Q4 shipments see declines while rates continue to go, reports U.S Bank Freight Payment Index

The fourth quarter edition of the recently-released U.S. Bank Freight Payment Index highlighted a significant annual increase in shipping costs, contrasting with a lower number of shipments.

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 $31.4 billion in 2020 for some of the world’s largest corporations and government agencies.

The report’s shipment index value—at 121.6—was off 2.4%, from the third quarter to the fourth quarter, and was down 5.1% annually. For calendar year 2021, shipments fell 0.5% annually and were down 4.5% when compared to 2019.

The fourth quarter freight spend reading—at 267.5—saw an 8.4% gain, from the third quarter to the fourth quarter, and it was up 20.2% annually, marking its highest reading on record, while the annual gain snapped a two-quarter stretch of annual gains of more than 30%, with the first quarter up 44% and the second quarter up 32.6%. For calendar year 2021, the freight spend reading was up 26.5% annually and was up 21.5% compared to 2019.

“The freight trucking industry faced familiar challenges as we closed out 2021: a lack of available drivers, trucks, and trailers. This is increasing costs for shippers and making it more difficult for carriers to haul more freight,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “The rising cost of diesel fuel in the fourth quarter—up nearly 10 percent compared to the previous quarter—also drove up costs for those shipping goods by truck.”

And Bob Costello, American Trucking Associations (ATA) Senior Vice President and Chief Economist, wrote in the report that the lower shipment volume in the fourth quarter was partly due to anxious retailers acquiring more of their holiday products in the third quarter. The larger issue is capacity, he added, noting that ATA data shows that carriers who primarily haul contract freight operated roughly 5% fewer trucks in 2021 compared with 2020.

“In 2021, we moved about the same amount of goods via truck freight in the U.S. as we did in 2020, but it cost more than 25 percent more to do so,” said Costello. “The demand for trucking services continues to be high, but until driver shortages, as well as various supply chain challenges—such as those that are causing new truck and equipment shortages—are improved, capacity will be constrained.”

On a regional basis, the report found that fourth quarter shipments were mixed, with the West down 6.4%, from the third quarter to the fourth quarter, the Midwest down 2.9%, the Northeast down 1.6%, the Southwest up 0.7%, and the Southeast down 1.5%. Annually, shipments were up 2.5% out West, up 2.2% in the Southwest, down 12.0% in the Midwest, down 4.7% in the Southeast, and down 12% in the Northeast.

On the spending side, it found that fourth quarter spend saw across-the-board sequential gains, with the West up 12.0, a 7.9% gain in the Southwest, a 6.7% gain in the Midwest, an 8.4% gain in the Southeast, and an 8.9% gain in the Northeast. Annually spend saw a 29.0% gain out West, with the Southwest up 20.4%, the Midwest up 15.8%, the Southeast up 18.7%, and the Northeast up 23.8%.

In a previous interview with LM, Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions, said there continues to be increases in demand for freight shipments, which is only expected to increase as the economy recovers and retailers work to replenish their inventories.

“At the same time, the industry is facing one of the largest supply crunches in history, driven in large part by a major truck driver shortage. This shortage, along with rising fuel prices, is causing considerable spending increases for shippers,” he said.

With over the road capacity still very tight, Holland noted it is hard to gauge whether rates stay at current levels, based on data alone, while rates have been climbing for some time, as the capacity constraints have continued and shippers and carriers continue to adapt.

And with shipment growth still below pre-pandemic levels, he said that the market continues to adjust to what he called the new normal, with shifts in consumer patterns, in the form of travel and social events ramping up, retail adjusting back to more brick and mortar while online stays high.

“As consumer confidence continues to grow, industries and market sectors are expected to continue their rebounds,” he said. “In addition, the capacity shortage will need time to resolve, both in terms of new drivers on the roads, as well as additional trucks.”