It’s not a done deal, but the freight market is inching closer to the next cycle.
The OOIDA Foundation’s April freight market update showed capacity continues to exit in large numbers.
However, traditional freight generators remain weak and new housing activity was down.
Additionally, tensions in the Middle East are adding to the uncertainty.
“Rates are up due to tighter capacity, not increased demand,” the Foundation said. “The recent Iran conflict has dramatically increased fuel prices. While rates are up, the overall future remains shaky.”
Van market
Most regions saw increased demand, with the largest increase in the West Coast region.
Rates also increased by the largest amount on the West Coast, and all but one region reported higher rates.
Gains were driven by grocery wholesales, electrical and electronic goods wholesalers and plastics and rubber manufacturing.
Flatbed market
The Northeast and Southeast regions were the best for demand, while the Mountain Central region had the largest decline.
Every region saw increased rates.
A drop in the composite index was largely due to decreases in primary metal manufacturing and cement and concrete product manufacturing.
Reefer market
Demand ratios were up more than 100% in the West Coast region. The largest decrease was 47% in the Midwest.
More than half of the regions reported a decrease in demand, which remains below 2019 levels.
A reduction in food manufacturing primarily drove the decline.
Trucking market
The Cass Shipment Index was up month over month but down year over year.
“Although spot truckload rates have been rising significantly, it will take time for this to translate into higher contract rates,” Cass said. “We believe we’ve moved to the early cycle phase where capacity becomes short and rates rise.”
Estimated for-hire carrier entries increased. After seasonal adjustments, March marked the 35th consecutive month of a net loss of carriers.
Geopolitical events have created headwinds for truckers, the Foundation said.
Diesel prices were nearing an all-time high of $5.81 per gallon, set in June 2022.
Used truck sales were above historic averages.
Freight market
U.S. manufacturing activity remained in expansion territory, growing at a slightly faster pace.
All components of the housing market index decreased.
The index also showed 36% of builders cut prices in April, down slightly from March. Sales incentives were used at 60% or higher for the 13th consecutive month.
Intermodal is beginning to show early signs of recovery, according to C.H. Robinson.
Modest demand growth is expected as shippers shift more freight to intermodal to offset rising truckload costs. LL
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