News / Dismal picture for US trucking as Q4 volumes go into double-digit decline

Traffic numbers from multiple sources paint a grim picture of the US trucking scene coming out of 2023.

In lieu of a peak season boost, the fourth quarter delivered more grief to truckers, as freight volumes went into a double-digit descent.

The latest quarterly US Bank Freight Payment Index registered a 10.9% drop in shipment volume from the third to the fourth quarter of 2023, with two regions showing decline of more than 14%.

Traffic sank in all regions, from a relatively moderate 2.9% slip in the west to a 14.5% drop in the south-east and an 18.2% slump in the south-west, as shippers’ spend on trucking slipped 1.4% from the third quarter. All but two regions saw reductions in spending.

Shipments have declined for the past six quarters, and year-on-year volume plummeted 15.7%, the steepest drop in the history of the index.

It was 6 percentage points worse than the year-on-year decrease in Q3. Four of the five regions suffered double-digit decline, led by a 25.4% slump in the south-east, followed by a 23.8% drop in the north-east.

Over the year, freight spend fell 13.5% from 2022, reflecting flagging demand and falling rates.

It was down across all regions year on year, with only the west (down 7.4%) showing a single-digit decline. It fell the most in the midwest, dropping 17%, although that was 1.2% up on Q3.

The rate of decline in freight spending slowed to the smallest reduction in three quarters, but the year-on-year drop was the largest since Q2 20, which saw the peak of Covid-related lockdowns.

“The truck freight market is feeling the impact of companies reducing inventories significantly, as well as consumers continuing to spend more on experiences over goods,” said Bob Costello, SVP and chief economist of the American Trucking Associations.

The slowing decline in spending and the spread between spending and shipment volume indicate that the market may be moving closer to a balance between demand and capacity as truckers exit the business, the index noted.

Numbers from other organisations corroborate the dismal picture drawn by the US Bank index.

The American Trucking Associations’ Freight Tonnage Index for December shows a year-on-year decrease of 0.5%, stretching the string of annual decline to ten straight months. On a brighter note, tonnage grew 2.1% over November, when it had shrunk 1.4% from the previous month. For the full year, the index recorded a 1.7% decrease from 2022 tonnage.

“While 2023 ended on a better note, truck tonnage remained in a recession as it continued to fall on a year-over-year basis,” Mr Costello commented.

The Cass shipment index, which covers several modes of transport but is weighted towards the truckload sector, shows a 2.1 improvement in December over the previous month, in seasonally adjusted terms, but it was 7.2% down on December 2022. For the full year it shows a 5.5% drop.

Cass noted that freight volumes had fallen for most of the past two years, similar to previous down cycles both in length and magnitude.

This hints at hope that 2024 will turn out to be a better year for the trucking sector. However, several commentators have warned that the economic indicators point to moderate growth in demand at best.

So rising yields for truckers will depend on more operators dropping out of the market to reduce capacity to levels that allow rate increases.