Mark Twain is often quoted as saying that the news of US trucking resuscitation was exaggerated. Industry statistics show that the industry will continue to struggle through negative growth throughout the remainder of the year.
The trucking industry is still in contraction, despite some mild improvements.
After a slight improvement in the first three months, the CASS Freight Index is now in decline. In May, the CASS Freight Index showed a 5.8% decline in shipments compared to 12 months ago. The month-to-month shipment count was unchanged, but the volume of shipments on a seasonal basis decreased 3.1% compared to April. This is a 46 month low.
The drop from a year ago was almost twice as large as the 3% decline CASS predicted a month earlier. Assuming normal seasonal patterns, CASS expects this month’s index to show a decline of 4%, with a trend toward a similar decline for the entire year.
Analysts questioned the belief that the market was held in a rut by a large number of small players who were struggling to survive. Their eventual demise would restore the balance between capacity and demand. They noted that 42,000 operating permits have been revoked in a record number of cases since October 2022.
They instead highlighted two other factors that are affecting the current situation: the consolidation of LTL into truckload shipments, and the capacity expansion within private fleets which “continues defy expectations”.
The CASS reported that the transport spending gap in April was 17%. In May, it was 9% smaller. Spending increased 1.9% month-on-month, which indicates an increase in rates.
CASS, assuming the same seasonal patterns as before, predicts a decline of 16% in spending during the first half of the calendar year and 10% for the entire year.
Positively, the ‘inferred rate’ (transport expenditure divided by shipment count), as CASS calls it, was down 3.4% in May 2023. This is an improvement over the 13% drop of the previous month, and the smallest decline in 16 months. Seasonally adjusted, the rates rose 3.9% in April to reach a six-month peak.
Derek Leathers of Werner Enterprises, the CEO, recently stated that his company would hold the line with pricing, citing the promising developments in the marketplace. Werner Enterprises is ranked 17 th by Transport Topics Top 100 List of Commercial Carriers.
“From a monetary perspective, we’re going be disciplined,” said he. “There is still some pressure on the price, and some pressure throughout the process, but there is much less churn.” This is an indication that everyone is realizing we’re getting closer to an inflection.
He said that inventory levels had “normalised”, which indicates a return to a replenishment cycle. Consumer behaviour is not expected show any significant changes.
The American Trucking Associations have also reported signs of recovery. The For-Hire Truck Tonnage Index, released yesterday, showed a 1.5% increase year-on-year for May. This was the first annual gain for 15 months. It was also up 3.6% from April.
Bob Costello, chief economist at the ATA, said that May was the first time since February 2023 when tonnage had increased both sequentially and compared to a year ago. However, he cautioned.
“While it was clear that there was an increase in truck freight before Memorial Day, it is too early to tell if this is the beginning of the long-awaited market recovery,” he said.