Freight rates firming, OOIDA Foundation says

Freight rates have improved some, but the trucking market is not out of the woods quite yet. That’s according to the OOIDA Foundation, which released a freight market report in late August.

The OOIDA Foundation maintained a negative outlook overall even though seasonal trends have been positive.In that market outlook, the Foundation concluded that volume and demand were flat and operating costs were high, while capacity was equalizing and rates were firming.

Van market

Regional truck-to-load ratios were lower in eight of the 15 regions, with the greatest decrease in the Southeast.

Spot rates stayed flat, and contract rates increased. The inventory-to-sales ratio increased as monthly sales decreased.

Inventory levels were much lower than at the start of 2023, but demand had yet to materialize for furniture and home furnishings. Household appliances were showing very positive signs.

Seasonally adjusted retail sales increased for all three retailer types in July.

Flatbed market

Load-to-truck ratios were down in all but three regions.

DAT forecasted a steady decrease of spot freight rates through the rest of the year. The seasonally adjusted flatbed composite index declined again in June after ticking upward in May.

Housing continued to weaken as the FED held interest rates steady due to inflation. It appeared likely that the FED would cut rates when it met in September, but it could take several months to see the effect.

Building materials, garden equipment and supplies dealers continued to struggle with high inventories.

Reefer market

Conditions were favorable in the California, Upper Atlantic and Upper Mountain regions in terms of demand.

Spot rates remained flat, while contract rates increased and were expected to continue to do so through the end of 2024.

Carriers in the Florida region experienced the greatest in pay-per-mile, according to the U.S. Department of Agriculture’s freight rates.

The USDA also reported volumes decreased month-over-month. Volume increases were the most significant in the Mid-Atlantic and Mexico-New Mexico regions. Capacity remained either flat or positive across the country.

Trucking market

Employment numbers decreased in July and were down year-over-year for the 14th consecutive month.

New and used truck sales both increased as new orders dropped. Preliminary used truck prices increased in July after declining in June. Year-over-year comparisons had been negative for 20 consecutive months, meaning that the overall freight market was still weak.

“If history is to be believed, August sales should jump a bit,” said Steve Tam, ACT Research vice president.

Transportation prices were at their highest level since May 2022, according to the Logistics Managers’ Index. This marked the third consecutive month that prices exceeded capacity.

The average price for diesel increased to $3.83 per gallon, ending four months of consecutive decreases.

Freight market

Wages and salaries, as well as real disposable income, continued to grow year-over-year.

Manufacturing activity, excluding pharmaceuticals and computer and electronics, decreased both month-over-month and year-over-year. Two consecutive quarters of declining seasonally adjusted manufacturing activity represented a manufacturing recession. The current recession had been ongoing for six quarters.

Imports and exports dipped in June but continued to do well year-over-year. Imports rose to 16% above 2019 levels.

Growth in intermodal remained strong year-to-date, primarily due to international intermodal traffic.

Read the complete freight market update on the OOIDA Foundation website. LL