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Friday, July 19, 2024

Freight Volume And Spending Declined Markedly In Second Quarter

By Trucking News

Truck freight volume and spending in the second quarter of 2023 declined by the highest levels since the early days of the pandemic, the latest U.S. Bank Freight Payment Index revealed. Spending by shippers dropped 10.9% compared to the second quarter of 2022 while shipment volume dropped 9%, according to a statement from the Minneapolis-based bank.

“Trucking is in the midst of a significant slowdown,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations.

Weaker consumer demand for goods and a slowdown in manufacturing activity and housing starts are having a major impact on the industry – especially carrier operations.”

Nationwide shipment levels have now decreased for five consecutive quarters. In the second quarter, volume dropped most in the Northeast (27.1%) and Southeast (12.6%) year-over-year. The Southwest continued to be a bright spot, with shipments increasing 14.8%.

“In the spot market, we’ve been observing for a while sharp spending drops caused by lower volumes and increased capacity. This trend has now solidly penetrated the contract freight market,” said Bobby Holland, director of freight business analytics, U.S. Bank.

“Nearly every category we track – both nationwide and regionally – contracted in the second quarter.”

The Midwest region had the sharpest spending drop in the second quarter, 18.7% year-over-year. The Northeast and West also experienced double-digit spending declines, dropping 10.9% and 10.2%, respectively versus the second quarter of 2022.

The bank’s regional data found:

  • WestTruck freight continued to struggle in the West region as port activity and housing starts there continued to slow. This is the lowest point for shipments in the West in three years.

  • SouthwestContinuing to outperform other regions, the Southwest’s volume is benefiting from increased truck-transported trade with Mexico. The 14.8% year-over-year increase in shipments is the highest since 2018.

  • MidwestContinued slowdowns in manufacturing likely led to year-over-year shipments dropping by the largest level in the region since Q4 2021. Yearly spending also dropped by the largest amount since Q2 2020.

  • NortheastThe 27.1% volume contraction is the largest in the history of the Freight Payment Index. The region faces multiple headwinds, including low housing starts. However, the contraction in household consumption likely had the biggest impact for this populated area.

  • Southeast: Even though shipments contracted 12.6% year over year and slightly on a linked quarter basis, this was an improvement for the region. In the first quarter, shipments fell 16.1% year over year and 10.1% on a linked quarter basis.

Truck freight spending levels have now contracted year-over-year for two consecutive quarters. With spending at all-time high levels for the preceding six quarters, the recent drops brought spending activity back to its relatively strong levels of mid-2021.

This post was originally published on this site

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