Newsletters Contact Us

After 4 straight increases, benchmark diesel price falls

With the first full week of the second Trump administration in the books, the weekly average retail diesel price reacted sharply to an overall decrease in oil prices by declining for the first time in five weeks.

The average weekly retail diesel price published by the Department of Energy/Energy Information Administration fell 5.6 cents/gallon to $3.659. It follows an increase a week earlier of 11.3 cts/g. 

In a repeat of what was a feature of his first term, the first week of the second Trump administration did feature a presidential call for OPEC to lower oil prices. 

During the first Trump term, his occasional call to producers that came with veiled threats were often powerful in dropping prices. One analyst dubbed the sensation the “Trump put,” a reference to a put option. Put options enable the holder to sell oil at an earlier agreed-upon price that can be profitable when exercised, if it was set at a higher than the prevailing market price when the option is exercised and the sale is made. A Trump statement demanding OPEC take action to lower prices was often self-fulfilling, enhancing the profitability of some put options.

At his speech in Davos Thursday at the World Economic Forum, news agencies reported that Trump said he was “surprised” OPEC had not reduced its prices. However, OPEC and the wider OPEC+ group that includes several non-OPEC exporters nominally led by Russia does establish production quotas, but it does not set prices.

Those production levels were set to rise in January, but the continued sluggish market in place in early December led to that increase being put off until April. OPEC+ had put off increasing production several times before that as well. 

That decision by OPEC+ to delay increases until April was made December 5, when the settlement price for Brent, the world’s crude benchmark, was $72.09/barrel. 

Brent got as high as a settlement of $82.03/b on January 15. The earlier upward push in prices in January has been attributed to additional sanctions placed on Russian shipping in the waning days of the Biden administration.  

Even during Trump’s first term, there were indications that markets had taken those statements of wanting lower prices less seriously with each passing instance of his demands.  

Trump’s statements last week demanding lower prices did come alongside a falling market. Brent settled Wednesday at $79/b. It closed a day later, the day Trump made the comments, at $78.29/b. Brent rose to a settlement Friday of $78.50/b. The settlement Monday was $77.08/b, with oil declining in tandem with the sharp fall in equities markets. There was little chatter in the market that it was reacting to Trump’s call for lower prices.’

Bloomberg reported Monday that OPEC+ will meet next week. Despite the fact prices have risen since the start of the year, and the call by President Trump to take action, no acceleration is expected in the group’s plan to begin ramping up output in April. 

Separately, in a report published Sunday on Bloomberg, the bullish impact of the Biden sanctions on Russia, which gave a significant boost to the market just two weeks ago, was called into question. 

According to Bloomberg, Goldman Sachs has published a report that said those sanctions  “are unlikely to result in a large hit to production.” Tanker fees are strong enough to incentivize ships that were not part of the Biden sanctions to move Russian crude and take the risk of being added to any further sanctions. The report also said ESPO, which is Russia’s crude grade shipped out of its Pacific Coast ports, has fallen enough in value relative to other crudes that it is incentivizing buyers to scoop it up.

In the diesel futures market, a more worrisome trend from a buyer’s perspective is the widening of the spread between the first month ultra low sulfur diesel (ULSD) price on the CME commodity exchange and the second month.  

When the first month price is higher than the second month price, it is a structure known as backwardation. Markets that are wrestling with tight inventories move into backwardation, as the most valuable barrel is the one for immediate delivery. 

The opposite is called contango. A market in perfect balance is in contango, as the rising spread reflects the cost of storage and the time value of money.

After many months of contango in ULSD, the market moved into backwardation in late December. But that backwardation spread in recent days has been widening, settling at almost 7.5 cts/g on Tuesday, with the front month that much higher than the second month. On Friday, that spread was a little less than 7 cts. 

The overall movement in the spread this month suggests tightening inventories, though data for the U.S. published by the Energy Information Administration is showing the opposite. But a commodity market inevitably reflects global conditions. The transparent data released by the EIA each Wednesday does not have an international counterpart. The month-to-month spread in the ULSD market at times does not align with what the data is showing for U.S. inventories, as the market is impacted by international conditions as well as those in the U.S. 

One piece of bearish news that has emerged in the past few days is that Kazakhstan, which is a significant non-OPEC exporter but is a member of the OPEC+ alliance, increased its production by opening an expansion of its largest field, Tengiz which is operated by Chevron. The output is said to be a record and comes as Kazakhstan has been identified as one of the non-OPEC countries that is falling short of its pledged reductions in output. It is that sort of production in excess of a quota that could have an impact on any OPEC+ decision to not begin increasing production in April as planned.

