MID-SHIP and Logistics Update May 2016

The Baltic Dry Index finished last week at 600.

River

Barge traffic is expected to become congested this summer due to the closing of the Industrial Locks on the Gulf Intracoastal Canal East. The locks will be closed for repair staring August 1 and work is expected to take as long as 120 days to complete. The alternate route for cargo shipments has yet to be announced. Much higher rates are expected for cargo moving along the detour routes.

Lock closures are also planned for Selden Lock Mile 261 Warrior-Tombigee with access to Tuscaloosa and Birmingham; Webber Falls Lock mile 367 Arkansas accessing Catoosa, Inola, and Muskogee; and the Chicamauga Lock mile 472 Tenn accessing Lenoir City, Fort Loudon and Knoxville. All three are complete closures lasting varying lengths and, in some cases, multiple times.

Northbound traffic is down dramatically due to lower import volume at the port of New Orleans. Tonnage in first quarter was 2.7 million tons compared to 4 million tons in Q1 2015. Finished steel imports dropped from 1.1 million tons in first quarter 2015 to 492,000 metric tons in Q1 2016. Barge freight is expected to improve in July/August.

New rules on container weight verification may cause some disruption at export terminals until weighing procedures are ironed out.

Trucking

Truck freight levels continued to decline as of March data. Freight shipments are down 2.6 percent from the same period last year due to weakness in the oil and gas industry as well as in utility and manufacturing sectors, says MID-SHIP.

DAT Trendlines reports spot rates rose sharply for Vans and Reefers in the week ending May 7. Demand for this category of trucks was highest in the California, Texas and the Southeast. The increase was due in part to rising diesel costs but mainly because of seasonal demand from fruit and vegetable harvest in the Southeast and California.

Flatbed demand and rates remained steady during the week, increasing only 1 cent to $1.91 per mile nationally. Flatbed rates were highest in the Northeast at $3.51 per mile and lowest in Los Angeles at $1.71 per mile.

Load to truck ratio for flatbeds declined from 21.1 loads per truck to 18.8 loads per truck during the week May 1- May 7. Flatbed load volume on the spot market was unchanged while capacity increased 12 percent from the previous week leading to the 11 percent decline in the load-to-truck ratio.

Diesel fuel costs rose slightly to a national average of $2.271 per gallon on May 9, 2016.

Rail

For the week ending May 7, the Association of American railroads reported total weekly rail traffic was 492,923 carloads and intermodal units, down 10.6 percent compared to the same week last year. Carloads totaled 223,047, down 14.8 percent, and intermodal volume was 259,876 containers and trailers, down 6.4 percent from 2015.

Crude oil volume on Class I railroads was 63,261 carloads of crude oil in the first quarter of 2016, down 21,664 carloads or 25.5 percent from the fourth quarter of 2015 and down 49,828 carloads or 44.1 percent from the first quarter of 2015.