U.S. Bank Index: Truck freight market ends 2023 with double-digit drops in volume, spending

Rhea-AI Summary

The U.S. truck freight market saw a decline in shipment volume and spending in the fourth quarter of 2023 compared to the same period in 2022. Shipment volume was down 15.7% and spending by shippers contracted 13.5%. The largest drop in volume in the history of the Index was observed. All regions experienced a slowdown in volume and spending, with the Southeast and Northeast being the most affected. However, the West was one of the two regions to see an increase in spending on a quarter-over-quarter basis. The Midwest shipment volumes contracted the least among all regions compared to the fourth quarter of 2022.

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• The U.S. truck freight market experienced a significant decline in shipment volume and spending, with the largest drop in volume in the history of the Index. All regions experienced a slowdown in volume and spending, indicating a challenging market for truck freight. The Northeast was one of the most challenged truck freight markets in 2023, with consistent volume contractions and spending declines in recent quarters.

Insights

Economist

The downturn in the U.S. truck freight market, as indicated by the U.S. Bank Freight Payment Index, reflects broader economic trends that are critical for businesses and investors to consider. The significant year-over-year declines in shipment volume and spending by shippers are indicative of a cooling demand for goods. This contraction could be symptomatic of a shift towards a more balanced inventory level after the supply chain disruptions experienced in recent years.

From an economic standpoint, the reduction in freight activity might suggest an impending slowdown in economic growth, as transportation is often considered a leading indicator of economic health. The regional disparities highlighted, with the Southeast and Northeast experiencing the sharpest declines, could point towards uneven economic conditions across the country. Investors and businesses should monitor these trends closely as they may have implications for regional economic policies and investment decisions.

Market Research Analyst

Examining the truck freight market from a market research perspective, the data from the U.S. Bank Freight Payment Index reveals not only a decrease in demand for freight services but also potential shifts in consumer behavior. As consumers prioritize experiences over goods, as mentioned by Bob Costello, this could lead to a sustained change in the freight market dynamics. Companies in the logistics sector may need to adjust their strategies accordingly, potentially focusing on diversification or enhancing efficiency to maintain profitability in a declining volume environment.

Furthermore, the regional analysis provided in the Index can be invaluable for businesses looking to optimize their supply chains. Understanding which regions are experiencing less severe declines, such as the Midwest, could inform decisions on where to allocate resources and how to adjust distribution networks to align with the current market conditions.

Financial Analyst

From a financial analysis perspective, the decline in shipment volumes and spending detailed in the U.S. Bank Freight Payment Index has direct implications for companies within the trucking and broader transportation sector. The largest year-over-year volume drop in the history of the Index could lead to downward pressure on revenues for freight companies, which may, in turn, affect their stock prices and overall market valuation.

Investors should closely scrutinize the balance sheets of these companies to assess how they are managing costs in the face of reduced demand. The report's indication of trucking supply potentially coming into balance with demand could mitigate some of the negative impacts if companies have been proactive in adjusting their capacity. However, if this balance leads to price stabilization or even deflation in freight rates, it could further compress margins for companies in the sector.

Fourth quarter shipments down 15.7% compared to same period a year earlier, while spending by shippers dropped 13.5%

MINNEAPOLIS--(BUSINESS WIRE)-- The U.S. truck freight market ended 2023 with further declines in both shipment volume and spending, according to the latest U.S. Bank Freight Payment Index. Compared to the same period in 2022, fourth quarter shipment volume was down 15.7% while spending by shippers contracted 13.5%. The year-over-year drop in volume was the largest in the history of the Index.

“The truck freight market is feeling the impacts of companies reducing inventories significantly as well as consumers continuing to spend more on experiences over goods,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations. “We’ll watch carefully in coming quarters if companies complete their inventory reduction efforts and begin to restock, which would help boost trucking.”

All regions in the fourth quarter felt the slowdown in volume versus the same quarter in 2022, but it was most acute in the Southeast (-25.4%) and Northeast (-23.8%). Spending also dropped in all regions year over year, with the most significant in the Midwest (-17%).