More articles by John Kingston

Drivers settle class action with Lytx over in-cab surveillance, data gathering

Louisiana staged accident murder: Harris pleads guilty but fingers others for the shooting

Carrier loses fight against Biden independent contractor rule in New Mexico court

Railcar lessor GATX profit up on fleet utilization, lease renewal rates

Railcar and locomotive lessor GATX reported 2024 fourth-quarter net income of $76.5 million or $2.10 per diluted share, compared to net income of $66 million or $1.81 per diluted share in the fourth quarter of 2023. 

Chicago-based GATX (NYSE: GATX) said utilization of its Rail North America unit’s wholly owned fleet, comprising approximately 111,400 cars, excluding 8,400 boxcars, was 99.1% at the end of the fourth quarter, compared to 99.3% at the end of the prior quarter and 99.3% at 2023 year-end.

During the fourth quarter, the renewal lease rate change of the GATX Lease Price Index (LPI) was 26.7%. This compares to 26.6% in the prior quarter and 33.5% in the fourth quarter of 2023. The average lease renewal term for railcars included in the LPI during the fourth quarter was 60 months, compared to 59 months in the prior quarter and 65 months in the fourth quarter of 2023. The 2024 fourth-quarter renewal success rate was 89.1%, compared to 82.0% in the prior quarter and 87.1% in the fourth quarter of 2023.

Net income for full-year 2024 was $284.2 million or $7.78 per diluted share, compared to $259.2 million or $7.12 per diluted share year over year (y/y). 

The 2024 and 2023 fourth-quarter results include net positive impacts of 17 cents per diluted share and 7 cents per diluted share, respectively, from tax adjustments and other items.

The 2024 full-year results include a net negative impact of 11 cents per diluted share from tax adjustments and other items. The 2023 full-year results include a net positive impact of 5 cents per diluted share from tax adjustments and other items.

“Based on strong performance throughout the year, GATX delivered 2024 full-year financial results that exceeded our original expectations,” said Robert C. Lyons, president and chief executive of GATX, in a release. “In Rail North America, demand for existing railcars remained steady, as expected. We continued to extend lease renewal terms at attractive rates while maintaining high fleet utilization and strong renewal success rate. 

“In addition to the commercial results, we also invested over $1.1 billion in our North American rail business in 2024. We continued to expand the platform through opportunistic railcar purchases in addition to investments made under our existing supply agreement. Additionally, we experienced continued strong demand for GATX assets in the secondary market, allowing us to optimize the fleet through railcar sales and generate significant asset remarketing income.”

Rail North America reported segment profit of $85 million in the fourth quarter of 2024, compared to $67 million in the fourth quarter of 2023. For the full year, profit was higher at $356 million from $307 million y/y. Profit gains were driven primarily by higher lease revenue, partially offset by higher interest expense.

Find more articles by Stuart Chirls here.

Related coverage:

CN braces for rail strike

CSX Q4 profits sink on lower coal and fuel revenue, hurricane-related costs

Fuchs to lead Surface Transportation Board

Trump defers 25% Colombia tariffs after deportation agreement reached

President Donald Trump is holding off imposing tariffs on imports from Colombia after the two countries came to an agreement late Sunday over migrant deportations.

Colombian authorities agreed to accept deportation flights after Trump threatened the country with 25% import duties and other sanctions to punish Colombia for refusing to accept U.S. military planes carrying deportees last week.

“We have overcome the impasse with the United States government,” Colombian Foreign Minister Luis Gilberto Murillo said in a news conference Sunday. “Colombia confirms that diplomatic channels of dialogue will be maintained to guarantee the rights, national interest and dignity of our citizens.”

The Trump administration claimed victory in the potential trade spat that could have impacted freight movements of oil, coffee, cut flowers and more.

“The government of Colombia has agreed to all of President Trump’s terms, including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on U.S. military aircraft, without limitation or delay,” Trump’s press secretary Karoline Leavitt posted on X. “Today’s events make clear to the world that America is respected again.”

Earlier, Trump had ordered 25% tariffs on all imports from Colombia, along with other retaliatory measures in response to Colombian President Gustavo Petro’s decision to reject two inbound U.S. military aircraft carrying migrants.

In response to Trump’s decision to impose tariffs on all Colombian products, Petro initially said on Sunday his country would impose a 50% tariff on U.S. imports.

The United States is Colombia’s largest trading partner, accounting for 34% of Colombia’s total trade, and Colombia is a top ten supplier of crude oil to the U.S.

The two countries facilitated $33.4 billion in commerce from January to November 2024, according to Census Bureau data.

According to trade data provider the Observatory of Economic Complexity, the top three imports from Colombia to the U.S. in 2022 were petroleum ($6 billion), coffee ($1.78 billion) and flowers ($1.64 billion).

