OOIDA Foundation May market update

Increased demand in May was likely due to holidays and CVSA’s International Roadcheck, meaning it’s unlikely to continue to affect the freight market in a meaningful way, according to the OOIDA Foundation’s latest market update.

Outside of demand, capacity is loose and operating costs are high, while rates are firming, the Foundation report said.

Spot Market Cycle Indicator

Van market

All but three regions saw an increase in the load-to-truck ratio. The largest increase was by 48% in the Southeast.

The spread between spot rates and contract rates decreased and was better year-over-year.

The DAT extended forecast projects spot rates excluding fuel will rise again in June and continue to do so through October.

Inventory-to-sales ratios remained flat and have fallen 4% since peaking in June 2023. Demand has failed to increase, leading to a continued freight downcycle despite inventory rightsizing. Inventory levels are lower now than at the start of 2023.

Flatbed market

The load-to-truck ratio was down from the previous month but increased year-over-year for just the second time in 25 months. Ratios were the most favorable in the Southeast, South Central and Carolina regions.

DAT predicts flatbed spot rates will steadily decrease through the end of 2024.

Total construction, highways and streets and non-residential spending decreased month-over-month in April. Housing starts rebounded, as homeowners are reluctant to put their current homes on the market due to the lower mortgage rates they secured during the pandemic. This has created a scarcity of homes for sale, causing individuals to build instead of buy.

Building materials, garden equipment and supplies dealers inventories continue to struggle with high inventory levels.

Reefer market

Demand jumped in May following the usual seasonal trend.

According to the U.S. Department of Agriculture, carriers in the Florida region experienced the greatest increase in pay-per-mile month-over-month. This aligns with Mother’s Day, as most of the flowers that enter the U.S. do so via Miami.

Most regions experienced an increase in truck volumes.

Reefer truck capacity tightened again following several months of loosening, as rates ticked upward overall. Availability was down 4% over the previous year, but this was primarily due to a tough comparison. Capacity remained mostly flat across the country.

Trucking market

The Transportation Service Index was down month-over-month and was lower than a year earlier.

“Some pockets of tightness are appearing in reefer and flatbed markets, but the truck market is still well-supplied, with private fleets increasingly competing for spot loads recently,” the Cass Shipment Index said.

Trucking employment numbers decreased after adjustments and were down year-over-year. This was the 12^th consecutive month of decreases.

The industry was still suffering with overcapacity. However, demand for used trucks continued to rise despite strong headwinds in the freight market due to falling truck prices.

Although it was encouraging to see transportation prices on the Logistics Managers’ Index expanding, this has happened before in the past six months and has been temporary every time.

It’s becoming more likely that the next cycle won’t begin until the second quarter of 2025.

Read the full May market outlook on the OOIDA Foundation website. LL

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