US trucking market stuck ‘in hobble mode’ through remainder of 2024
News of US trucking’s recovery has been somewhat exaggerated – industry statistics suggest continued negative growth for the rest of the year.
Speculation has been rife about whether the trucking market has bottomed out and if a recovery is imminent, but traffic numbers remain disappointing, showing the industry still in contraction despite some mild improvements.
After some improvement in the first quarter, the CASS Freight Index has declined again. For May, it showed a 5.8% drop in shipments compared to the previous year. Month-on-month shipment count was flat, but seasonally adjusted shipment volume fell 3.1% from April, hitting a 46-month low.
The year-on-year drop was nearly double the 3% decline CASS had predicted a month ago. Assuming normal seasonal patterns, CASS now expects a 4% annual decline this month, trending toward a similar decrease for the full year.
Analysts questioned the belief that the market’s stagnation is due to an abundance of small players struggling to survive, noting that a record 42,000 operating authorities have been revoked since October 2022. Instead, they highlighted the consolidation of LTL traffic into truckload shipments and capacity expansion in private fleets as key factors.
Transport spending in May was 9% lower than a year earlier, an improvement from the 17% gap recorded in April. Month-on-month spending rose 1.9%, indicating an increase in rates. CASS predicts a 16% decline in spending for the first half of the year and 10% for the full year.
On a positive note, ‘inferred rates’ (transport spend divided by shipment count) were down 3.4% from May 2023, an improvement from a 13% drop the previous month and the narrowest decline in 16 months. Seasonally adjusted, they rose 3.9% from April to a six-month high.
Derek Leathers, CEO of Werner Enterprises, recently indicated his company, ranked 17th on the Transport Topics Top 100 list of commercial carriers, intends to maintain pricing, citing promising market developments.
“From a rate perspective, we’re going to be disciplined,” he said. “There’s still some pressure on price, still some pressure through the process, but much less churn. That is an indication that everybody is realising we’re closer to an inflection point.”
He suggested inventory levels were “more normalised,” indicating a return to a replenishment cycle, while consumer behavior is not expected to show a significant shift.
The American Trucking Associations (ATA) also reported some signs of recovery. Its For-Hire Truck Tonnage Index for May showed a year-on-year gain of 1.5% – the first annual gain in 15 months – and a 3.6% increase over April.
“May was the first month since February 2023 that tonnage increased both sequentially and from a year earlier,” commented ATA chief economist Bob Costello. However, he added a cautious note.
“While there was clearly an increase in freight before the Memorial Day holiday, it is still too early to say whether this is the start of a long-awaited recovery in the truck freight market,” he said.