The majority of fresh cut flowers the U.S. imports from Colombia are shipped via air cargo through the Miami International Airport.

Approximately 1,300 vessels had over 11,000 port calls in the U.S. after calling on ports in Colombia, including 422 bulk vessels, 241 container vessels, 90 oil/chemical tankers, 88 crude oil tankers, 85 general cargo vessels and 81 vehicle carriers, according to predictive maritime intelligence company Windward.

Trump telework reversal undermines aviation security, ex-TSA official says

A TSA security agent screens carry-on bags at an airport.

The new Trump administration’s directive that federal employees return to the office full time will drive away skilled professionals who are protecting the aviation system from terrorist threats, a former Transportation Security Administration official warned Friday.

Douglas Brittin, who headed the TSA’s air cargo division a decade ago, said in a letter to the House Homeland Security Committee that the the mandate to phase out remote work without sufficient planning or accommodation will lead to “significant attrition, including the loss of irreplaceable institutional knowledge and expertise” and undermine the agency’s ability to recruit and retain specialized personnel. 

A self-inflicted brain drain would hurt current air cargo security programs, such as third-party canine inspections, as well standard security screening processes and adoption of new screening technologies for passenger checkpoints and cargo, that the TSA is working to upgrade and improve with the Airforwarders Association and other industry stakeholders, Brittin said.

“Losing experienced personnel during these important initiatives will jeopardize their success and, by extension, our national security,” he said. 

Aviation remains a high-profile target for terrorists and rogue nations. Air cargo security recently came under scrutiny after Western intelligence agencies alleged Russia’s military intelligence unit was behind a plot to smuggle booby-trapped incendiary devices onto DHL Express cargo jets in Europe last summer. The packages caught fire on the ground at DHL’s air facility in Leipzig, Germany, and a logistics hub in Birmingham, United Kingdom. U.S. and European security officials say they believe the parcel bombs were a test run for future attacks against U.S.-bound aircraft. 

Skilled professionals experienced at security operations, planning and risk mitigation are needed to address such threats to cargo and passenger security, Brittin stressed. 

He urged Chairman Mark Green, R-Tenn., and ranking member Bennie Thompson, D-Miss., to press the administration to extend the return-to-office deadline by six months for key divisions such as air cargo and canine inspections so the TSA can retain talent and ensure program continuity.

President Trump last week signed an executive order instructing agencies to stop remote work practices and directing workers to return to their desks. A subsequent directive from the Office of Personnel Management provides details on how agency heads are to implement the return to in-person work. Trump campaigned on a platform of increasing federal workforce efficiency and accountability. According to the administration, telework has resulted in empty offices, diminished performance and challenges in supervision and training. 

Many federal workers disagree that they aren’t working hard or doing quality work for taxpayers. 

The previous rules allowed subject-matter experts to build careers on flexible work arrangements and TSA to recruit and retain specialized personnel, according to Brittin. 

He added that the recent relocation of TSA’s headquarters from Arlington, Virginia — across the Potomac River from downtown Washington, D.C. — to Springfield, Virginia, makes it more difficult to house an influx of workers. “The new facility lacks the capacity to accommodate the volume of personnel currently teleworking, making the return-to-office transition logistically impractical and likely to create an untenable work environment,” Brittin said.

Homeland Security advisory committees put on freeze

The security situation, he added, is also undermined by the recent departure of the Air Cargo Division director and the vacancy left by Trump’s firing of TSA Administrator David Pekoske. The deputy administrator’s position at TSA is also vacant. 

Ben Currier served as executive director of TSA’s air cargo security division until his abrupt departure three weeks ago to take a position at the Department of Defense. His successor has yet to be named.

Meanwhile, the Department of Homeland Security has effectively suspended the operation of key federal advisory committees involved in aviation and cross-border freight security. Private-sector members of the Aviation Security Advisory Committee (ASAC) and the Commercial Operations Advisory Committee (COAC), which supports Customs and Border Protection, were advised in a Jan. 20 memo from then-DHS Acting Secretary Benjamine Huffman that the department is revoking membership in all advisory committees as part of a “commitment to eliminating the misuse of resources and ensuring that DHS activities prioritize our national security.” The Federal Railroad Administration also has an advisory committee.

The ASAC was mandated by Congress in 1988 after the PanAm 103 bombing. Congress also established COAC.

The decision on the TSA’s advisory body “eliminates a vital platform for collaboration between government and industry stakeholders, undermining efforts to safeguard the flying public and protect our nation’s commerce,” the Airforwarders Association said in a statement. “Disbanding this committee at such a critical time weakens our collective ability to respond to evolving threats. We urge the President and his administration to reconsider this decision immediately and reinstate ASAC as an essential advisory body.”

