Chart of the Week: Carrier Details Total Trucking Authorities, Outbound Tender Volume Index – USA SONAR: CDTTA.USA, OTVI.USA
Trucking demand is up while capacity is down since this time last year. This statement by itself means that the transportation market is healthier, but it also suggests that 2024 should be better in aggregate as the gap between supply and demand narrows quickly.
Truckload demand is barely a shadow of what it was during the pandemic, but it has been growing throughout most of 2023. This fact has been invisible to most carriers and 3PLs, which continue to deal with a massive glut of oversupplied capacity thanks to a record number of entrants in 2020-21 according to Carrier Details Total Trucking Authorities data set.
Tender volumes are averaging over 10% higher year over year this December and have been growing steadily since last winter. Outside of October, daily tender volumes moved higher, suggesting that economic demand for goods has grown.
On this past week’s Freightonomics episode, Zac Rogers, an associate professor of supply chain management at Colorado State and co-author of the Logistics Managers’ Index (LMI), suggested that the demand growth was a product of both inventories having been rightsized versus this time last year and growth in consumption.
While he admits that there is some ongoing concern about consumer health, the numbers are what they are. Anthony Smith, FreightWaves’ chief economist, responded to his concerns with a resounding “never bet against the American consumer.”
Possibly the most shocking revelation was in the LMI outlook of transportation prices by respondents. The LMI is divided up into multiple measures of logistics activity such as transportation and warehousing prices and capacity. Values above 50 indicate expansion while values below 50 are contractionary.
The transportation pricing component has averaged a value of 38 in 2023 and has been showing below 50 since the summer of 2022. Respondents to the November survey showed a reading of around 64 for prices in 2024, indicating that most expect rates to have bottomed.
While every forecast is an opinion on some level, the data does suggest that the supply of capacity and demand for its use is moving back toward equilibrium at a relatively fast clip.
Looking at the past 13 years of Carrier Details Total Trucking Authorities data, there has never been such a strong downward trend. This of course is following the historic growth rate — the definition of an economic bubble.
FreightWaves CEO Craig Fuller stated in this past week’s State of Freight webinar that the risk is growing for shippers in 2024. Taking an overly aggressive approach to cost cutting would be much more risky than last year. No capacity is guaranteed. Even the strongest carriers feel this level of market downturn.
While Fuller admitted that he does not definitively know that the market will turn, there are several LMI respondents that feel similarly that there will be noticeable signs of tightening by the end of next year.
Economically speaking, there are still questions, but the answers are coming into focus with time. At the very least, the U.S. has economically overachieved versus many expectations, which does provide hope for the “soft landing” many have wanted.
Unfortunately, the solution to the freight market means that several first have to lose. This has been the case for many sectors post-pandemic. But this too is passing.
About the Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
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George WS
I’m somewhat amazed, amused actually, by the hostility posted here. Since I play market trends, I found this a helpful article. As a contrarian investor, bad news and patience are my friends. Freightwaves helps in my discernment process. The trucking industry is beat up. My hunch is there’s a scuffed-up undervalued gem or two that will give investors a good return.
I currently have a 25% return on my product tanker company investments. I credit this to Freightwaves coverage of the industry. They report – I connect dots. With stop-loss orders in place, I hope for better returns as spot prices accelerate. Trucking won’t be as dynamic, but I sense an opportunity in the making. Mr. Strckland, thanks for helping with my homework!
Merchant NWT, llc
In my business, we ran into a broker (who shall not be named) in the west of the country, who takes easily 2,100 dollars out of an 5,100 dollars charge to a customer leaving the truck with 3,000 dollars for an 1,900 mile haul. That is what is wrong with this business. I understand that brokers need to make money too but 2,100 for picking up a phone?
Richard Davis
Mike S — Fox News loves weak-minded people, the ones they can tell anything to and they will believe them. You need to stop watching Fox {so-called} News. Your hero Donald Trump added 8 trillion to the deficit in four years. It was Trump that sent out what you call free money first and I’m sure you didn’t refuse your cut. Thousands of Americans were dying every day when he left office, businesses were closed and people weren’t working. YOU ARE CLUELESS, STOP WATCHING FOX.
Stephen Webster
Bring in too many trucks and drivers without a Lan for the next downturn is very expensive expensive for the people and the taxpayers
Mike S
There is no edit button! Another failure of Freightwaves.
Mike S
The discussion on fight and Freight movement utterly fails to examine extremely important details.
How can Freight and products sold and moved, when we were in a CV-19 crisis, with no one really working. I’ll tell you why. Because the government Printed 7 Trillion dollars and gave it out for free. This is a prescription for disaster.
This followed up by Biden & his cronies having Printed another 7 Trillion dollars.
The questions are: why hasn’t the stock market crashed under the weight of a 35 Trillion dollar debt and the major crime and invasion of Our Nation lead by what’s called our government. As well as the Trillion dollars spent on credit cards that people are using.
Who’s holding up the the stock market? And how long til consumer credit cards crash?
Freddy Howell
Thanks for the information and reporting that you do on the Trucking Industry. I was born into the business but when trucking was deregulated and the government took away the full disclosure laws totally took away any advantage of O/O or small companies getting a fair rate. The FMCSA, is supposed to start enforcing Brokers to report what they are actually getting paid per load.
All this being said then we come to the Confirmation process on the loads. All load Confirmation should be itemized as follows:
Rate Per Mile
Fuel Surcharge
Multi Pickups/Extra
Multi Drops/Extra
Detention Time Per Hour for Equipment and Driver
Layover Pay $500.00
This is the way it was and needs to be more than ever now.
The Government said prices went 7%, go to market and stores, compare what you spent months before and what your paying now,68% increase is closer to reality.
For the O/O and Trucking Companies equipment prices and repairs have gone up 80%. This has to change and the Government not gonna help. Thanks for What all of you do. I’ve been out over 30 years and Millions of miles.
AKA: JESSE JAMES