Negative market outlook persists, OOIDA Foundation says

Freight market reports have not allowed for much optimism in the past few months.

That trend continued with the release of the OOIDA Foundation’s July market update.

The Foundation maintained a negative outlook similar to its reports in February, March, April, May and June. Soft volume and demand, loose capacity, flat rates and high operating costs were among the factors that lead to the Foundation’s outlook.

Below are the conditions by market type.

Van market

July saw an increase in the load-to-truck ratio, but it’s still 31% lower than last year. Load posts are 2% lower than the pre-pandemic average for this time of year. Equipment posts remain high.

Spot rates dropped as they typically do this time of year, while contract rates remained flat.

Inventory-to-sales ratios increased, but monthly sales moved downward. Not a positive indicator for truck demand. Seasonally adjusted retail sales declined with the exception of general merchandise stores.

Flatbed market

Load posts are 32% lower month-over-month and 61% lower year-over-year. The spread between contract and spot rates increased and is now 29% higher than one year ago. Rates usually “cool off” this time of year but can change due to hurricane season, the Foundation update said.

Total construction spending increased while spending on highways and streets decreased. New housing starts increased, as did houses under construction. Completed houses decreased and are down 5% year-over-year.

Retailers saw an increase in inventories due to fewer sales in June. A negative sign for future freight demand.

Reefer market

Demand continues an upward trend as produce volumes pick up after a late start this year.Load posts are slightly higher, but equipment posts are mostly flat.

Spot rates moved downward despite an increase in demand. Contract rates are leveling out.

Fruit and vegetable reefer rates are 25% below their January 2022 high.

Carriers in Florida saw the greatest increase in pay per mile month-over-month.

Volumes dropped in July after two consecutive months of gains. California was relatively flat, while the Southwest and Pacific Northwest experienced large drops.

Reefer truck capacity loosened after tightening in the spring.

Truck market

The Industrial Production Index was down, reflecting decreases in manufacturing, mining and utilities.

According to the Cass Shipment Index, private fleets are pulling freight away from for-hire fleets and prolonging the industry downturn. Until private fleet growth eases, Cass says it’s unlikely industry capacity will tighten.

Employment numbers overall decreased for the second consecutive month.

New and used sales of Class 8 trucks both decreased.

Overcapacity has pushed freight rates downward, and new sales have eclipsed used sales – another negative sign.

Inventory levels reached their lowest reading in the history of the Logistics Managers’ Index.

The Producer Price Index continues to decrease, but spot rates appear to have found a floor. Some analysts predict the new cycle will start in late summer or early fall, while others say meaningful increases to rates may not return until 2024.

Diesel is 31% lower year-over-year but 27 cents higher than the five-year trend.

Wages and salaries continue to grow and are starting to outpace inflation.

Total manufacturing increased for the third consecutive month.

Imports are down but are similar to pre-pandemic levels.

However, current import volumes aren’t enough to pull the industry out of its freight recession.

Ports have overcome their 2022 congestion issues.

Carloads and intermodal are below the five-year trend line. LL

Read the full OOIDA Foundation market update here.