OOIDA Foundation freight market outlook remains negative

In its March freight market outlook, the OOIDA Foundation labeled the future outlook as negative.

The Foundation’s April update was much of the same with volume and demand remaining flat, capacity still loose, rates continue to bottom and operating costs still high.

A breakdown by specific freight market is below.

Van market

Compared to typical seasonal patterns, load-to-truck ratios are underperforming following another decrease in April, the OOIDA Foundation reports. That ratio is now 44% lower than 2022, and 50% below the five-year trend.

Spot rates dropped for the fourth consecutive month and are 10% below the five-year trend.

Contract rates also decreased in April, but they are 5% higher than the five-year trend.

While inventory-to-sales ratios have increased, monthly sales continue to decline. This has dampened truck demand and pushed rates downward. In order for demand to increase, inventories will need to decline further.

The more inventory businesses have, the less they need trucks to restock goods. This is among the reasons the dry van segment has struggled since early 2022, according to the Foundation report.

Flatbed freight

Load posts have declined by about 80% from last year as they follow a pattern similar to 2019.

Equipment posts are at their highest level in seven years.

Total construction spending increased while spending on highways and streets decreased month-over-month.

Housing starts were up after a 5% decrease in March.

Building materials, garden equipment and supplies dealers sales showed positive movement. This could possible bring inventory levels down and will be a trend to watch going forward.

Reefer market

Produce markets continue to underperform, but there is positive evidence that things are beginning to pick back up.

Spot rates saw a fourth consecutive month of decline, and contract rates dropped below $3 for the first time since September 2021. DAT is forecasting spot rates excluding fuel to increase by 10 cents per mile by the middle of June.

According to the U.S. Department of Agriculture, carriers in the New York region are earning more per mile than any other region. The Pacific Northwest is earning the least, at $2.58 per mile.

Capacity tightened after two months of loosening. Overall capacity is still loose, especially compared to the last couple years.

Truck market

The Transportation Service Index decreased month-over-month after seasonally adjusted decreases in rail intermodal, water, air and trucking, the OOIDA Foundation reports.

Railcar loads and pipeline showed growth.

Also down was the Cass Shipment Index, but there are some encouraging signs in terms of freight volumes.

Truck employment increased, marking the second consecutive month of gains.

New and used Class 8 sales both decreased with new sales nearly 7,000 higher than used sales in April.

Used truck prices dropped in April, but are still significantly higher than the pre-pandemic average of $42,000.

For a fifth consecutive month, fuel prices were down. After the 11-cent drop in April, the average diesel price is now 20% lower year-over-year. LL

More Land Line freight market news.