The Spot Market Cycle Indicator showed freight market indicators decreased in June, but that was likely due to seasonal trends, the OOIDA Foundation said in its latest freight market update.
“Demand typically ramps up this time of year for van and reefers, before leveling off again as we move through the rest of the summer,” the Foundation said. “While the last two months have been positive, the demand we’re seeing is only due to seasonality.”
Looking at the overall freight market, the Foundation’s report found that operating costs are high, volume and demand are flat, capacity is equalizing and rates are firming. The future outlook remains negative.
Van market
Every region outside the Pacific Northwest and Upper Midwest saw an increase in load-to-truck demand.
Spot rates were up, while contract rates declined month-over-month.
The inventory-to-sales ratio remained flat as monthly sales increased in May.
Inventory levels were lower in June than at the start of 2023, but demand had yet to materialize in a meaningful way. However, the household appliances category was starting to show some very positive signs.
Flatbed market
Load-to-truck ratios were down for the second consecutive month but were more favorable for carriers in the Southeast, South Central and Carolina regions.
The spread between contract and spot rates decreased to exactly where it was one year prior.
Total construction spending, highways and streets spending and non-residential spending decreased again month-over-month in May.
Housing rebounded some in June but continued to weaken even though it did show some signs of resilience earlier this year.
Building materials, garden equipment and supplies dealers continued to struggle with high inventory levels.
Reefer market
Demand rose again and was following the usual seasonal trend.
DAT’s extended forecast was for reefer spot rates to continue to rise through the rest of 2024.
Rates per mile stayed flat month-over-month in June after increasing in May, even though rates typically increase this time of year.
Arizona and the Southeast regions experienced the greatest increases in volume.
Reefer truck capacity loosened in June following a couple months of tightening, as rates remained mostly flat overall.
Trucking market
Freight volumes increased in May due to seasonally adjusted increases in trucking, air, intermodal and water, while rail and pipeline decreased.
“The freight market continues to be characterized by overcapacity,” the Cass Shipment Index said. “We expect the for-hire freight market conditions will improve once excess capacity additions end.”
Truck employment numbers decreased overall and were down year-over-year for the 13th consecutive month.
Class 8 used sales eclipsed new sales for the sixth straight month.
“A lack of traction in freight and freight rate improvement, coupled with still-high interest rates, remains the largest (hurdle) to better used-sales performance,” said Steve Tam, vice president of ACT Research.
The Logistics Managers’ Index showed transportation prices outpaced capacity for the second consecutive month. Those prices have not exceeded capacity by this much since April 2022.
Fuel prices declined again in June and were more than $2 below the high of $5.75 per gallon in June 2022.
Used truck prices have fallen nearly 46% since their high in March 2022.
Year-over-year comparisons have been negative for 19 consecutive months, which does not bode well for the overall freight market even though it does help to lower costs.
Freight market
Wages and salaries, as well as real disposable income, continued to grow year-over-year.
Durable and non-durable goods, as well as services, also grew.
Manufacturing activity excluding pharmaceuticals and computer and electronics increased both month-over-month and year-over-year.
The gap between new orders and shipments had been significantly lower over the previous five months.
Imports continued to perform well, while exports dipped again month-over-month but continued to do well year-over-year.
Carloads continued to slide overall in May, while intermodal’s upward momentum picked up again following a decrease in May. LL
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