Marianne Rowden, CEO of the E-Merchants Trade Council, said via email that by cancelling current membership, “the Trump Administration may be evaluating the mission of advisory committees and whether they match the priorities that the President has set for each agency while gauging the resources to staff the advisory committees.”

Click here for more FreightWaves stories by Eric Kulisch.

Air cargo goes crazy for K-9 security

Los Angeles, the busiest US container port, plans even bigger future

While the global supply chain seemed whipsawed on a daily basis in 2024, one thing remained constant: a veritable tsunami of ocean containers moving through the Port of Los Angeles.

The busiest U.S. maritime trade hub moved 10.3 million container units in 2024, a record 1.7 million TEUs or nearly 20% higher than a year ago.

“That is our second-best year in the 117-year history of the Port of Los Angeles,” said Executive Director Gene Seroka, who spoke at the annual State of the Port event Thursday, “and nearly a 20% increase in volume over 2023. In fact, we moved 1.7 million more TEUs than last year, which is the largest incremental gain we’ve ever seen.”

Total volume finished short of the record 10,677,610 TEUs handled in 2021.

Total traffic in December, usually a weaker month following the runup of holiday merchandise, was 921,617 TEUs, up 24% year over year (y/y). Loaded imports totaled 460,916 TEUs, up 26%, while loaded exports totaled 110,484 TEUs, off 9%.

Empties, a pre-cursor of import flows, was 350,218 TEUs, ahead 37% from December, 2023.     

“That kind of traffic is driven by a lot of factors,” said Seroka, entering his 11th year at the port. “A strong U.S. economy with robust imports and exports. The best labor force — bar none — in the world on the docks and on the roads. Significant investments by our two great western railroads, Union Pacific (NYSE: UNI) and BNSF, to efficiently accommodate increased cargo in and out of the San Pedro Bay.” 

Coming off a near-record year, LA still has room to grow: Seroka in a media briefing this past fall said the port was operating at 80% capacity.

Seroka said cargo flows continue to be aided by data improvements as part of the Port Optimizer, launched in 2017, and the first phase of a Universal Truck Appointment System launched in 2024. 

“This system gives drivers a single user interface to schedule appointments at our terminals, improving the workflow and lives of our 20,000 truckers,” Seroka said. “It was introduced just eight weeks ago, and we’re already seeing positive results. 

As part of an $8 million dollar grant from the Governor’s Office of Business and Economic Development, the port is developing Phase 2 of the system to integrate appointments systems at both Los Angeles and neighboring Port of Long Beach.

“Leveraging real-time tracking data from the Port Optimizer, our customers will enjoy an even simpler and more seamless experience,” Seroka said.

There’s a direct correlation between speed of goods to market and workforce expansion, he said, “because every four containers we move creates a job, and over the last 10 years, longshore registration has increased by 27%.”

That kind of continuity served LA well over the past 12 months, when labor turmoil disrupted port operations from Texas to Boston, and along both coasts in Canada. 

An on-dock rail project completed in 2024 at APM Terminal’s Pier 400 is expected to improve efficiency and boost container volumes across a wider range of inland locations. 

Fenix Marine Services, a subsidiary of France’s CMA CGM, is breaking ground on a similar project at Pier 300. Seroka said rail expansion will enhance capacity for future growth, enabling the port and Fenix to compete for more cargo. 

Infrastructure projects in 2024 were helped by a record $60 million in federal money from the U.S. Army Corps of Engineers’ Harbor Maintenance Trust Fund, which Seroka termed “a fair amount” more than a decade in the making.

Import taxes fund waterway maintenance projects and ports contribute about half the money in the fund but only see about 3% in return. Seroka credited recently retired Rep. Grace Napolitano and others who started advocating for an equitable distribution of those funds. 

More broadly, Seroka said geopolitics presents a “significant” challenge both to the port and the maritime industry. In 2024, the gateway had to adapt to change from attacks on Red Sea shipping, drought conditions in the Panama Canal and labor issues on the East and Gulf coasts. 

“In Washington, the new administration is talking about more tariffs and trade constraints. This post-globalization era is creating new headwinds that we must navigate.

“Now more than ever, ports, shipping lines, terminal operators, our workforce, communities and all other links in the supply chain must work together,” he said.

In May, the port opened the $16 million Maintenance and Repair Training Center on Terminal Island with the cooperation of the International Longshore and Warehouse Union and Pacific Maritime Association in an effort to retrain and upskill ILWU workers. 

The port is also developing a Goods Movement Training Facility, the only workforce training center in the United States dedicated to goods movement. 

Eyeing a future workforce, the port plans to expand its collaboration in advancing clean technology with the University of California at Los Angeles (UCLA), as well as a partnership with the California Community College system, with 2 million students at 116 schools — the largest higher education system in the country. 

