As speculation swirls about the trucking market’s eventual recovery, the latest data released Tuesday serves as a reality check.
The U.S. Bank Freight Payment Index revealed that the truck freight market remained depressed in the first quarter of this year.
National Freight Market Overview for Q1 2024 US Bank
This was down from both the final quarter of 2023 and the same period last year. Spending by shippers was down approximately 28% from the first quarter of 2023 and approximately 17% from the fourth quarter of 2023. Shipments also fell more than 21% year over year in the quarter.
Bobby Holland, director of cargo business analysis at U.S. Bank, said that while there was hope for an improvement in the cargo market at the beginning of the year, the data shows that challenges remain. “Nationwide, sales volumes have declined year over year for eight consecutive quarters, and spending has declined for five consecutive quarters.”
“Spending has fallen disproportionately to volume declines, suggesting downward pressure on interest rates early in the year,” said Bob Castello, senior vice president and chief economist at the American Trucking Associations. said.
He added that cargo capacity continues to exceed available cargo volumes. “It will be important to watch throughout the year to see how much this discrepancy shrinks or widens.”
This is also consistent with recent truck tonnage data from ATA. The seasonally adjusted rental truck tonnage index fell 2% in March after rising 4% in February.
ATA Tonnage Index American Trucking Associations
ATA Chief Economist Bob Costello said March tonnage data shows truck freight volumes remain weak, indicating the truck freight downturn continues into the first quarter. said.
“In the first three months of 2024, the ATA tonnage index contracted 0.8% quarter-on-quarter and fell 2.4% year-on-year, highlighting the continued challenges facing the industry,” Castello said. said.
(Related: Truck tonnage decreases in March)
The US Bank Freight Payments Index showed regional data and the broad impact of various factors impacting the Truck Freight Market. Shipments and spending declined significantly in all other regions except the Southwest, where volumes increased each quarter.
Overcapacity, adverse weather conditions and reduced consumer spending have impacted the Western truckload market, with shipments down 23% year-over-year.
Although sales volumes increased in the Southwest, shipments decreased 12.8% due to weak factory production, while shipments in the Midwest decreased 18.5% due to slowing auto sales and weak manufacturing activity.
The most severe contraction was in the Northeast, where winter storms and weak retail sales led to a 34.8% year-over-year drop in spending and a 33.9% decline in shipments.
Fleet reiterated similar challenges in its first quarterly earnings report, saying the airline is focused on cost reductions, efficiency opportunities and market positioning.
Several airlines, including Knight Swift Transportation, Covenant and Heartland Express, cited significant weather complications that are increasing costs and creating operational challenges.
Joe Vitilit, president of PAM Transportation Services, said in an earnings call that the excess capacity “continues to allow shippers to take advantage of the overcapacity market and achieve below-cost rates.” said.
According to its April 23 earnings call, Heartland Express reported a net loss of $15.1 million in the first quarter of this year. CEO Mike Gardin said the results reflected “an extended period of significant freight demand weakness, including industry overcapacity, adverse weather conditions early in the quarter, and ongoing operating costs.” It is a rise in
Some trucking companies, including Knight Swift Transportation, oppose further rate cuts.
Brad Stewart, Knight Swift’s senior vice president of investor relations and treasurer, said in an earnings call that “some shippers are still trying to lower rates, and the early bidding season has put more pressure on freight rates than expected.” It led to.” Even further away. In some cases, we have lost contract volume because we did not commit to further concessions on contract rates that were deemed unsustainable. ”
Marten Transport, which hasn’t lowered rates since last August, said in its first quarter earnings report that it is “focused on fair compensation for premium services across each business operation as we move into the next phase of the freight cycle.” I’m guessing,” he said. The market will inevitably recover from the later stages of the current recession. ”
Some airline executives remain hopeful, pointing to the economic downturn as part of the cargo cycle and focusing on long-term strategies.
“There will come a time when prices and sales volumes will return,” Darren Field, president of JB Hunt Intermodal, said in an earnings call.
Adam Satterfield, Chief Financial Officer of Old Dominion Freight Line, pointed out that: Looking at things from a glass-half-full perspective, I’ve noticed some green shoots. ”
“To maintain a consistent cost advantage relative to our industry peers, we have to remain disciplined through good times and bad,” Knight Swift CEO Adam Miller said in an earnings call. There must be,” he said.
