News / US trucking market stuck 'in limp mode' through remainder of 2024

To twist Mark Twain’s frequently quoted quip: news of US trucking’s resuscitation has been somewhat exaggerated – and industry statistics point to a slog through negative growth for the rest of the year.

There has been a steady trickle of speculation on whether the trucking market has hit bottom and an imminent recovery this year, but traffic numbers continue to disappoint, showing an industry still mired in contraction – notwithstanding mild improvements in some aspects.

After some improvement in the first quarter, the CASS Freight Index has been in decline again. For May, it showed a 5.8% drop in shipments from 12 months earlier. Month on month shipment count was flat, but on a seasonally adjusted basis shipment volume diminished 3.1% from April to hit a 46-month low.

The year-on-year drop was almost double the 3% decline CASS had predicted a month ago and, assuming normal seasonal patterns, CASS now expects the index to show a 4% annual decline this month, trending toward a similar decrease for the full year.

Its analysts questioned the mantra that the market is held in the doldrums by an abundance of small players struggling to survive, whose eventual demise would right the balance between demand and capacity. They pointed out that a record 42,000 operating authorities have been revoked since October 2022.

Instead, they highlighted two other factors in the current conditions: the consolidation of LTL traffic into truckload shipments; and the capacity expansion in private fleets that “continues to defy expectations”.

Transport spending in May was 9% lower than 12 months earlier, but an improvement on the 17% gap CASS recorded for April. Month on month, spending rose 1.9%, indicating an increase in rates.

Again assuming normal seasonal patterns, CASS predicts a 16% decline in spending for the first half of the year, and 10% for the full year.

On a positive note, what CASS calls ‘inferred rates’ (transport spend divided by shipment count) were down 3.4% from May 2023, an improvement from a 13% drop the previous month and the narrowest decline in 16 months. Seasonally adjusted, they climbed 3.9% from April to a six-month high.

Derek Leathers, CEO of Werner Enterprises, signalled recently that his company, which ranks 17^th on the Transport Topics Top 100 list of commercial carriers, intended to hold the line on pricing, citing promising developments in the market.

“From a rate perspective we’re going to be disciplined,” he said. “There’s still some pressure on price, still some pressure through the process, but much less churn. That is an indication that everybody is realising we’re closer to an inflection point.”

He suggested inventory levels were “more normalised”, indicating a return into a replenishment cycle, while consumer behaviour is not expected to show a significant shift either way.

The American Trucking Associations (ATA) has also reported some green shoots of recovery. Its For-Hire Truck Tonnage Index for May, released yesterday, shows a year-on-year gain of 1.5% for May – its first annual gain in 15 months, and it was up 3.6% over April.

“May was the first month since February 2023 that tonnage increased both sequentially and from a year earlier,” commented ATA chief economist Bob Costello, but he added a cautious note.

“While there was clearly an increase in freight before the Memorial Day holiday, it is still too early to say whether this is the start of a long-awaited recovery in the truck freight market,” he said.