The OOIDA Foundation reiterated in its quarterly freight market report for the second quarter of 2024 that regardless of certain indicators, the next upcycle won’t occur in the short term.
C.H. Robinson indicated a slight increase in volumes, with truckload business growing for the fourth consecutive quarter, according to President and CEO Dave Bozeman.
However, truckload price and cost had been in negative territory since the second quarter of 2022. While closer to parity, more ground needs to be gained, the Foundation market update said.
Leased-on owner-operator
The same soft freight market fundamentals that occurred during 2023 have continued in 2024. Among these are low demand, weak manufacturing and too much capacity.
The number of loads in the second quarter was 10.5% lower than in 2019.
Although capacity was still exiting for Landstar, revenues per load had yet to really recover. It did appear that some parts of the market might be stepping closer to equilibrium, according to the Foundation market.
Company driver
Retail wholesale trade sales excluding petroleum increased year-over-year for the third consecutive year. This could be a positive sign for future freight demand, at least for specific industries such as some durable goods and especially as inventories continue to right-size.
Employment for the general-freight, long-distance truckload sector, which best represents OOIDA membership, decreased quarter-over-quarter as the industry continues to downsize to meet weaker demand. Average weekly earnings for that sector were also down in the second quarter of 2024.
Overall trucking
U.S. Bank’s shipment index showed a continued downward trend in the truck freight market.
Several factors contributed to declining freight levels, including consumers spending more of their money on services, especially experiences, at the expense of goods purchased.
The U.S. Bank Spend Index contracted for the eighth consecutive quarter.
“The decline is likely due more to fewer shipments and falling diesel prices in the second quarter, than from freight rate decreases,” U.S. Bank said.
Essentially, shippers experienced an abundance of capacity for the amount of freight shipped.
Overall freight
The utilization rate for all manufacturing sectors rose, while hours of operation have declined in six of the past seven quarters. This is a bad indicator for demand.
Insufficient supply was lower year-over-year, but insufficient orders and sufficient inventories were both higher year-over-year.
The Foundation surmised that it appears rates will continue to bounce along the bottom of the trough until demand increases enough to ignite the next upcycle.
That doesn’t look like it will happen until the second quarter of 2025.
In addition to its quarterly reports, the OOIDA Foundation provides a freight market outlook monthly. A complete list of the Foundation’s research is available on its website. LL
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