Chart of the Week: Carrier Details Total Trucking Authorities, Outbound Tender Volume Index – USA SONAR: CDTTA.USA, OTVI.USA
Trucking demand is up while capability is down since this time last yr. This statement by itself implies that the transportation market is healthier, but it surely also suggests that 2024 ought to be higher in aggregate because the gap between supply and demand narrows quickly.
Truckload demand is barely a shadow of what it was in the course of the pandemic, but it surely has been growing throughout most of 2023. This fact has been invisible to most carriers and 3PLs, which proceed to take care of an enormous glut of oversupplied capability because of a record variety of entrants in 2020-21 in keeping with Carrier Details Total Trucking Authorities data set.
Tender volumes are averaging over 10% higher yr over yr this December and have been growing steadily since last winter. Outside of October, every day 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 each inventories having been rightsized versus this time last yr and growth in consumption.
While he admits that there may be some ongoing concern about consumer health, the numbers are what they’re. Anthony Smith, FreightWaves’ chief economist, responded to his concerns with a powerful “never bet against the American consumer.”
Possibly essentially the most shocking revelation was within the LMI outlook of transportation prices by respondents. The LMI is split up into multiple measures of logistics activity similar to transportation and warehousing prices and capability. Values above 50 indicate expansion while values below 50 are contractionary.
The transportation pricing component has averaged a worth of 38 in 2023 and has been showing below 50 for the reason that summer of 2022. Respondents to the November survey showed a reading of around 64 for prices in 2024, indicating that the majority expect rates to have bottomed.
While every forecast is an opinion on some level, the information does suggest that the provision of capability and demand for its use is moving back toward equilibrium at a comparatively fast clip.
the past 13 years of Carrier Details Total Trucking Authorities data, there has never been such a robust downward trend. This in fact is following the historic growth rate — the definition of an economic bubble.
FreightWaves CEO Craig Fuller stated on this past week’s State of Freight webinar that the chance is growing for shippers in 2024. Taking a very aggressive approach to cost cutting can be way more dangerous than last yr. No capability is guaranteed. Even the strongest carriers feel this level of market downturn.
While Fuller admitted that he doesn’t definitively know that the market will turn, there are several LMI respondents that feel similarly that there can be noticeable signs of tightening by the tip of next yr.
Economically speaking, there are still questions, however the answers are coming into focus with time. On 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 answer to the freight market implies that several first should lose. This has been the case for a lot of sectors post-pandemic. But this too is passing.
Concerning the Chart of the Week
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