The tightest trucking market in years is testing the limits of an otherwise well-conditioned U.S. economic expansion. It also is tinder for accelerating inflation should the capacity constraints spark moves by companies to pass on those higher delivery costs.
A shortage of drivers, new regulations and solid demand are driving up rates charged by trucking companies to haul loads over the country’s more than 46,000 miles of interstate highways. Combined with higher materials prices, partly due to the Trump administration’s tariffs, rising transportation costs are putting pressure on goods producers.
“Demand is exceeding capacity in most modes of transportation by a significant amount,” Donald Broughton, managing partner of Broughton Capital, wrote in the Cass Freight Index Report for May. “In turn, pricing power has erupted in those modes to levels that continue to spark overall inflationary concerns in the broader economy.”
Producer-price figures from the Labor Department on Wednesday showed that inflation continued to build in the sector last month, with general long-distance freight trucking costs advancing 9.4% in June from a year earlier. That was the largest year-over-year increase in nearly a decade. The broader producer-price index was up 3.4%, the most since November 2011.