As summer draws to a close, the U.S. truck inventory market is heating up, and loadings are also increasing as the peak trucking season arrives. This has led to a tightening of momentum and loading truck ratios in some inland distribution markets, although this is not universally the case. But truck drivers shouldn't get too excited about demand, and shippers don't need to panic about truck supplies either. Dean Croke, chief analyst at DAT Freight & Analytics, said the long-term truck load outlook remains “dim” by 2025.
“Over a longer period of time, we still saw weak sales, but after Labor Day, outbound on-load truck loading capacity at major distribution points such as Allentown, NC, Charlotte, North Carolina, and Atlanta became increasingly tense.” Crook toldBusiness Magazine。 After a slowdown after July 4, seasonal growth usually occurs in September. This year,The volume of shipments increased in July,Then there was a decrease in August. As the volume of outflows increases, the immediate exchange rate tends to increase, although the increase is not significant. In the Allentown market, DAT's outbound fares to Charlotte increased from an average of $1.79 per mile in August to $1.87 per mile for the past 7 days through Thursday. That's still lower than the DAT average rate of $2.01 per mile for dry goods vehicles through September to date, compared with an average rate of $2.12 per mile in September a year ago.
Crook said freight growth in some inland distribution markets was earlier than usual, with month-end sales, Labor Day weekend and early Halloween retail sales all helping to drive up the on-premises truck load. Some of the goods shipped ahead of time may include a strike by dock workers in Eastern and Gulf of Mexico coastal ports this fall that could cause any potential disruption to imported goods before they arrive in the United States.
London's DAT load-to-truck ratio (an indicator of demand) on Wednesdays is 9.9; in comparison, the average load of 6.5 cargoes per truck over the past 30 days, and Wednesday, Charlotte and Atlanta have a truck load ratio of 5.4 and 5, respectively. “They ship large volumes of outbound cargo from Allentown to Charlotte, Boston, and Chicago, and according to DAT's market condition index, truck traffic in Allentown, Philadelphia, and Harrisburg, Pennsylvania is expected to be tense this week.” Crook said.
However, the increase in demand in the distribution hot spot market has not translated into increases in sales or prices in other regions. Overall, DAT spot truck shipments fell 17% year-over-year in the last week of August, the lowest level since the same period in 2017, and TruckStop.com found a similar pattern in its data. Although cargo volumes fell 7.6% from the same week a year ago, down 35% from the five-year average at the end of August, total shipments of Truckstop pallets grew by 6% year-on-year. This does not necessarily mean a decrease in overall freight, just that the volume of freight on the truck stock market has not changed. But the decline does indicate that overall demand is weak, with contract carriers able to handle most of the freight provided by customers.
Manufacturing weakness may be the biggest constraint on truck demand, with the S&P global U.S. manufacturing Purchasing Managers' Index (PMI) shrinking for the second consecutive month in August, falling 1.7 points to 47.9. S&P Global Market Intelligence chief business economist Chris Williamson said Tuesday that after a period of declining inventories, sales were slower than expected, causing warehouses to fill up with unsold inventory. Manufacturers are reducing parts orders, further reducing demand for trucks, according to the August PMI report.
A drop in manufacturing demand could lead to an increase in the number of small trucking companies leaving the market. “The number of exits accelerated again, but there is potential for production to enter the market at the right time, which is why this market is difficult to interpret.” Crook said. Potential performance, he said, refers to operators whose operating costs are low enough to operate at a lower cost balance point. The carriers, he said, have repaid the debts of the tractor and the trailer. He believes that during the “gold rush” of the spot market in 2021 and 2022, a large number of small truck carriers and independent drivers will be able to repay debts.
“They reduce their cost by about 36 cents per mile, which those low-cost shipping companies can get in and out of the market,” Crook said. This means that when those who pay $3,000 a month in tractor fees cannot continue to operate, he said, “Productivity will come and go as demand fluctuates sideways this year, which is why prices remain flat for the rest of 2024.”