“Our aim is to equip these students with the education and skills needed for decarbonization and environmental stewardship,” Seroka said. “This partnership will keep local colleges updated on emerging technologies and prepare students for evolving job opportunities in our industry.” 

Seroka said the port’s greenhouse emissions have dropped 24% since 2005, while TEUs and overall business has increased by 15%.

“This means, we are now down to the last 9% of diesel particulate matter and the last 2% of sulfur oxides from anything with an engine that moves cargo through our gateway. 

“To put all this in perspective, these reductions are the equivalent of taking nearly 5-and-a-half million cars off the road.” 

The port, meanwhile, is aiming for zero emissions. 

The Clean Truck Program counts nearly 500 ZE trucks operating at LA-Long Beach, along with dockside tractors, top handlers and other equipment. 

Over the last three years, the port complex has received nearly a billion dollars in federal and state funding, led by a $412 million EPA grant announced in 2024 for ZE equipment and terminal upgrades. With more than $230 million in matching funds from the port and terminal operators, total investment will exceed $640 million, the hub plans to deploy 250 ZE trucks and replace dockside diesel equipment with 424 ZE units, along with 300 charging stations. 

Seroka said the port is working on securing funding to help Union Pacific purchase and develop a new zero-emissions locomotive for operations within the port.

At the same time, the Hydrogen Hub project is seeking $100 million for the San Pedro Bay ports through a grant from the U.S. Department of Energy. In May 2024, Yusen Terminals powered up the world’s first hydrogen-fueled rubber-tired gantry crane. Fenix Marine Services, in collaboration with Toyota, is testing a retro-fit hydrogen-powered top handler that can operate for 20 hours on a single tank of fuel. 

Also, Yusen Terminals recently deployed five Taylor electric top handlers, and Everport is running two electric top handlers as part of a $8 million Advanced Cargo-Handling Demonstration Project.

“These projects not only transform our port; they also set a global standard, proving that economic growth and environmental stewardship can go hand in hand,” said Seroka. “At this point, every container terminal either has ZE equipment in use, or is actively planning for future-ready fleets. 

To ramp up electrical capacity, the port has teamed with the Los Angeles Department of Water and Power on a $500 million upgrade to scale up battery electric equipment and provide reliable shore power.

“We must expand our infrastructure to accommodate additional electric cargo handling equipment, EV charging stations, and overall operations in order to meet our zero-emissions targets,” Seroka said. 

The port also advanced maritime initiatives with eight different ports in China, Singapore, Japan and Vietnam to develop Green Shipping Corridors aimed at decarbonizing vessel operations.

“Collaborations like these will demonstrate the safety and feasibility of deploying the world’s first zero-carbon container ship by 2030,” Seroka said, adding the port in 2024 hosted the first U.S. call of the Alette Maersk, the first-ever green container vessel capable of running on carbon neutral e-methanol fuel.

Find more articles by Stuart Chirls here.

Related coverage:

Red Sea now a ‘case-by-case basis’ for CMA CGM

US says China pressed unfair advantages to dominate shipping, shipbuilding 

Sola to head Federal Maritime Commission

Nikola FCEV: 1-year performance review; Trump vs Colombia; Motion Museum | WHAT THE TRUCK?!?

On episode 796 of WHAT THE TRUCK?!? Dooner is talking to Coyote Container’s William Hall about his experience owning a Nikola Fuel Cell Electric Vehicle for the past year. He’ll share the highs and lows of ownership, if the truck is viable for an operation like yours, and what changes to EV mandates mean for the future of EV trucks.

Firecrown Founder and CEO Craig Fuller is getting the Motion Museum on track. He stops by the show to talk about our weekend mission to Massachusetts to check out the Railroad Hobby Show, our plans for content, and the logistics behind bringing a museum of freight miniatures to life.

R&R Express’ Anthony Impavido rates the strap work. 

Plus, Trump vs Colombia, CN braces for strike, Taylor Swift advances to Super Bowl, dogs on lawnmowers, and more. 

Catch new shows live at noon EDT Mondays, Wednesdays and Fridays on FreightWaves LinkedIn, Facebook, X or YouTube, or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player and at 5 p.m. Eastern on SiriusXM’s Road Dog Trucking Channel 146.

Watch on YouTube

Check out the WTT merch store

Visit our sponsor

Subscribe to the WTT newsletter

Apple Podcasts

Spotify

More FreightWaves Podcasts

The trucking market is still headed in the right direction

The U.S. truckload market ratcheted tighter into the beginning of this week, with closing spreads between contract and spot rates and multiple major trucking markets rejecting more than 7% of outbound shipments. However, there’s still no clear ‘melt-up’ or cascade toward meaningfully higher rates compared to conditions during the holiday retail peak season.