“Throughout 2023, our Index has consistently revealed significant declines in spending by shippers. While spending dropped again in the fourth quarter, we are seeing indications that might suggest trucking supply is coming into balance with demand,” said Bobby Holland, director of freight business analytics, U.S. Bank.

National Data
Shipments
Linked quarter: -10.9%
Year over year: -15.7%

Spending
Linked quarter: -1.4%
Year over year: -13.5%

Regional Data
West
Shipments
Linked quarter: -2.9%
Year over year: -16.3%

Spending
Linked quarter: 0.2%
Year over year: -7.4%

The West was one of two regions to see an increase in spending on a quarter-over-quarter basis, though spending by shippers was still down -7.4% compared to a year earlier. Improved West Coast import volumes may have helped the region’s shipment volumes, which were still down, but less so than most other regions.

Southwest
Shipments
Linked quarter: -18.2%
Year over year: -15.9%

Spending
Third quarter: -2.7%
Year over year: -10.4%

After slowing in the third quarter, the Southwest truck freight market contracted significantly in the fourth quarter. The region, which was the best for truck freight in 2022 and the first half of 2023, experienced slower retail and home sales in the first half of the fourth quarter, which weighed on truck freight volumes.

Midwest
Shipments
Linked quarter: -8.6%
Year over year: -8.9%

Spending
Linked quarter: 1.2%
Year over year: -17.0%

Midwest shipment volumes contracted the least among all regions compared to the fourth quarter 2022. Soft manufacturing, consumer spending and housing activity in the region have likely contributed to depressed freight volumes, which have persisted for the last few years.

Northeast
Shipments
Linked quarter: -9.4%
Year over year: -23.8%

Spending
Linked quarter: -2.5%
Year over year: -12.5%

The Northeast was one of the most challenged truck freight markets in 2023. Headwinds for the market include consumer spending moderation and manufacturing activity softening.

Southeast
Shipments
Linked quarter: -14.5%
Year over year: -25.4%

Spending
Linked quarter: -4.1%
Year over year: -11.4%

The Southeast had the largest year-over-year drop in volume among all regions. The region has had consistent volume contractions – as well as spending declines – in recent quarters.

To see the full report including in-depth regional data, visit the U.S. Bank Freight Payment Index website. For more than 25 years, organizations have turned to U.S. Bank Freight Payment for the service, reliability, and security of a full-service, federally regulated financial institution. The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment.

About U.S. Bank

U.S. Bancorp, with more than 70,000 employees and $663 billion in assets as of December 31, 2023, is the parent company of U.S. Bank National Association. Headquartered in Minneapolis, the company serves millions of customers locally, nationally and globally through a diversified mix of businesses including consumer banking, business banking, commercial banking, institutional banking, payments and wealth management. U.S. Bancorp has been recognized for its approach to digital innovation, community partnerships and customer service, including being named one of the 2023 World’s Most Ethical Companies and Fortune’s most admired superregional bank. To learn more, please visit the U.S. Bancorp website at usbank.com and click on “About Us.”

View source version on businesswire.com: https://www.businesswire.com/news/home/20240201773777/en/

Todd Deutsch, U.S. Bank Public Affairs & Communications

todd.deutsch@usbank.com | 612.303.4148

Source: U.S. Bancorp

FAQ

What was the year-over-year change in shipment volume in the U.S. truck freight market?

The year-over-year change in shipment volume in the U.S. truck freight market was a decline of 15.7% in the fourth quarter of 2023 compared to the same period in 2022.

What was the year-over-year change in spending by shippers in the U.S. truck freight market?

The year-over-year change in spending by shippers in the U.S. truck freight market was a contraction of 13.5% in the fourth quarter of 2023 compared to the same period in 2022.

Which region experienced the largest year-over-year drop in volume in the U.S. truck freight market?

The Southeast experienced the largest year-over-year drop in volume among all regions in the U.S. truck freight market, with a decline of 25.4% in the fourth quarter of 2023 compared to the same period in 2022.

What was the year-over-year change in spending in the Midwest region of the U.S. truck freight market?

The year-over-year change in spending in the Midwest region of the U.S. truck freight market was a contraction of 17.0% in the fourth quarter of 2023 compared to the same period in 2022.