Trucking freight news headline adjacent to a futuristic, transparent freight truck with interconnected digital dots to represent a supply chain.

Trucking Freight News & Trends

Trucking freight news and trends are of special interest to transportation, logistics, and supply chain professionals. Many shippers are aware that after freight rates seemingly hit rock bottom last year, transportation leaders expressed optimism demand and rates would rebound in 2024.

However, for many carriers, that is not what happened. At least not yet. The long-lasting ‘freight recession’ continues to cast a shadow over the trucking industry.

In this post, we reveal current freight transportation trends and explain what they mean to shippers like you. We will also share recent public comments made by trucking executives and analysts to make you aware of their market perceptions and what expectations they have moving forward. Plus, you will gain insights on how other shippers are saving money today.

One important thing to keep in mind is the low spot rates you are paying today won’t last forever. In fact, according to a recent Logistics Managers’ Index report, professionals across the supply chain expect transportation rates to rise over the next year.1

So, before the trucking freight market rebounds, this may be a great time for you to negotiate carrier contract rates. SSI can help you optimize and negotiate your freight contracts. Further, we can ensure you maximize your savings with our best-in-class SSI freight audit and freight payment services.

IF US IMPORTS ARE UP, WHY IS THE TRUCKING MARKET DEPRESSED?

You may recall reading our recent US ports blog post, which reported on the fast-rising tide of Q1 import volume. Further, last month we communicated that with the supply chain nearshoring boom, Mexico overtook China as the top source of goods imported to the US.

So, why aren’t all these imports filling up the trucking market’s excess capacity? That’s the million-dollar question! Some relevant insights may be gleaned from a fresh CNBC Supply Chain Survey as reported in this article.2

According to the results, the risk of an East Coast longshoreman’s strike, Panama Canal drought restrictions, and Red Sea diversions are pushing more US shipping volume to the West Coast ports. Guess what? 77% of the survey respondents say rail is now their preferred method of transportation for shipping goods from the West to East Coast.

Also, a growing number of shippers are implementing truck-to-rail or rail-to-truck shipping. Known as transloading, this logistics strategy can save time and money as products are transferred from one mode of transport to another to efficiently get products to their final destination.3

The popularity of transloading is a noteworthy development. In fact, some shippers who once sent most of their containers into one port, where the contents were divided and dispersed across the US, are instead first dividing the content overseas. The products are then shipped in multiple containers to different ports, closer to regional distribution centers. These smaller loads are then transloaded.4

Based on the CNBC reporting, here are a few key points we discern.

  • Truckload (TL) freight carriers are losing cross-country volume to the railways.
  • TL freight carriers are losing transloaded volume to railways and less-than-truckload (LTL) carriers.
  • If this transloading practice proliferates, it will do so at the expense of long-haul TL carriers.

MANY RECENT IMPORTS ARE ALSO TRANSPORTED VIA INTERMODAL FREIGHT

Intermodal shipping, in which an entire shipping container is transferred from one mode of transportation to another, can also provide cost-saving benefits to shippers. Total intermodal Q1 volumes rose 8.8% year over year (YoY), according to the Intermodal Association of North America (IANA).

Joni Casey, the CEO of IANA said, “international volume growth was the driver for continuing intermodal industry gains in the first quarter.” In fact, Q1 international volume soared 18% while intermodal domestic trailer volume plummeted nearly 25%.5

So, based on the IANA  data, it appears the railroads are benefitting from the growing volume of imports, much more so than trucking companies.

Per Union Pacific, rail can be a great choice for moving large freight volumes over long distances.

  • A train can haul the freight equivalent of 300 trucks.
  • Rail can offer a comparable speed to trucks (less prone to congestion & no road-construction delays).
  • Rail provides shippers with a lower cost-per-ton-mile (the cost of moving one ton one mile).
  • Trains have a lower environmental impact, which is important to shippers who measure supply chain emissions (rail can move one ton of freight nearly 500 miles per gallon of fuel).6

Q1 TRUCKING OVERVIEW – THE FREIGHT RECESSION ROLLS ON

In the first quarter of this year, trucking freight volumes fell more than 21% year-over-year (YoY) while freight spending fell nearly 28%. It was the eighth straight quarter of YoY volume declines and fifth straight drop in spending.7

Truck utilization, which was near 100% in 2022, has fallen to the mid- to high-80% range.8

Aside from some shippers choosing rail more frequently, what the heck happened? Well, the trucking industry experienced a significant period of growth after the pandemic hit, which led to a surge in much-needed capacity. However, two years ago, demand starting dropping while capacity remained high. Even now, due to truck-manufacturing backlogs, many carriers are still receiving new trucks and equipment ordered long ago. Most carriers are hesitant to take their trucks out of the freight market.9

Yet, aside from Yellow Freight, no other large carriers have shuttered. In fact, several carriers gobbled up assets at Yellow bankruptcy auctions in order to expand their networks.

It’s possible and perhaps inevitable that other financially strapped carriers will exit the market. However, for now, overcapacity remains the chief issue prolonging trucking’s freight recession.

