OOIDA Foundation adds quarterly market update

Since July 2022, the OOIDA Foundation has provided a monthly freight market update to inform members and others in the industry about the current and future state of the market.

As a supplement to that update, the Foundation is now providing a quarterly market update, starting this month.

The quarterly updates will contain a general outlook with a focus on company drivers, leased-on owner operators and owner-operators under their own authority. Van, flatbed and refrigerated trailers will be specific markets of focus.

Going forward, the quarterly report is scheduled to be released in the last month of each quarter.

“While the data frequency isn’t as high, it’s much more accurate and telling than the monthly reported data, as there is less volatility involved,” said Andrew King, research analyst for the Foundation.

Owner-operator outlook

With C.H. Robinson being the largest freight brokerage in the country, the company’s volumes, truckload revenue and truckload price and cost per quarter will be used to illustrate market trends for owner-operators.

Truckload volumes have declined in four of the last five quarters, putting downward pressure on rates. Volumes have been in negative territory the past two quarters.

Net truckload revenue has declined the past three quarters. Revenues are down nearly 22% compared to last year. There is too much capacity for the amount of freight in the market.

Truckload price and cost have been in negative territory since the second quarter of 2022. C.H. Robinson’s net revenue margin is starting to decline, perhaps indicating the start of the next upcycle.

Leased-on owner-operator outlook

Landstar’s BCO Loads serve as a good proxy for volumes.

The number of loads has declined 13% since the second quarter of 2022, when the current freight recession began. The number of trucks has provided a good barometer for leased-on owner-operators. That number has declined 11% since the start of the freight recession.

Revenue is down 11.5% year-over-year but is flat compared to the five-year trend.

As volumes and demand have declined, so have rates, but as reported in the Foundation’s August market update, rates appear to have found the floor.

Company driver outlook

Year-over-year percentage changes for wholesale trade data decreased again, making it two straight quarters of decline.

Employment for the general freight, long-distance and truckload sector increased quarter-over-quarter and above the five-year trend.

Average weekly earnings for general freight, long-distance and truckload decreased in Q2 2023.

Overall trucking industry

According to U.S. Bank, shippers are starting to consolidate their freight onto full truckload trailers rather than sending multiple shipments on LTL. However, truck freight continued to underperform relative to the broader economy.

This quarter’s decline in U.S. Bank’s Spend Index is the largest sequential decrease in three years and indicates a challenging marketplace for carriers. Spending has dropped over the past year in part due to lower shipment volumes but also because there is more truck capacity available in the marketplace than there are loads to haul.

Shipment volumes were somewhat mixed during the second quarter from a regional perspective compared to quarter one. The Northeast region experienced the greatest percentage change from the previous quarter in terms of both shipments and spending. The Southwest and Midwest regions were the only areas of the country to still experience some growth in shipments, even if it was a stepdown from the previous quarter.

Southwest and Midwest regions were the only areas of the country to still experience some growth, even if it was a stepdown from the previous quarter.

Overall freight market

The utilization rate for all manufacturing sectors increased 1.6% following a steep drop in the third quarter. In addition, hours of operation decreased for the third straight quarter.

The percentage of plants experiencing an insufficient supply of materials decreased, while the percentage of plants citing insufficient orders and sufficient inventory increased.

Spot rates appear to have found a floor despite a continued decrease in the Producer Price Index.

We’re in a waiting game for the next freight cycle to begin. Some analysts predict that the new cycle will start in late summer to early fall, with back-to-school shopping. LL

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