Logistics Update | How Are U.S. Truck Carriers Coping Amid Weak Freight Demand?

This data reflects the current state of the U.S. freight market, showing persistently weak demand, particularly in the trucking sector.

Cass Freight Index

Cass indicates that shippers' increased use of private fleets has impacted demand in the for-hire transportation market.

According to the Cass Freight Index, U.S. shippers' freight expenditures fell 18% year-over-year (YoY) in March, with a projected 9% decline for 2024. This is primarily due to rebalancing U.S. ocean freight volumes and transportation rates.

Amid the YoY decline, freight volumes fell for the 14th consecutive month, dropping 3.6% YoY—the smallest annualized decline since April 2023.

The Cass Freight Index, released Monday, is the latest indicator signaling the freight market’s struggle to find a catalyst to break free from its two-year slump. The index should alleviate some shippers’ concerns about a potential pricing inflection point in 2024.

So far, rising U.S. import volumes have not significantly boosted trucking demand. Despite the expansion of U.S. manufacturing, as indicated by the S&P Global and Institute for Supply Management’s Purchasing Managers’ Index (PMI), recent new orders may not yet be translating into highway freight movement.

PPI Trends

Per FTR Transportation Intelligence and Truckstop.com data (as of April 12), total truckload spot market volumes rose 10% YoY but remained 24% below the five-year average.

In March, the U.S. Producer Price Index (PPI) for long-distance truckload freight was largely flat, inching up from 175.6 in February to 175.8. This all-in truckload pricing measure was down 6.5% YoY and 21.6% from two years ago.

The U.S. less-than-truckload (LTL) PPI rose 0.5% from February to March and 2.5% YoY. Since December, the LTL PPI has climbed 3.9%.

Demand "Broadly Stable"

Despite YoY declines in freight volumes and pricing, Cass sees signs of growth.

Cass noted that, seasonally adjusted, the shipment component of its index rose ~2% from Q4 2023 to Q1 2024. However, unadjusted data showed no increase, suggesting shipments outperformed expectations.

Cass reported that for-hire freight demand was "broadly stable," with the shipments index dipping just 0.2% seasonally adjusted from February to March. This followed a 7.3% surge in February, which rebounded from January’s weather-related slowdown.

Cass emphasized that actual demand may be stronger than the for-hire data suggests, as private fleet growth masks the true scale of demand. Shippers are increasingly using their own equipment rather than tendering freight to carriers.

A Deflationary Year

While YoY rates remain depressed, they are gradually climbing. Unadjusted, Cass’s inferred rate index rose 0.2% from February to March. Seasonally adjusted, it increased 1% month-over-month (MoM).

The YoY decline in Cass’s inferred rates narrowed to 15.4% (vs. 16% in February and 18.1% in January).

Cass stated: "Even if rates rise from here (an increasingly likely scenario), 2024 will likely remain deflationary for freight pricing."

The Cass Freight Index covers freight volumes across all domestic transport modes, including truckload, LTL, rail, and parcel pricing.

The narrower Cass Truckload Linehaul Index rose 0.2% MoM in March (after a 0.1% February increase) but was down 4.7% YoY.

Conclusion

Despite manufacturing expansion, trucking demand growth remains sluggish, with the U.S. freight market lacking a catalyst to accelerate volumes. The true demand level remains difficult to assess accurately.