OOIDA Market Update labels future outlook negative

In its March Market Update, the OOIDA Foundation said volume and demand are flat while capacity is very loose and rates are bottoming/dropping.

Add in the current high operating costs and the future outlook is negative, according to the latest Foundation market report.

Below is a breakdown by specific market.

Van market

March saw another decrease in load-to-truck ratios as it continues to underperform compared to the typical seasonal pattern.

A drop of 19% month-over-month moves the ratio 46% below the five-year trend.

Spot and contract rates both decreased. However, the spread between the two remained at 58 cents per mile.

Inventory-to-sales rates also dropped, but are elevated overall.

The sidewise trend for retail sales continues.

Flatbed outlook

Load posts increased again, and are at the highest level in seven years.

Flatbed load-to-truck ratios also increased for the fourth consecutive month and is the only equipment type with positive movement.

Even still, that ratio is 58% lower than the five-year trend.

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

Housing starts dropped after a 10% increase in February.

As retailers seek to deplete their inventories, building materials, garden equipment and supplies dealer sales declined.

Reefer rates

The downward trend in demand continued as produce volumes underperform as a result of inclement weather.

Spot rates saw a third straight month of decline, while contract rates dropped by almost 10 cents.

Fruit and vegetable reefer rates are 27% below their high in January 2022.

The slowest reefer season typically lasts until April, but weather may delay that this year.

Volumes jumped significantly in March and are up 91% since September 2022.

Truck capacity loosened again, negatively affecting rates.

Truck market

Freight volumes increased in February due to seasonally adjusted increases.

The Cass Shipment Index was down 3.8% month-over-month when seasonally adjusted.

Truck employment saw a gain of 5,700 jobs. According to some analysts, the increase in jobs is due to large carriers who think the freight market will improve in the second half of 2023.

Sales of new and used Class 8 trucks both increased. The Logistics Managers’ Index reported the lowest reading in its history. Many were hoping rates would bottom out in early spring, but it appears they have still have further to fall – especially dry van and reefers.

Fuel prices dropped 20 cents in March, the fourth consecutive month of decline.

Surprisingly, used truck prices increased and are still slightly higher than the pre-pandemic average of $42,000.

Despite inflation, people are still purchasing goods, but at a slower pace and in different ways.

Imports and exports increased month-over-month.

Containerships awaiting berth is down 91% since January 2022.

The Foundation expects more freight will continue to shift to truck causing further slides in both carloads and intermodal.

View the full OOIDA Foundation March Market Update here. LL

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