March has proven to be a challenging month for for-hire truck tonnage, with a notable 2% decline. However, amidst the dips, glimmers of hope flicker on the horizon, suggesting potential future trucking market improvements.
Truck Tonnage Takes a Dip
According to the American Trucking Associations (ATA), for-hire truck tonnage in the United States experienced a 2% drop in March, indicating sustained softness in freight demand. Bob Costello, chief economist at ATA, remarks, "Tonnage in March suggests that truck freight volumes remain lackluster, and it is clear the truck freight recession continued through the first quarter."
Comparing to the previous year, tonnage was down by 1%, marking the 13th consecutive year-over-year decline, albeit the smallest over that period.
Signs of Optimism
Despite the downturn, ACT Research paints a more optimistic picture. Their latest report indicates an upturn in goods spending, a shift in inventory cycles, and an increase in industrial production, all pointing towards a potential surge in freight demand within the next two months.
Tim Denoyer, ACT Research's vice president and senior analyst, suggests, "We think a lower Class 8 tractor supply dynamic will be very helpful in bringing freight back to the for-hire market."
Boost from Retail Restocking
Motive's monthly economic report for March provides further grounds for optimism. The Big Box Retail Index recorded a significant 6.9% increase in truck visits to retail warehouses, with visits to home improvement retailer warehouses leading the surge.
Spot Market Rates Hold Steady
While stable spot market rates were reported by Truckstop and FTR Transportation Intelligence for the week ending April 19, there were fluctuations in different segments. Higher flatbed rates offset slightly lower van rates, with total market rates reaching their highest level since June.
DAT Freight and Analytics observed a third consecutive month of declining spot market rates in March, with van rates averaging US$2.01 a mile, down 6 cents from February and 15 cents year over year.
Impact of Rising Fuel Costs
FTR's Shippers Conditions Index turned slightly negative in February, primarily due to the escalating cost of fuel. Avery Vise, FTR's vice president of trucking, anticipates a gradual tightening of the truck market that will lead to a moderately tougher environment for shippers by the first quarter of 2025.
Trailer Orders Slump
March saw a significant 38% slump in trailer orders, according to FTR. The decline, attributed to subdued fleet profitability and the anticipation of the 2027 emissions regulations, underscores the cautious approach of fleets towards equipment purchases.
In summary, while the trucking industry faces immediate challenges, the convergence of various economic indicators suggests a potential turnaround in the coming months. Exploring these turbulent waters will require agility, strategic planning, and a keen eye on evolving market dynamics.
Stay tuned for more insights as we continue to monitor the shifting landscape of the trucking industry.
