Q1 U.S. Bank Freight Index signals shipment and spending declines

The first quarter edition of the U.S. Bank Freight Payment Index, which was released this week, pointed to declines, for freight payments and expenditures.

This report, which was initially launched in the third quarter of 2017, is comprised of data on freight shipping volumes and spend on both a national and regional basis. The report’s data is based on the actual transaction payment date, highest-volume domestic freight modes of truckload and less-than-truckload and is seasonally- and calendar-adjusted. Its historical data goes back to 2010, with a base point of 100, and its index point for each subsequent quarter marks that quarter’s volume in relation to the preceding quarter. U.S. Bank Freight Payment's business processed $46 billion in 2022 for some of the world’s largest corporations and government agencies.

The report’s first quarter shipment index value—at 111.7—was down 0.8% compared to the fourth quarter and fell 6.1% annually, marking the fourth consecutive quarter of annual shipment declines. On a regional basis, the steepest annual shipment declines were in the Southeast, West, and Northeast, down 16.1%, 14.1%, and 13.8%, respectively. Shipments out of the Midwest rose 2.4% annually, down for the 12^th consecutive quarter, and shipments out of the Southwest climbed 14%, for its largest annual gain going back to early 2018.

The report’s author, American Trucking Associations (ATA) Chief Economist Bob Costello wrote that the first quarter truck freight market was mixed sequentially and annually, with the national metrics down compared with the previous quarter and year prior, but the rate of decrease was smaller in terms of shipments.  

“During the first quarter, not only did freight levels fall both sequentially and from a year earlier, so did spending, albeit modestly,” noted Costello. “This suggests capacity has loosened overall, but there are still regions where capacity appears tighter. The market still faces challenges. For one, despite strong longer-term fundamentals, the home construction market remained soft. Manufacturing activity, another important generator of truck freight, also slowed during the same quarter. For example, the Manufacturing Purchasing Manager’s Index (PMI), as reported in March by the Institute for Supply Management (ISM), hit the lowest level since the spring of 2020. This metric has been contracting since November 2022. On a more positive note, general merchandise retailers made progress clearing out excess inventory during the first quarter, according to data from the Census Bureau. Relative to sales, this group pushed inventories down to levels closer to the start of the pandemic. However, some supply chain managers say that inventories won’t get completely back to normal until 2024.2 This is part of the dynamics in today’s freight market; it is an important development for truck freight in the quarters ahead, as inflated inventory have been a drag on freight volumes for the last year.”

The report’s freight spend index value—at 269.9—was down 0.2% compared to the fourth quarter and was down 0.3% annually. The reading saw its first annual decline going back to the third quarter 2020.

Costello pointed to softer shipment volumes, coupled with the 13% in the national on-highway diesel prices, from the fourth quarter to the first quarters, factored into the modes freight spend declines.

“The combination of some fleets (mainly smaller ones) exiting the business as spot market rates fall and costs remain high, as well as larger fleets operating fewer trucks than pre-pandemic numbers, are a couple of reasons why spending likely did not fall further.

On a regional basis, spend out of the West was up 2.8% annually, with the Northeast, Southeast, and Southwest up 2.0%, 7.8%, and 16.7%, respectively. The Midwest saw an 8% annual decline.