US for-hire truck tonnage saw its single-largest monthly decrease in November since early 2020 as freight demand, already falling from unsustainable 2021 levels, cooled even faster, according to the American Trucking Association (ATA). The ATA’s For-Hire Truck Tonnage Index dropped 2.5 percent from October to November, after a 1.2 percent sequential drop in October.
“The decreases match anecdotal reports of a soft fall freight season as well as a slowing goods economy generally,” Bob Costello, chief economist for the ATA, said in a statement Tuesday.
However steep in November’s drop, the index was still 0.8 percent higher than in November 2021. Last year was the strongest for the US economy in more than a decade, pushing freight demand to unusually high levels.
Truckload and less-than-truckload (LTL) carriers, especially those most reliant on retail freight, noted falling freight volumes in the fourth quarter. Industrial freight, which kept freight volumes comparatively high through most of 2022, is beginning to decline as well, with the S&P Global manufacturing PMI dropping to a 47.7 reading in November. That’s a sign of contraction.
The For-Hire Ton Miles Index compiled by Jason Miller from Michigan State University and Yemisi Bolumole from the University of Tennessee was just 0.8 percent higher in October than the same month in 2021, the index’s smallest year-over-year gain to that point in 2022. As November and December 2021 were strong months for trucking, Miller, also a Journal of Commerce analyst, expects the index to turn negative soon.
Lower industrial and retail demand coupled with excess truck capacity will keep pressure on truck rates as the 2023 contract negotiating season approaches. Trucking contracts are negotiated throughout the year, but many are completed and go “live” in the first quarter.
Logistics analysts expect spot truckload rates to bottom out in the first quarter, followed by contract rates in the third quarter. Spot rates have been falling throughout 2022, dropping as much as 40 percent.
Source: Journal Of Commerce
