U.S. Bank reports sequential shipment and pricing declines for Q3 in Freight Payment Index report

Freight shipment and spending levels trended down from the second quarter to the third quarter according to the most recent edition of the U.S. Bank Freight Payment Index, which was recently released by 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.

The report’s National Shipment Index, at 131.6 (2011=110.1), was down 5.2% compared to the second quarter’s 138.7, which is an all-time high. Compared to the second quarter of 2018, this index is down 1.1% for its first annual decline going back to the fourth quarter of 2016. This mixed output snaps a stretch of six quarters and sequential and annual shipment growth, during which time shipments rose a cumulative 18%.

The report stated that part of the sequential decline was due to spot market volumes falling substantially and contract loads recording a moderate decrease. On a year-to-date basis through the third quarter U.S. Bank said the National Shipment Index is up 6.2%.  Shipment gains remain intact overall, due to the ongoing driver shortage and the impact of electronic logging devices (ELD), which took effect late last year and have impacted capacity levels and availability against the backdrop of strong demand.

On the pricing side, the report's National Spend Index, at 186.8, was off 1.2% compared to the second quarter, down sequentially for the first time since the second quarter of 2016, and up 13.5% annually.  This broke an eight-quarter run of sequential increases, with annual gains now up for the seventh consecutive quarter. On a year-to-date basis, U.S. Bank said this index is up 20.6% compared to the first three quarters of 2017.

“Despite the sequential decreases in shipments and spend last quarter, the national truck market remains solid and capacity tight,” wrote American Trucking Associations Chief Economist Bob Costello, whose analysis and commentary is featured in the report. “But, as both indexes exhibited in the third quarter, the robust year-over-year gains are slowing, due to a moderating economy and more difficult year-over-year comparisons. As a result, what is more important in gauging the market moving forward is the level of shipments and spend, not the year-over-year gains.”    

Costello added that these sequential shipment and pricing declines match up with the deceleration many industry stakeholders expected in third quarter GDP growth. And he explained that these decreases suggest economic growth may have peaked and could trend down more in the fourth quarter and beyond that.

“Despite the sequential decreases in freight shipments and spending last quarter, the national truck market remains solid and capacity tight,” said Costello.  

U.S. Bank Freight Data Solutions Director Bobby Holland said in a recent interview with LM that both the freight shipment and spend data continue to tell a positive story over all, as they relate to market conditions.