Q1 TRUCKING FREIGHT NEWS & TRENDS: TRUCKLOAD OVERVIEW

The TL market in Q1 was described as “dismal”, “disappointing”, “challenging”, and “could not have been much worse”, in a recent Transport Topics article.10

According to a recent TD Cowen/AFS Freight Index report, Q1 saw a 16.7% YoY decrease in cost per shipment in the TL market. The data extended a pattern of consecutive quarterly YoY declines of this metric. The good news for freight companies is volume declines seem to have moderated. Yet, there is not yet a clear indication of TL market recovery in the near term.11

The American Trucking Associations (ATA) is the largest national trade association for the industry. The ATA has tracked trucking tonnage for more than 40 years. As reported in this state of the industry update in Trucking Dive, ATA Chief Economist Bob Costello said, “Tonnage in March suggests that truck freight volumes remain lackluster, and it is clear the truck freight recession continued through the first quarter.”12

The immediate outlook is not exactly bright. In fact, April TL rates actually fell 4.4% YoY, per the Bureau of Labor Statistics’ Producer Price Index.13 Yet, multiple industry analysts believe TL volumes will increase in the second half of this year.14

Q1 TRUCKING FREIGHT NEWS & TRENDS: LESS-THAN-TRUCKLOAD OVERVIEW

The LTL market, in which multiple loads are carried for several customers on the same truck, is a bit healthier than the TL market. In fact, LTL rates jumped 8.2% in April YoY after a 5.2% jump in March.15

This LTL bounce ahead of peak season may be a surprise to shippers who were counting on low spot rates through 2024.

Old Dominion Freight Line (ODFL) is North America’s second-largest LTL shipper (FedEx is #1). Rankings are based on 2023 revenue and published by Transport Topics on a Top Less-Than-Truckload Carriers list.16

In Q1, ODFL reported a modest 2.6% rise in profits. Company leaders see signs that overall demand may be improving. Per, Adam Satterfield, ODFL’s Chief Financial Officer, the carrier is experiencing its strongest growth from retail customers and is hopeful for a rebound in manufacturing shipments.17

XPO also ranks high on the Transport Topics LTL list and the company paints a rosier picture than most carriers. In Q1, XPO reported LTL operating income soared by nearly 50%. LTL yield, shipments and tonnage all increased.

Further, XPO has focused in recent years on implementing service improvements, which have made their general rate increases (GRIs) more palatable to customers, per XPO Chief Strategy Officer, Ali Faghri. Also, the carrier has targeted high-yield local customers and offered premium services including trade show trucking, Mexico cross-border services, and retail store services.18

Saia is another LTL carrier travelling on the sunny side of the street. The company posted a 19.2% increase in profits in Q1 and has adopted a growth mindset. Since the start of the year, Saia has already acquired more than 2,000 trailers, 400 tractors and 400 forklifts as part of their plan to spend more than $400 million on fleet growth and modernization in 2024.

Per Saia CEO, Fritz Holzgrefe, “so far in 2024, we have opened four terminals in new markets and relocated four additional terminals to new sites in existing markets. We believe this year will mark an unprecedented year of investment in our company, with a total of 15-20 new terminal openings planned for the year.”19

XPO, Saia, and Estes Express Lines were the most active bidders in the Yellow bankruptcy auctions. Reportedly, all three are racing to update and re-open Yellow’s former terminals. The carriers view the capacity additions as essential density in their networks to position themselves with improved service and profitability as LTL freight demand rebounds.20

SHIPPERS MAY SAVE BY CONSOLIDATING FREIGHT AND SWITCHING FROM LTL TO TRUCKLOAD

Want to cut your trucking freight transportation costs? With TL rates declining and LTL rates increasing, now may be a good time to consider consolidating shipments from LTL onto TL carriers. Per reports, to an extent, Old Dominion and Saia are feeling the pain of this emerging trend. Some of their sophisticated national customers have already made this transition.21

We don’t know who those customers are of course. However, Walmart, provides an example of how the world’s largest retailer is taking advantage of lower TL rates.

The retailer just opened a nearly 500,000 square foot high-tech consolidation center near Chicago – the third of its kind in the US. This allows Walmart’s vast network of suppliers to deliver merchandise to just a few key hubs. Walmart then consolidates these LTL shipments into full truckload shipments which are shipped to one of Walmart’s 42 regional distribution centers. Freight consolidation saves Walmart money and accelerates the process of getting products on store shelves.22

Of course, no other shipper has Walmart’s size and scale. But if your company can take a page from their playbook and consolidate freight, you may also save by shipping more goods via TL in 2024.

OTHER TRUCKING TRENDS OF INTEREST

The prolonged overcapacity conundrum is overshadowing news of a shift in national transportation flow patterns, per Zach Strickland, a market analyst at FreightWaves. By studying the FreightWaves Outbound Tender Volume Index (OTVI), Strickland concludes that Phoenix and Dallas are hot growth markets.

