The trucking industry is experiencing major shifts in supply chain strategies, sustainability efforts, and what consumers expect from companies. These shifts are driven by e-commerce, globalization, and other technological advancements.
Ryder’s latest State of the Industry report expounds on this changing landscape, presenting a comprehensive transportation logistics industry analysis that highlights key trends, drivers, and upcoming technologies alongside other trucking industry key insights.
Our goal with this analysis is to equip industry professionals, stakeholders, and decision-makers with the knowledge and tools they need to navigate this change effectively.
In this article, we'll explore some of the following insights and trends:
Let's start by examining freight demand.
Truckload markets remain stable
Freight demand has remained quite stable, maintaining the brisk pace set at the start of the year through the second quarter. This stability has highlighted the market’s stubborn overcapacity.
April has been a solid month for shippers, which may make May comps tough as demand is expected to grow. The end of March was a notable exception to this strength, but Easter tends to see a seasonal slump.
Also, this year’s Outbound Tender Volume Index (OTVI) has consistently been ahead of 2023 so far, suggesting that the worst of the recent freight recession is behind us.
Spot rate increases helped by rising diesel prices
Truckload dry van spot rates have found stable footing and are slowly climbing after coming down from some unseasonal highs in February and early March. Diesel retail prices are also steadily rising, allowing carriers to negotiate higher rates.
The National Truckload Index (NTI)—a seven-day moving average of national dry van spot rates that includes fuel—is up 0.5% year over year (y/y) at $2.23 per mile. Contract rates, which don’t include fuel and other accessorials, have already depreciated following the recent bid cycle that favored shippers. As of early May, these rates have fallen 9.5% y/y to $2.29 per mile.
LTL carriers aim to continue expansion
The year 2024 is on track to be a year of major expansion, with many carriers vying to secure volume as they acquire new terminals. For example, after a national carrier dissolved last year, the remaining titans in the field divided up the facilities it left behind. However, quality remains a high priority, even as these carriers grow quickly amidst fierce competition.
As of early May, the average LTL contract rate is up $0.28 per hundredweight over the previous month. Now sitting at $46.40 per hundredweight, LTL shipping costs 14.3% more than it did a year ago.
Macroeconomic conditions paint a mixed recovery picture
Manufacturers have remained optimistic about an economic recovery, resting on the belief that interest rate cuts are on their way. However, the possibility of these rate cuts seems to be fading, as does that positive attitude.
Rising energy prices are another crack in the recovery narrative. Despite these headwinds, manufacturers should be cautious about raising prices to counteract this trend, as doing so may only reinforce the inflationary pressures that have delayed interest rate cuts.
The industry's attitude about recovery seems to be mixed:
In addition, labor market data continued to outperform the most optimistic forecasts in March, with job growth surpassing expectations by nearly 50%.
Maritime rates fall, demand remains stable
The maritime market has been recovering from a shipping crisis in the Red Sea: Houthi rebel attacks on tankers and cargo ships forced hundreds of vessels to steer clear of the Suez Canal, a vital waterway, and instead find an alternate route around southern Africa. This significant detour was 4,000 miles longer, increasing freight costs and transport times.
This recovery is now primarily considered to be complete, and there seems to be relative strength in volumes compared to last year. Ocean and container spot rates have both declined since early February, but U.S. maritime import shipments are tracking above 2023 levels.
Some of the country’s busiest ports are showing signs of growth:
While some other, smaller ports are down:
This growth at the nation’s largest ports is particularly notable as it directly contradicts the usual trend of ocean volumes falling in the spring and rising in the summer. It’s also worth noting that Ocean TEU Booking Lead Times are 20% shorter than this time last year.
Intermodal rail has healthy volumes, pricing challenges
The intermodal rail market continues to grow at an impressive rate. After recovering from an early April slowdown, volumes are up 0.6% m/m, with total volume growing by 12.9% so far for the year.
Empty volumes are also up 1.1% m/m and 21.3% y/y overall. Domestic volumes are ticking upward more slowly, by 5.1% over the past year, with empty domestic intermodal volumes up 10.8%. Meanwhile, loaded international volumes are up 20.2% over that same period, and empty international volumes are up 31.1%.
Intermodal contract rates rebound but remain lower
On average, domestic intermodal contract rates are staying level with those of the previous year, and capacity remains plentiful. However, the sector is still feeling pressured; despite positive trends, the savings index remains well below the 13.93% historical average.
Most of the 13 densest intermodal lanes across the country are down, with the sole exception of the Chicago-to-El Paso lane, which is enjoying an increase of 0.5% m/m and 29.2% y/y.
Intermodal spot rates dip significantly
Intermodal tender rejections can gauge service disruptions as carriers often operate on “auto-accept” when contract rates are competitive with spot rates.
The current national intermodal rejection rate continues to trend higher, now sitting at 1.03%. As increased volatility hit the market, intermodal rejection rates in Los Angeles jumped to 1.82%.
Other trends of note
Other trends worth keeping an eye on include the following:
Navigating the Evolving Trucking Industry
The trucking industry is at a pivotal juncture, characterized by a blend of stability in freight volumes and significant shifts driven by technological advancements, supply chain innovations, and evolving consumer expectations.
As the freight recession fades into the past, the industry faces a mixed recovery landscape, marked by stable truckload markets, rising diesel prices, and expanding LTL carriers.
Ryder is your source for comprehensive industry reporting and analysis. Our expertise in the field can provide the transportation logistics solution you need.
