U.S. Bank Freight Payment Index sees third quarter shipment and spend declines

The third quarter edition of the U.S. Bank Freight Payment Index, which was released today, again showed 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 third quarter shipment index value, at 106.6, was down 3.4% compared to the second quarter and was down 9.7% annually, marking the fifth consecutive quarter of annual shipment declines. On a regional basis, the steepest annual shipment declines were in the West, Northeast, and Southeast down 22.9%, 20.8%, and 14.8%, respectively. Shipments out of the Midwest fell 2.4% annually, and shipments out of the Southwest increased 3.3%. What’s more, third quarter shipments in all regions were off sequentially, for the first time since the first quarter 2021.  

On the spend side, the report observed that the third quarter reading, at 106.6, fell 9.7% annually and was down 3.4%, from the second quarter to the third quarter.

On a regional basis, spend out of the West was down 5.1% annually, with the Northeast, Southeast, and Southwest down 1.6%, 2.8%, and 7.0%, respectively. The Midwest saw a 4.4% annual decline.

The report’s author, American Trucking Associations (ATA) Chief Economist Bob Costello wrote that the national truck freight market remained very challenging for motor carriers in the third quarter as both shipments and spending contracted from the second quarter and a year earlier.

“While the overall economy continues to grow, the truck freight economy is still impacted by many factors, including consumer spending on experiences over tangible goods, a softer housing market, and factory output falling from a year earlier,” noted Costello.  

Other factors contributing to declining freight volumes cited by Costello, included: evaporating household savings that were built up over 2020 and 2021; continued retailer inventory reduction having an adverse effect on freight volumes; housing market mortgage rates at nearly 7% in the third quarter; and a 5% or more reduction in new home construction.

“When housing slows, it also reduces consumption of items needed to fill a home (e.g., furniture and appliances), all of which reduces truck freight,” wrote Costello. “As shipment volumes contract, available capacity increases, which typically results in falling freight rates. The combination of declining rates and shipments leads to less shipper spend, which is what happened in the third quarter.”

U.S. Bank Director of Freight Business Analytics Bobby Holland said that the report’s data is showing a continued decline within the truck freight market, especially when compared to 2022’s solid output. And he added that a close eye, in the upcoming quarters, will be focused on signals that the market has bottomed, for both volume and spending.