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Loaded and Rolling: ATA truck tonnage data; Podcast on freight journalism

In spite of the rising tonnage, trucking spot rates continue to deteriorate

ATA Truck Tonnage Index increased in August

(Source: American Trucking Associations)

The American Trucking Associations’ (ATA) seasonally adjusted For-Hire Truck Tonnage Index increased 2.8% in August after a disappointing 1.5% drop in July. The ATA data primarily relates to contracted freight tonnage volumes and is a useful indicator of shipping activity. 

In the report, ATA Chief Economist Bob Costell notes: “With the economy in transition to slower growth and changing consumer patterns, we may see more volatility in the months ahead. But the good news is that we continue to witness areas of freight growth in consumer spending and manufacturing, which is helping to offset the weakness in new home construction.”

In spite of the rising tonnage, trucking spot rates continue to deteriorate, as truckload supply has increased relative to truckload demand. The record number of new entrants into trucking over the past two years is creating downward pressure on rates, as carriers without access to stable year-round contracted volumes compete for cheaper spot market freight. 

Podcast: Freight Journalism with Sydney Edwards

(Source: FreightWaves)

The Loaded and Rolling show and podcast is back in action! On Tuesday, I had the pleasure of interviewing FreightWaves’ cold chain expert, Sydney Edwards, on her experiences in media and journalism. Prior to joining FreightWaves, Edwards was a reporter for various local news affiliates, and she has extensive experience in digital journalism. 

In this episode, we get her thoughts on a few topics, including:

  • Differences in business media and traditional local news reporting.
  • The pathway to becoming a journalist.
  • How reporters often cut, edit and record stories same day under tight time constraints.
  • Her experiences coming to FreightWaves and the advantages of business journalism. 
  • Do’s and don’ts for interviewing or being interviewed.

You can also check out her cold chain community, Running on Ice, and the show she hosts, which can be found here

Market update: Cass August freight volumes high, rates down

(Source: Cass Information Systems Inc., ACT Research Co.)

The Cass August report had promising news for freight volumes, but also concerns over deterioration in the truckload spot market. FreightWaves’ Todd Maiden wrote, “The Cass Freight Index showed shipments were up 3.6% year over year in August and 5.5% higher than in July on a seasonally adjusted basis. Additionally, July data was revised to a growth rate of up 1.9% y/y versus the initial report, which displayed a 0.4% gain. The August reading was the best recorded since May 2018 and is an outlier to signals of a loosening freight market.”

There are concerns that rising interest rates and a balancing of consumer spending patterns in goods and services will slow the transportation sector in the coming months. Cass notes: “The improvement may not be sustainable, especially as pressure increases on interest-rate-sensitive sectors like capital goods and housing, but the summer improvement likely reflects a combination of successful discounting campaigns by retailers, seasonal inventory building ahead of the holidays, easing supply constraints, particularly in auto production, and the reversal of China lockdown effects in June and July.”

I would continue to watch truckload contract rates, as most large carriers are less exposed to the deterioration of spot market rates compared to owner-operators and some freight brokers. If we see a continued contraction in contract rates, there is a risk that trucking third-quarter earnings will be negatively affected. 

FreightWaves SONAR spotlight: The gulf between spot market linehaul and contract rates widens.

(Source: FreightWaves SONAR)

Summary: Spot market rates continue to underperform relative to contracted rates as the NTIL reached $1.90 per mile, compared to the most recent reading of $2.72 from the Van Contract Rate Per Mile initial report index. Understanding the spread between contract and spot market rates is important for carriers, brokers and shippers, as traditionally contracted rates follow the downward movement of spot rates. The lag in movement between the two is usually around 90 days, but the slow-moving decline in recent months appears to be related to peak season capacity concerns.

Shippers have begun to seek reductions in contracted rates as RFPs are renewed, but the extent of these declines so far appears to be in the high single digits to low double digits for dry van carriers based on recent anecdotal reports from equities analysts. Those incumbent carriers and brokers that do not offer lower contracted rates or voluntary downward contract rate revisions risk being undercut by other carriers that are competing for fewer truckload volumes and greater truckload supply.

The FreightWaves National Truckload Index (Linehaul Only) is a spot rate index based on an average of booked spot dry van loads from 250,000 lanes. The daily spot rate less the cost of fuel is the NTIL. Fuel costs are based on the retail price of diesel fuel and a fuel efficiency of 6.5 miles per gallon per tractor.

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Thomas Wasson

Based in Chattanooga TN, Thomas is an Enterprise Trucking Carrier Expert at FreightWaves with a focus on news commentary, analysis and trucking insights. Before that, he worked at a digital trucking startup aifleet, Arrive Logistics as an Account Executive, and 5 years at U.S. Xpress Enterprises Inc. with an emphasis on fleet management, load planning, freight analysis, and truckload network design. He graduated from the University of Tennessee Chattanooga with a MBA in 2020 and a Bachelors of Political Science from the University of Tennessee Knoxville in 2013.