OOIDA releases October market report
November 23, 2022
The OOIDA Foundation recently released its October Market Update.
According to that latest report, volume is steady, demand is slowing, capacity is loose, rates are flattening, and operating costs are elevated. As a result, the outlook is restrained, says the Foundation Market Update.
Below is a summary of each of the additional four key markets the OOIDA Foundation examines each month.
This month showed there’s room for rightsizing of the van load-to-truck ratio. That ratio dropped 17.5% month-over-month in October, and 60% since January. This indicates rates for vans still have further to drop as we head into Black Friday, says the OOIDA market update.
Van spot rates declined month-over-month in October, while contract rates increased.
However, the industry is forecasting a weak peak season as DAT expects rates to continue to decline for the next few weeks.
People are still purchasing goods despite high inflation, with e-commerce representing almost 19% of total retail sales.
Clothing, electronic and furniture sales are flattening.
The decrease in load-to-truck ratios is more due to an increase in capacity than it is a decline in volumes, says OOIDA’s market update.
DAT is reporting record numbers for equipment posts.
Even still, flatbed load-to-truck ratio has declined since January and is 85% below the five-year tend, putting further downward pressure on rates.
Both spot and contract rates declined for the third consecutive month. Spot rates are 12% above the five-year trend, and contract rates are 27% higher.
Winter is typically a slower season for flatbed freight, so rates are likely to continue to decline.
Market forces continue to weaken as new orders for construction materials decline even as total manufacturing increased overall.
Additionally, housing starts dropped significantly in September, mostly due to a decline in single-family housing starts.
Lastly, building materials, garden equipment and supplies dealers retail sales decline month-over-month, but are still 22% above the five-year trend.
Flatbed volumes are expected to decline due to the typical winter trend.
Reefer saw its third straight month of decreases while DAT reports a record number of equipment posts, similar to flatbed.
Ratios are following a more traditional pattern.
Spot rates dropped for the fifth consecutive month, but contract rates ticked up slightly.
DAT is forecasting spot rates to level out after sliding through the middle of November.
Fruit and vegetable reefer rates decreased by 20 cents per mile in October. That’s still 12.3% higher than the five-year trend.
Volumes also declined, and truck capacity tightened, leading to the expectation of continued falling spot rates.
Overall freight market
Employment numbers remain strong and job openings continue to grow.
Durable as well as nondurable goods increased in September after a decrease in August.
Inflation is high, but wages and salaries are 17.4% higher than the five-year trend. That has kept retail sales elevated.
Rates for expeditor services, hot-shots and general LTL remain strong but may have peaked.
Total manufacturing increased again in September. This suggests activity is still going strong, and there should still be plenty of freight.
Ocean and rail exports increased month-over-month, but imports dropped by 10.3%.
Ports are becoming less congested, especially on the West Coast.
Intermodal continues to struggle with service issues with some railroads limiting the number of boxes accepted each week from ports.
More Land Line business news.