OOIDA Foundation market outlook largely unchanged

July 26, 2023

SJ Munoz


For the fourth consecutive month, the OOIDA Foundation’s market update said its outlook is negative.

In its June market outlook, the Foundation said volume and demand are soft, capacity is loose, rates are bottoming and operating costs are high.

Below is the Foundation’s breakdown by specific freight market.

Van market

June saw an increase in load-to-truck ratio, which may positively impact dry van as well.

Even still, load posts are approximately 50% below this time last year. Equipment posts remain high.

Rates are underperforming compared to seasonal trends. Spot rates are 10% below the five-year trend, while contract rates are 3% higher.

Inventory-to-sales ratios increased slightly, but monthly sales moved downward. This reversed any positive gains in April.

Furniture inventory levels are declining and household appliances remain flat. The destocking of these two industries will hopefully generate freight for trucks.

Seasonally adjusted retail sales increase for all sectors except general merchandise stores.

Flatbed market

Load posts are tracking 60% lower than last year, while equipment posts are very high.

The spread between contract and spot was flat at 59 cents, or 27% higher than one year ago.

Total construction spending increased. Spending on highways, streets and non-residential decreased.

Housing starts were down again in June and seem to have found a floor.

Building materials, garden equipment and supplies dealers inventories decreased, meaning retailers depleted their inventory levels at the expense of margins.

This could signal more retailers are righting their inventory levels, but there’s still a long way to go.

Reefer market

The downward trend in demand has reversed over the last two months with produce volumes increasing.

Spot rates moved up for the second consecutive month. Contract rates dropped 1 cent per mile.

Fruit and vegetable reefer rates are 24% below the January 2022 high.

The Great Lakes region experienced the greatest increase in pay per mile month-over-month, according to the U.S. Department of Agriculture. Only Florida saw a decrease from May to June.

Truck capacity tightened in Florida and the Pacific Northwest. California was the only region to experience loosening.

Truck market

The Transportation Service Index increased month-over-month, while the Cass Shipment Index was down 1.9% in June.

Cass believes the U.S. freight transportation industry is on the cusp of a new cycle.

Truck employment numbers overall decreased, ending three months of gains.

New Class 8 sales eclipsed used sales, which were flat in June, by nearly 4,000.

The industry has experienced overcapacity, or too many trucks, for the past several months, which has pushed freight rates downward.

A decrease of 1.7 points in the Logistics Managers’ Index marked the lowest reading in its history for the fourth consecutive month.

Fuel prices dropped 11 cents in June. This was the seventh straight month of decline.

The average diesel price is 34% lower year-over-year.

Read the full OOIDA Foundation market outlook.  LL

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