News of a revival in the US trucking sector has been somewhat overstated of late, as industry data indicates a continued struggle with negative growth expected for the remainder of the year. Despite occasional optimistic forecasts, however, the numbers tell a different story.
The CASS Freight Index, which had shown some improvement in the first quarter, recorded a 5.8% year-on-year drop in shipments for May. Although the month-on-month figures were flat, a seasonally adjusted analysis reveals a 3.1% decline from April, marking a 46-month low. This downturn was nearly double the 3% drop previously forecasted by CASS, and the trend suggests a similar annual decline.
Industry analysts have questioned the notion that the market’s woes are due to an oversupply of struggling small players. They point out that a record 42,000 operating authorities have been revoked since October 2022. Instead, two significant factors have been identified: the consolidation of less-than-truckload (LTL) traffic into full truckload shipments and the unexpected expansion of private fleets.
May of this year saw transport spending decrease by 9% compared to the previous year, although this was an improvement from the 17% gap recorded in April. Month-on-month, spending rose by 1.9%, suggesting a rise in rates. CASS predicts a 16% decline in spending for the first half of the year and 10% for the full year.
Optimistic Signs
There was a silver lining, however. The inferred rates, calculated as transport spend divided by shipment count, dropped by 3.4% from May 2023. This was an improvement from the 13% decline observed the previous month and marked the narrowest decline in 16 months. Seasonally adjusted, these rates increased by 3.9% from April, reaching a six-month high.
Derek Leathers, CEO of Werner Enterprises, noted that his company plans to maintain pricing discipline, citing positive market developments. “We’re seeing less price pressure and less churn, indicating we’re nearing an inflection point,” he said. Leathers also mentioned that inventory levels appear more balanced, pointing towards normalization in the replenishment cycle while consumer behavior remains stable.
The American Trucking Association (ATA) has also reported some positive signs. Their For-Hire Truck Tonnage Index for May showed a 1.5% year-on-year increase, the first annual gain in 15 months, and a 3.6% rise from April. ATA chief economist Bob Costello expressed cautious optimism, noting that while there was a noticeable increase in freight activity before Memorial Day, it’s too early to declare a sustained recovery.
Looking Ahead
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