In just the past 5 years, demand in Phoenix is up 60% and Dallas is up 50%. Meanwhile, the top 2 markets, Ontario, California, and Atlanta have lost significant share as supply chains and freight transport patterns shift. See Strickland’s analysis here.23

One may argue this next trend is not so hidden. As the financial condition of some carriers weaken, it’s likely that merger and acquisition activity will increase.

In fact, the nation’s top truckload freight carrier, Knight-Swift Transportation, is open to acquiring one or more (LTL) carriers in 2024. Why? The LTL market provides a larger base of potential customers and tends to have higher operating margins and stable earnings. On a recent quarterly earnings call, Knight-Swift executives mentioned their current LTL business made up about 15% of their Q1 revenue while yielding about the same operating profit as their much larger TL business segment.24

Specifically, Knight-Swift hopes to gain a foothold in the Southwest and Northeast regions. In the regions it currently serves, the trucking giant plans to open 32 new terminals this year — a 16% increase in its LTL door count compared to the end of 2023, per CFO Andrew Hess.

“Filling out a super-regional network in the short term and ultimately creating a national network will allow us to participate in more freight and enable us to find opportunities to further support our existing truckload customers with LTL capacity,” Hess said.25

ABOUT SSI

In this Trucking Freight News & Trends post, we have provided an update to inform shippers on market conditions and provided ideas on how they may cut transportation costs.

No matter how you transport your products, SSI can protect you from wasting money on your shipments with our best-in-class freight audit solutions.

At SSI, we transform the complexity of global freight audit into cash savings and supply chain intelligence, providing actionable insights to maximize your profit potential.

  • Customizable solution scales with your growing and dynamic business needs
  • Automated freight audit drives savings to your bottom line
  • Accurate, timely freight payment process renumerates carriers in the world’s most common currencies
  • Actionable business intelligence supports your supply chain optimization efforts
  • Cutting-edge data visualization facilitates your analysis of data and trends

Want to learn more? Our team is eager to help you save money. Contact SSI.

Footnotes:
1. Zac Rogers, PhD, “April 2024 Logistics Manager’s Index Report”. May 7, 2024, as published by the Logistics Managers’ Index.
2, 3. Lori Ann LaRocco, “Latest shipping data reveals that mid-range retail is the new consumer price sweet spot“. May 17, 2024, as published by CNBC.
4. Lori Ann LaRocco, “A trucking and rail strategy that boomed during pandemic shocks is heating up again“. March 25, 2024, as published by CNBC.
5. MH&L Staff, “Intermodal Makes Gains in Q1“. May 14, 2024, as published by Material Handling & Logistics.
6. Union Pacific Track Record, “Pros & Cons of Rail: Shipping Cost, Speed, Capacity and More“. January 10, 2023, as published by Union Pacific.
7. Thomas Wasson, “Shippers move LTL freight to full truckload”. May 2, 2024, as published by FreightWaves.
8. Pamella De Leon, “Growth in freight market hasn’t turned a corner, FTR analysts say”. May 10, 2024, as published by Commercial Carrier Journal (CCJ).
9. Connor D. Wolf, “Trucking Limps Through Another Quarter in Q1“. May 16, 2024, as published by Transport Topics.
10, 14. Keiron Greenhalgh, “Executives, Analysts See Less Cloudy Truckload Market Outlook“. May 15, 2024, as published by Transport Topics.
11. TD Cowen & AFS, “TD Cowen/AFS Freight Index”. April, 2024, as published by AFS Logistics.
12. Trucking Dive Team, “Trucks, trailers, tonnage: What transport data says about the state of the industry“. Updated May 9, 2024, as published by Trucking Dive.
13, 15. David Taube, “LTL rates make gains as TL stalls“. May 21, 2024, as published by Trucking Dive.
16. Transport Topics staff, “Top Less-Than-Truckload Carriers”. As published annually by Transport Topics.
17. Dean Seal, “Trucker ODFL Earnings Rise on Cost Cuts, Sales Growth“. April 24, 2024, as published by The Wall Street Journal.
18. Colin Campbell, “‘Firing on all cylinders’: XPO’s LTL operating income soars by 50% in Q1“. May 3, 2024, as published by Trucking Dive.
19. Keiron Greenhalgh, “Saia Q1 Profit Increases 19.2% as Revenue Rises 14.3%“. April 30, 2024, as published by Transport Topics.
20. Colin Campbell, “XPO, Estes, Saia begin to reopen Yellow’s former terminals“. April 19, 2024, as published by Trucking Dive.
21. Colin Campbell, “LTL carriers report shippers shifting freight to truckload“. May 2, 2024, as published by Trucking Dive.
22. Dan Berthiaume, “Walmart opens third high-tech consolidation center“. April 30, 2024, as published by Chain Store Age.
23. Zach Strickland, “Abundant capacity is hiding freight pattern shifts“. April 27, 2024, as published by FreightWaves.
24. Paul Page, “Knight-Swift Is Hunting for Trucking Acquisitions”. April 26, 2024, as published by The Wall Street Journal.
25. David Taube, “Knight-Swift eyes LTL expansion in Northeast, Southwest”. May 7, 2024, as published by Trucking Dive.

SSI blog post entitled: Trucking freight news & trends.