(The Outbound Tender Reject Index measures the percentage of electronically tendered truckload shipments rejected by carriers and serves as a proxy measure of the relative balance between the supply of trucking capacity and volume demand. Chart: SONAR. To learn more about SONAR, click here).

Notably, Los Angeles has softened compared to the rest of the country; while the national average tender rejection rate is still in nominally inflationary territory at 7.11%, LA’s outbound rejections have cooled to just 4.44%. Because Los Angeles is such an important origin for retail imports, it’s considered an ‘upstream’ market that influences markets further inland. If LA is soft compared to the national average, it implies that national average tender rejections will also come down.

But Dallas, rejecting 7.25% of its outbound truckload shipments, and Chicago, rejecting 7.64% of its outbound truckload shipments, are both tighter than the national average. Both markets experienced recent weather-related spikes in tender rejections and are still loosening back up, but Chicago in particular looks like it could stay tighter for longer. 

Recent results from publicly-traded trucking carriers reinforces the thesis that while the trucking market is improving for carriers, progress in tightening capacity and rising rates is halting and gradual.

Knight-Swift’s 2024 fourth-quarter earnings report provides a revealing snapshot of the current U.S. trucking market, particularly within the truckload segment, and it’s especially illuminating to compare it with Knight-Swift’s less-than-truckload (LTL) business. The company’s LTL unit showcased a robust 20.2% year-over-year revenue increase, reaching $279 million. This growth was driven by a 13% rise in daily shipments and a 6.6% boost in revenue per shipment, excluding fuel. 

If LTL experienced positive trends in volume and pricing, truckload (TL) was the opposite: soft, with falling volumes and rates. Knight-Swift reported a 4.4% year-over-year decline in TL revenue, which fell to $1.1 billion. This downturn occurred even as the company managed to increase revenue per tractor by 1.7%, thanks in part to a 6% reduction in the number of tractors in service. The company’s strategic move to rationalize its tractor and trailer counts aimed to improve fleet utilization, resulting in a 2.4% increase in loaded miles per tractor. Despite these efficiency gains, revenue per loaded mile slightly decreased by 0.7%, a 1% sequential improvement from the third quarter of 2024.

In other words, while Knight-Swift reduced its fleet count in order to increase asset utilization and ultimately lower its TL adjusting operating ratio to 92.2%, total loaded miles run by the fleet decreased. Because pricing per loaded mile fell, total truckload revenue dropped.

The financial results highlight a mixed landscape for the trucking industry. While the LTL sector is thriving, driven by increased shipments and higher yields, the TL segment is grappling with reduced revenue despite better asset utilization. This dichotomy underscores the broader market dynamics at play, where LTL remains capacity-constrained in multiple dimensions—the number of carriers and dispatchable driver hours, the throughput of infrastructure like crossdocks—while truckload carriers are only just now beginning to recover their pricing power.

The inventory landscape further influences truckload demand. The Logistics Manager’s Index (LMI) for inventory levels stood at 50 in December, indicating that total inventories were essentially flat compared to November. This stability suggests that companies have accurately forecasted demand for the holiday season. However, a deeper analysis reveals a stark divergence between upstream and downstream inventory levels. Upstream facilities, often located near major port cities like Los Angeles and Savannah, registered an LMI of 57.9, signaling expansion. In contrast, downstream retailers reported a significantly lower LMI of 33.9, indicative of a highly successful holiday shopping season.

This disparity points to potential freight movement opportunities in early 2025. Upstream firms may need to replenish their inventories after possibly over-ordering in response to factors such as tariffs, while downstream retailers are likely to ramp up their inventory levels to meet consumer demand. Consequently, truckload demand could see a rebound as downstream firms seek to replenish stocks, driving increased freight movement in the coming months.

Despite these positive indicators, the truckload market remains in a state of transition. The loss of market share to intermodal transportation has contributed to a reduction in excess capacity, fostering the first signs of long-term contract rate inflation since 2022. This trend is expected to continue, albeit modestly, as shippers navigate a landscape of evolving service levels and capacity constraints.

(The National Truckload Index – Linehaul is a national average truckload spot rate denominated in USD per mile, with fuel surcharges excluded. The Van Contract Rate Per Mile – Initial is the initial report of national average truckload contract rates, with fuel surcharges excluded. Chart: SONAR. To learn more about SONAR, click here).

There are green shoots visible in some of the national pricing data, particularly the spread between contract and spot rates. A wide positive spread between contract and spot rates, where contract exceeds spot by a healthy margin, helps to ensure service levels and carrier performance: carriers won’t abandon their contracted freight only for their trucks to fetch lower rates on the spot market.

