Freight market troubles linger

The annual peak shipping season is near, but even that doesn’t bring much hope for the freight market.

U.S. manufacturing has contracted for eight consecutive months and production and inventories are showing weakness, while bumps in new orders and backlogs haven’t provided sustained growth. Additionally, the housing market is soft.

These trends limit the chances of an immediate freight recovery, said the OOIDA Foundation’s November freight market update.

Van market

Demand declined because capacity rose faster than freight volumes. The largest decline was in the West Coast region, followed by the Northeast.

Those regions also saw the largest increase in rates.

The spread between the spot rate and the three-year moving average clearly demonstrates a dry van market cycle, the Foundation said.

Flatbed market

In four of six regions, demand was higher, led by the Mountain Central region. However, because of a nearly 16% decline in the Southeast, the overall flatbed market demand index was down month over month.

Overall spot rates were flat, ending five straight months of decline. By region, more than half saw declining rates. The largest decrease was in the Northeast.

Reefer market

An unusual increase in demand was reported. Typically, reefer activity slows down until November and December.

Demand was the most favorable for carriers operating in the Northeast and Midwest.

While rates were better in four of six regions, they fell overall, marking two consecutive months of contraction.

Trucking market

The Cass Shipment Index, including data from all domestic freight modes, fell month over month and is down year over year.

“Fleets continue to struggle financially and with losses continuing to pile up, investments are being sharply curtailed,” Cass said. “The issue for the freight cycle is now the affordability reductions that tariffs are beginning to impose on U.S. consumers.”

For-hire entries rose, but are below 2020 and 2021 levels. A mostly sideways trend is expected going forward.

The rise in prices, coupled with a slight downtick in capacity, reversed a two-month trend of negative freight inversion, according to the Logistics Managers’ Index. This is probably more due to seasonal factors than a true course correction in the freight market.

Diesel prices are higher year over year for the third straight month, a bad sign for owner-operators.

U.S. sanctions on Russia’s top oil producers, combined with OPEC’s decision not to increase output, are tightening global oil supply, C.H. Robinson said.

Pressure on diesel prices is expected to continue.

The used truck market fell short of seasonal expectations in both sales and price, while new Class 8 truck orders in October were soft.

Freight market

U.S. manufacturing activity contracted at a faster rate, with production and inventories leading the way. 11 of the 17 industries reported contraction in October.

The Housing Market Index was up overall, but down 14% year over year. Additionally, 38% of builders reported cutting prices in October. The average price reduction rose 6% after averaging 5% for several months.

The complete OOIDA Foundation November update is available online. LL