News / More casualties in US trucking sector expected after Q1 slump in volume and spend

© Andrii Yalanskyi

Amid the speculation on when the US trucking market will finally rebound, US Bank’s Freight Payment Index for the first quarter, published today, provides sober reading.

It shows decline against Q4 23, and a year-on-year drop, both in shipment count and freight spending.

Shipment volume slipped 7.8% from the previous quarter and 21.6% year on year,  while spending was worse, dropping 16.8% from Q4 23 and 27.9% from Q1 23.

The year-on-year slump in shipments was the worst on record, notes US Bank.

Bobby Holland, its director of freight business analytics, said: “While there was hope for a freight market turnaround to start the year, our data shows that the challenges continued.

“Nationally, this was the eighth straight quarter of year-on-year volume decreases, and the fifth straight with a drop in spending.”

The decline was not driven by one or two regions of the US: with the exception of quarter=on=quarter growth in shipment volume in the south-west (but a drop year on year), all regions witnessed significant decline in volumes and spending.

Winter storms and the usual drop after peak season slowed demand and spending, and hopes for a strong March did not materialise, said US Bank’s analysts.

And the first-quarter results of trucking companies have also shown continuing yield erosion, which US Bank’s numbers confirm.

“Spending fell disproportionately to the drop in volume, which suggests downward rates pressure to start the year,” said Bob Costello, SVP and chief economist at the American Trucking Association. The only exception there was the year-on-year tally in the south-west.

US Bank noted that the truck freight market continued to underperform the general economy. It blamed a combination of factors weighing on the trucking sector, including adverse weather, flat manufacturing activity and a contraction in consumption of household goods. Retail sales growth was too modest to counteract these factors. In addition, lower diesel prices resulted in decreased fuel surcharges, but these have been on the rise since.

The US north-east fared the worst, both in terms of shipment volume and spending. Shipments fell 17.4% from Q4 23 and 33.9% year on year, while spending slumped 23.8% and 34.8% respectively.

“The north-east is proving an exceedingly tough region for fleets, which could reduce capacity in the quarters ahead,” warned US Bank.

The south-west, the only region to register growth, saw shipment count up 8.9% from Q4 23, but volume was still down, 12.8% year on year. Spending fell 16.5% and 29.2% respectively. In the west, volume contracted 10.6% and 23%, while spending fell 19.9% and 30.6%.

In the mid-west, softer manufacturing market and a slowdown in auto sales contributed to a 9.5% decline in shipments from Q4 23, resulting in an annual drop of 18.5%. Spending retreated 15.4% and 25.9% respectively.

The south-east recorded its 12^th consecutive quarterly decline, with shipments falling 9% from Q423 and 24.4% for the year. Spending was down 13.8% and 25% – the lowest contractions of all regions, both in terms of volume and spending.

However, economic indicators point to an improving situation. Imports, as well as projections of retails sales, have risen recently, and the Institute for Supply Management’s manufacturing purchasing managers index rose from 47.8 in February to 50.3 in March, ending a 16-month stretch of contraction.

New orders also climbed out of contraction territory to a reading of 50.3.

But trucking operators and analysts agree there is still too much capacity in the market, and predict mounting casualties this year as unsustainable pricing forces players out of the market.