For the last three and a half months, that spread has been tightening. On October 6, the National Truckload Index – Linehaul (NTIL) stood at $1.67/mile and the contract rate was at $2.28, representing a positive spread of 61 cents or 26.7%. By January 12, the NTIL  had risen to $1.92/mile but the contract rate had only climbed to $2.36/mile, for a spread of 44 cents or 18.6%. As that spread closes, there will be more situations where carriers find the spot market advantageous, which will drive rejections and eventually spot rates higher.

In terms of freight rates, Knight-Swift is positioning itself for a favorable trajectory. The company is currently seeking mid-single-digit rate increases, a step up from the low- to mid-single-digit range it pursued the previous quarter. This adjustment aligns with broader market trends; for example on the eastbound Transpacific ocean container lane, where rates have been resilient amid tight capacity and fluctuating demand. 

Considering the current market conditions, the near-term prediction for truckload rates is upward. As capacity constraints persist and demand rebounds from inventory replenishment, rates are likely to continue their upward trend. 

In summary, the U.S. trucking market presents a complex but promising scenario. The TL segment is navigating challenges related to capacity and demand fluctuations. Inventory dynamics indicate potential demand surges in early 2025, and freight rates are poised for an upward trajectory in the near term. Companies like Knight-Swift, with their strategic expansions and rate adjustments, are well-positioned to leverage these trends, suggesting a cautiously optimistic outlook for the trucking industry in the coming months.

January doldrums finally impact truckload market

This week’s FreightWaves Supply Chain Pricing Power Index: 40 (Shippers)

Last week’s FreightWaves Supply Chain Pricing Power Index: 40 (Shippers)

Three-month FreightWaves Supply Chain Pricing Power Index Outlook: 40 (Shippers)

The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

This week’s Pricing Power Index is based on the following indicators:

Holiday causes tender volumes to move lower

After winter weather swept across much of the middle of the country, the Martin Luther King Jr. holiday proved to be an impactful holiday for freight volumes. The holiday, while not as impactful as other Monday holidays like Memorial and Labor Day, did cause a decent sized drop in volumes. As the final week of January is here, the first month of the year has been one of disruption, but the time of year is having a greater impact keeping tender volumes down year over year.

SONAR: Outbound Tender Volume Index — Seasonality View: 2025 (white) 2024 (green) and, 2023 (pink)
To learn more about SONAR, click here.

The Outbound Tender Volume Index (OTVI), a measure of national freight demand that tracks shippers’ requests for trucking capacity, has completely erased the holiday noise and comparisons can now be formed. Over the past week, tender volumes have declined by 4.53%, but much of that decline is due to the holiday to start the week. With just a few days until the end of the month, it will be interesting to see if there is any uptick in tender volumes to close out the month, especially since there doesn’t appear to be a significant winter weather event on the horizon.

Lunar New Year is nearly two weeks earlier this year than last and the result is the uptick in ocean volumes started earlier as well. The question becomes, once those ocean volumes are stateside, does the truckload market benefit in any way or will the intermodal market see the upward volume momentum continue?

SONAR: Contract Load Accepted Volume – Seasonality View: 2025 (white) 2024 (green) and, 2023 (pink)
To learn more about SONAR, click here.

Contract Load Accepted Volume (CLAV) is an index that measures accepted load volumes moving under contracted agreements. In short, it is similar to OTVI but without the rejected tenders. Looking at accepted tender volumes, the decrease was smaller than the overall OTVI as CLAV fell by 3.7% w/w, due to a drop in tender rejection rates.

Bank of America’s most recent card spending report, for the week ending Jan. 18, showed a recovery in spending as total card spending was up 5.6% year over year. The largest increases in the most recent week was transit that was up 14.3% and department store spending that was up 12.5% y/y. Bank of America did note that the timing of MLK Day created a boost for spending.

SONAR: Outbound Tender Volume Index – Weekly Change
To learn more about SONAR, click here.

Even with a slight decline in tender volumes at the national level, the majority of freight markets experienced volume declines over the past week. Of the 135 markets tracked within SONAR, 44 reported higher volumes over the past week, down from 83 last week.

The largest weekly increases continue to stem from the smaller freight markets, due to the influence that even a slight increase in tenders can have on these markets. The largest increases were in Grand Junction, Colorado and Billings, Montana, both extremely small freight markets with less than a tenth of one percent of overall truckload volumes.

Most of the large freight markets experienced tender volumes decline over the past week, but there was one exception. The Atlanta market experienced tender volumes increased over the past week, rising by 5.18%, though it is a factor of easier comps from the weather impacts a week prior.

SONAR: Van Outbound Tender Volume Index (white, right axis) and Reefer Outbound Tender Volume Index (green, left axis)
To learn more about SONAR, click here.

