loadings, but that share has risen by about 50% since 2009. (Associated Press: HANS-MAXIMO MUSIELIK)

BLOOMINGTON, Ind. — Although the U.S. goods trade deficit with Mexico is about $80 billion, the U.S. has a longstanding trade surplus with Mexico in terms of rail tonnage and a growing truck tonnage surplus over the past three years, according to just-completed analysis by FTR.

Using the Freight•cast forecasting model, FTR translated value-based trade data published by the Bureau of Transportation Statistics into transportation tonnage and loadings to and from Mexico and Canada.

The forecasting firm’s analysis of cross-border trade data has been ongoing for several months and happened to conclude around the time President Trump announced tariffs on all imports from Mexico, effective June 10.

“With China continuing to be problematic, we know that there had been some shifting of sourcing to Mexico, so potential tariffs on Mexican imports raise important questions,” said Eric Starks, chairman and CEO of FTR. “Either we lose this freight, see increased costs, or both.”

The U.S. rail sector has run a significant surplus of tonnage into Mexico for years, but U.S.-Mexico truck tonnage had been more balanced until 2016, when the U.S. trucking sector posted its first meaningful surplus since 2008. The picture looks a bit different regarding loads into and out of Mexico. Rail loadings are volatile year to year, but the U.S. runs a deficit of truck loads to the tune of about 800,000 a year.

Rail movements into and out of Mexico represent about 3.2% of all U.S. rail moves, and that portion has grown steadily since 2009. Excluding intermodal, U.S.-Mexico traffic represents about 5.5% of total U.S. rail moves, and that number has nearly doubled since 2009.

FTR estimates that truck loads into and out of Mexico make up just 1.5% of all U.S. truck loadings, but that share has risen by about 50% since 2009.

“Rail is more exposed than truck even though it has a smaller portion of overall crossborder freight,” Eric Starks said. “Changes in freight would be felt quicker by the rail sector. If we assume a retaliation by Mexico, rail could be hit further because Mexico potentially has other ready sources for some of the most important rail exports to Mexico, such as fuel and grain.”

With truck, while the share of overall truck volume dedicated to Mexico is small, a big piece of that are parts for vehicles, computers, and machinery.

“If the trucking freight went away, that in itself would not be a death knell for trucking, but the broader issue is the exponential impact on U.S. manufacturing,” Starks said.

FTR will discuss some of its top level findings during a complimentary State of Freight webinar on Key Issues in Transportation, scheduled for June 13.

To register, visit http://www.ftrintel.com/webinars. A more comprehensive analysis will also be available later this month to subscribers of FTR’s State of Freight INSIGHTS series.

For information on how to subscribe to State of Freight INSIGHTS and other FTR products, visit www.ftrintel.com or contact FTR by email at sales@ftrintel.com or by phone at 888-988-1699, ext. 1.

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Average on-highway gallon of diesel up 1.6 cents, but crude oil up 12.97%

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The average price of a gallon of on-highway diesel for the week ending September 16 was 28.1 cents lower than the comparable week in 2018. (The Trucker file photo)

WASHINGTON — The average on-highway price of a gallon of diesel rose 1.6 cents a gallon to $2.987 for the week ending September 16, according to the Energy Information Administration of the Department of Energy.

It was the first weekly increase since the week ending July 8 when the price went up 1.3 cents a gallon to $3.055.

What, if any, impact did the attack on the Saudi oil facility have on the price this week is hard to determine since the attack occurred only early last Saturday.

“Our team is keeping a close eye on the impact of the Saudi oil fire on the diesel market,” said a spokesperson for Pilot Flying J. “We have already seen the market react, but it’s too early to predict the extent of the impact. Our No. 1 priority remains getting our guests from point A to point B as quickly and conveniently as possible.”

The price of West Texas Intermediate crude rose 12.97% to $61.93 Monday.

All regions of the country increased with the exception of the Central Atlantic States (New York, Pennsylvania, Maryland, Delaware and New Jersey) where the price dropped nine tenths of a penny to $3.013.

