The December freight market update released by the OOIDA Foundation says the market looks poised to flip in the near future.
In its third-quarter market report released earlier this month, the Foundation reported all signs were pointing toward an upcycle beginning in the second quarter of 2025.
Those indicators remain in the December market update, which categorized volume/demand as flat, capacity as equalizing, rates as rising and operating costs as stabilizing.
The Foundation maintained a neutral future outlook for the second consecutive month.
“As the number of owner-operators continues to increase, we believe the market will turn upward in early Q2 2025,” the Foundation said.
Van market
Exactly half of the regions experienced a decrease in the market demand index.
Spot rates remained flat month-over-month but were expected to increase in December. The spread between the spot rate and the three-year moving average clearly demonstrated where we are in the dry van market cycle, the Foundation said.
The inventory-to-sales ratio also remained flat.
Household appliances have turned a corner, performing exceptionally well since late 2023.
Seasonally adjusted retail sales increased for electronics, appliances and furniture but decreased for general merchandise.
Flatbed market
Ratios were more favorable for carriers operating in the Southeast and Mountain Central regions.
Spot rates had decreased year-over-year for 28 consecutive months.
The seasonally adjusted flatbed composite index, which correlates strongly with the spot market, decreased in September after increasing in August following adjustments.
It will take several months to see the effect of federal rate cuts, and those interest rates don’t directly impact mortgage rates, the Foundation said.
Building materials, garden equipment and supplies dealers continue to struggle with high inventory levels, which are 4% higher than 2019 levels. This is a significant headwind for future freight demand.
Reefer market
Demand decreased. This is unusual for that time of year. However, spot rates increased and showed substantial improvement since bottoming out in April 2023.
According to the USDA, carriers in the Mexico-Texas region experienced the greatest increase in pay per mile month over month.
Volumes plummeted, with eight regions reporting a decrease.
Truck capacity tightened, contradictory to lower rates and lower volume. The volume figures should adjust upwardly next month.
Trucking market
“Although private fleets may continue to limit demand in the for-hire market, for-hire activity will likely benefit from slowing private fleet growth and temporary pre-tariff shipping in 1H’25,” the Cass Shipment Index said.
New and used Class 8 sales decreased, but not enough to cause major concern in terms of used sales.
“Given that typical seasonality called for a decrease of 18% month over month, the small dip [in used sales] was a big win,” said Steve Tam, vice president at ACT Research.
Used sales eclipsed new sales for the 11th consecutive month.
Based upon the Logistics Managers’ Index, transportation prices continued expanding at its second-highest reading of the past two years, offering further evidence that the freight market has moved back into equilibrium.
Fuel prices have decreased and are down $2.23 since a high of $5.75 in June 2022.
Wages and salaries have increased slightly, while the Consumer Price Index has moved upward.
Demand remains weak as companies prepare for 2025 with the benefit of the election cycle ending. Suppliers continue to have capacity, with lead times improving but some product shortages reappearing.
“A general construction slowdown in the fourth quarter has created a surplus of finished goods,” the Foundation said. “We are carefully watching demand in the first quarter to determine if more permanent workforce reductions will be necessary.”
The OOIDA Foundation’s monthly and quarterly freight market reports can be found on its website. LL
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