OOIDA Foundation quarterly market report says certain changes likely

As a supplement to its monthly market update, the OOIDA Foundation has released its quarterly update for the fourth quarter of 2023, which indicated some changes could be coming.

Overall trucking industry

The U.S. Bank Shipment Index showed changes in spending and decelerated economic activity weighed heavily on the truck freight market. This index contracted for the sixth consecutive quarter, but it was the smallest reduction in three quarters.

Declines in volumes were more significant than spending, suggesting some reductions in freight capacity and keeping costs higher, according to U.S. Bank.

“The fact that volumes were weaker than spending in all regions further supports that freight capacity changes are likely occurring,” the Foundation report said.

Overall, the shipment index was below the five-year trend, after seeing the steepest year-over-year decline since 2019.

Owner-operator outlook

Truckload volumes increased for the second consecutive quarter but were still in negative territory and putting downward pressure on rates.

Net truckload revenue remained relatively flat quarter-over-quarter and was down compared to the previous year. This shows the next cycle is still a ways off.

C.H. Robinson, one of the world’s largest logistic platforms, failed to meet expectations as the company battles weak freight demand and excess carrier capacity.

Spot rates tend to improve when C.H. Robinson’s margins decline, and vice versa, the Foundation market report said.

Both truckload price and cost have been in negative territory since the second quarter of 2022.

Leased-on owner-operator outlook

Low demand, weak manufacturing, weaker-than-typical peak season and too much capacity continued in the fourth quarter.

The number of loads hauled via truck trended reasonably in line with historical, pre-pandemic sequential patterns, according to Landstar President and CEO Jim Gattoni.

The number of trucks provided is a good barometer for where the freight market is for the leased-on owner-operator.

That number has declined for eight consecutive quarters and year-over-year for six consecutive quarters. It’s also below the five-year trend.

“As expected, the soft macro-freight environment experienced throughout 2023 continued through the 2023 fourth quarter,” Gattoni said. “The soft macro-freight environment, along with the additional operating week in the 2022 fourth quarter, made for challenging 2023 fourth quarter to 2022 fourth quarter comparisons.”

Company driver outlook

Real wholesale trade sales, excluding petroleum due to fuel price volatility, increased for the second consecutive quarter.

The first year-over-year increase in three quarters could be a positive signal for future freight demand once inventories come under control.

Employment for the general-freight, long-distance truckload sector, which best represents OOIDA membership, decreased quarter-over-quarter as the industry continued to downsize to meet weaker demand.

This is the first year-over-year decline since the first quarter of 2021, highlighting the overcapacity facing the industry.

Average weekly earnings decreased in the fourth quarter and have decreased by 7% since the second quarter of 2021. Inflation-adjusted pay was 2% below 2019 levels.

View the full OOIDA Foundation quarterly market report. LL

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