First quarter freight spend and shipment levels each saw sequential and annual gains, according to the most recent edition of the U.S. Bank Freight Payment Index, which was issued this week from Minneapolis-based U.S. Bank.
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 processes more than $23 billion in global freight payments for U.S. Bank’s corporate and federal government clients.
First quarter freight spend, at 187.8, was up 1.4% compared to the fourth quarter and 24.5% annually, as well as being the highest-ever quarterly reading, according to U.S. Bank. The report explained that the surge in freight spend was largely attributed to the ongoing truck driver shortage, which, in turn, led to rising rates in tandem with increasing demand.
American Trucking Associations Chief Economist Bob Costello, whose analysis and commentary is featured in the report, wrote that motor carriers are having extreme difficulty finding qualified drivers, which is constraining capacity and elevating driver compensation.
“The capacity situation will likely get even tighter throughout the year as economic growth accelerates and fleets have a difficult time adding trucks to meet that added demand,” he wrote. “The continued growth in the spend index both sequentially and year-over-year reflects a tight truck market, likely the tightest ever since trucking was deregulated in the early 1980s,” wrote Costello. And, with the market economy expected to accelerate through the rest of the year, the market is expected to get even tighter.”
Looking at first quarter shipments, the 137.1 reading was 1.4% ahead of the fourth quarter and up 12.6% annually. While this represents the fifth straight quarter of shipment growth, it is also its smallest growth margin over that period, even though it stands as the second-best first quarter for shipments in the report’s history.
The gain in shipments marks the fifth consecutive quarter of growth, a stretch that has seen shipments rise a cumulative 16.6%. Costello said that this represents the result of three primary freight drivers-household consumption, factory output, and construction-showing strength. And he added that the 1.4% sequential increase marks the second largest for a first quarter in the index going back since 2011, with the 3.5% bump in 2017 being the largest. What’s more, on a historical basis, the report noted that from 2011-2016, the average first quarter percentage change was -2.9, signaling that the first quarter of 2018 “was better than it might appear.”
Other notable takeaways from the first quarter U.S. Bank Freight Payment Index include: