Freight Industry Sees Significant Shift in December
Volumes Take a Hit, Rates Show Signs of Improvement
New data from Cass Information Systems reveals a substantial decline in freight shipments in December, with expenditures decreasing at a slower rate. This suggests that freight rates are on the rise. The Truckload Linehaul Index, which excludes fuel and accessorial surcharges, continued its upward trend, marking a fourth consecutive month of growth.
Freight Volumes Experience Largest Year-Over-Year Decline Since January 2024
The Cass Freight Index, a trucking-centric dataset, showed a 7.3% drop in freight volumes from November and a 6.5% year-over-year decline. Even when excluding the typical November-to-December seasonal dip, the index still fell 3.1%, wiping away November’s 2.8% sequential gain. This marks the largest year-over-year decline for the shipments index since January 2024 and the lowest index reading since June 2020.
Midweek Holidays and Trade Policy Uncertainty Contribute to Slowdown
The midweek holidays in December may have exacerbated the seasonal slowdown, while some shippers pulled forward freight deliveries to avoid a potential dockworker strike on January 15. Additionally, winter storms and indecision over trade policy have contributed to a slow start in January.
Capacity Additions Put Pressure on For-Hire Market
The report notes that ongoing capacity additions are keeping pressure on the for-hire market. Cass’ January forecast predicts volumes will be down 6% year-over-year, assuming normal seasonal trends.
Freight Expenditures Index Falls, Implies Rate Increase
The freight expenditures index, which captures total freight spend including fuel, fell 2.6% sequentially (up 0.5% seasonally adjusted) in December and was down 3.4% year-over-year. Diesel prices during the month were down approximately 12% year-over-year (off approximately 1% sequentially). This implies that actual freight rates were likely up 3.3% year-over-year during the month, marking the first implied year-over-year rate increase since November 2022.
Truckload Linehaul Index on Verge of Turning Positive
The Truckload Linehaul Index, which includes changes to both spot and contract freight, increased for a fourth consecutive month in December, up 1.2% sequentially. A 0.4% year-over-year decline was the smallest since the end of 2022. The index is now on the verge of turning positive year-over-year for the first time in two years, possibly in January.
Winter Weather Drives Spot Activity, Capacity Additions Loom
Winter weather is driving significant spot activity in January, but the supply response in the past couple of months has been interesting. While lower Class 8 supply over the past several months supports a return to rate increases in 2025, the capacity additions to come will be considerable.
Leave a Reply