The largest increase was in the West Coast minus California at 3 cents top $3.161. The next largest increase was 2.6 cents in the overall West Coast region (California, Arizona, Nevada, Oregon and Washington) and the Rocky Mountain states (Colorado, Utah, Wyoming, Idaho and Montana.

The price for the week ending September 16 was 28.1 cents lower than the comparable week in 2018.

For a complete list of prices by region for the past three weeks, click here.

 

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DOT’s freight transportation index rises to new all-time high in July

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The Freight TSI measures the month-to-month changes in for-hire freight shipments by mode of transportation in tons and ton-miles, which are combined into one index. (The Trucker file photo)

WASHINGTON — The Freight Transportation Services Index (TSI), which is based on the amount of freight carried by the for-hire transportation industry, rose 0.9% in July from June, rising to a new all-time high after declining for two consecutive months, the Department of Transportation’s Bureau of Transportation Statistics’ (BTS) said Thursday.

From July 2018 to July 2019, the index rose 2.9% compared to a rise of 6.0% from July 2017 to July 2018.

The Freight TSI measures the month-to-month changes in for-hire freight shipments by mode of transportation in tons and ton-miles, which are combined into one index. The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and air freight. The TSI is seasonally-adjusted to remove regular seasons from month-to-month comparisons.

The BTS said the Uly increase was broad based with increases in rail carloads, rail intermodal, trucking, pipeline and air freight. There was a small decline in water transportation.

The TSI increase took place against a background of mixed results for other indicators.

The Federal Reserve Board Industrial Production Index declined in July, reflecting decreases in mining and manufacturing and an increase in utilities. Personal income increased by 0.1%, while housing starts declined by 4.0%. The Institute for Supply Management Manufacturing index decreased 0.5 points to 51.2, indicating continued but slowing growth.

The BTS said despite small decreases in both May (-0.1%) and June (-0.3%), the July index was 0.6% over its April level and 0.2% over its previous record high in November 2018.

The record high level was reached even though the index increased in only four of the eight months since November. From a low point in March 2016, the index climbed 12.8% until reaching a new high in May 2018. From that point, the index has exceeded its levels in all months prior to May 2018. The July 2019 index was 46.6% above the April 2009 low during the most recent recession.

For-hire freight shipments in July 2019 (139.0) were 46.6% higher than the low in April 2009 during the recession (94.8). The July 2019 level reached its all-time high.

For-hire freight shipments measured by the index were up 2.1% in July compared to the end of 2018.

For-hire freight shipments are up 15.4% in the five years from July 2014 and are up 41.4% in the 10 years from July 2009.

 

 

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Class 8 sales up in August, but figures indicate forecast slowdown coming

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International has posted the best year-to-gain in Class 8 sales with a 28.9 increase. (Courtesy: NAVISTAR)

SOUTHFIELD, Mich. — It appears that the much-discussed prospective chink in the armor of a two-year upward trend of new Class 8 truck sales is now visible.

Wards Intelligence reported Wednesday that August sales of 23,466 was a 6.7% decline from July’s sales of 25,164, but perhaps more significantly, it marked the first time in the past 25 months that sales had not exceed the figure for the comparable month in the previous year.

The streak began in July 2017 when sales were 8.7% higher than July 2016. July sales in 2019 were 21.9% higher than sales in July 2018.

Still in place is a streak of 20 consecutive months where the year-to-date sales has been higher than the same period the previous year, although that percentage has declined in each of the past three months.

Year-to-date sales of 183,462 in 2019 are up 18.7% over the same period in 2018 when sales had totaled 154,587.

Only two OEMs posted month-over-month gains in August. Volvo sales of 2,563 were 3.1% higher in August when 2,486 units were sold. Cousin Mack Trucks posted a 3% gain over July with sales of 1,773 in 2019 compared to 1,722 in July.

The largest month-over-month decline was 15.1% at Freightliner, although the Daimler Trucks North America product continues to hold the top position in market share at 35.6% with sales of 66,937. The next closest OEM is Peterbilt at 15.1%

As would be expected with year-to-date sales comparisons, all OEMs are ahead of 2018. International leads the parade at 28.9% (sales of 26,635 versus 20,663) followed by cousins Kenworth (21.2%) and Peterbilt (20.3%)

 

 

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