By mode: The dry van market has faced challenges over the past few weeks as disruptions have had a greater impact on the van market. The Van Outbound Tender Volume Index fell by 5% over the past week and was down 10.6% y/y. These declines are significant, but look to see if there is any improvement in February that could carry into March.

The reefer side of the market continues to hold up better than the van side of the market, though the holiday last week did cause a sizable drop in volumes. The Reefer Outbound Tender Volumes Index fell by 6.2% week over week and was down 5.71% y/y, but should rebound this week.

Tender rejection rates back below 7%

Tender rejection rates are still elevated compared to where they spent much of 2024, indicating that the market is in fact turning more in carriers favor. The question will be: when will the market flip firmly into the carriers favor and will it be driven by a demand catalyst or will it be steady with capacity continuing to exit the market until equilibrium is passed.

SONAR: Outbound Tender Reject Index – Seasonality View: 2025 (white), 2024 (green) and 2023 (pink)
To learn more about SONAR, click here.

Over the past week, the Outbound Tender Reject Index (OTRI) gave back some of the recent gains, falling by 83 basis points (bps) to 7.09%. Compared to this time last year, the OTRI is 179 bps higher y/y, an indication that the market is indeed tighter than it was last year, but is still a far cry from the levels experienced during the COVID-19 bull market.

SONAR: Outbound Tender Reject Index – Weekly change
To learn more about SONAR, click here.

The map above shows the Outbound Tender Reject Index — Weekly Change for the 135 markets across the country. Markets shaded in blue are those where tender rejection rates have increased over the past week, whereas those in red and white have seen rejection rates decline. The bolder the color, the more significant the change.

Of the 135 markets, 38 reported higher rejection rates over the past week, down from the 56 that saw tender rejection rates rise in last week’s report.

The largest increases over the past week stem from fairly small freight markets like Rapid City, South Dakota and Billings, Montana. Charleston, South Carolina experienced rejection rates increase by 130 bps week-over-week (w/w) as the market dealt with unusual snow and ice. Carriers appear to be flooding back to the largest freight markets in the country as tender rejection rates in Ontario fell by 108 bps to 4.1%, in Dallas they fell by 139 bps to 7.31% and in Atlanta they fell by 41 bps to 6.76%.

SONAR: Van Outbound Tender Reject Index (white), Reefer Outbound Tender Reject Index (green) and Flatbed Outbound Tender Reject Index (orange)
To learn more about SONAR, click here.

By mode:  The dry van market witnessed tender rejection rates fall below 7% once again, but are still near Fourth of July levels, which is a positive sign entering the final week in January. The Van Outbound Tender Reject Index fell by 78 bps over the past week to 6.55%. Dry van rejection rates are 158 bps higher than they were this time last year.

The reefer market remains the tightest of the three equipment types though reefer tender rejection rates suffered the largest decline this week. The Reefer Outbound Tender Reject Index fell by 171 basis points over the past week to 15.28%, though it is 380 bps higher y/y.

The flatbed market was the only equipment type to experience tender rejection rates increase over the past week, a positive sign for a market that had been under pressure to start the year. The Flatbed Outbound Tender Reject Index increased by 161 bps over the past week to 11%, now up 175 bps y/y.

Spot and contract rates slide, still elevated compared to much of 2024

Spot rates are retreating off the recent highs fairly rapidly, but the declines shouldn’t be a surprise for two reasons: January and February are the slowest months of the year for freight (outside of holidays) and tender rejection rates have dropped from their recent highs.

SONAR: SONAR National Truckload Index (white, right axis) and Initially Reported Van Contract Rate (green, left axis)
To learn more about SONAR, click here.

The National Truckload Index (NTI) – which includes fuel surcharge and various accessorials – decreased by 6 cents per mile over the past week to $2.33. The NTI is 2 cents per mile higher than it was this time last year, though the comps this week were around the same time severe winter weather impacted much of the country last year. The linehaul variant of the NTI (NTIL) – which excludes fuel surcharges and other accessorials – fell by 7 cents per mile over the past week to $1.88. The NTIL is now just 6 cents per mile higher than it was last year, the narrowest the gap has been in quite some time.

Initially reported dry van contract rates, which exclude fuel, have given back some of the recent gains in recent weeks. Rates are down 9 cents per mile over the past week to $2.37, though that is still on the high side of the range set throughout 2024. Compared to this time last year, the van contract rate is up 7 cents per mile, or 3%, which is about to be expected, especially as publicly-traded carriers are starting to report increased revenue per loaded mile on a sequential basis.

SONAR: RATES.USA
To learn more about SONAR, click here.

The chart above, showing the spread between the NTIL and dry van contract rates, is trending back to pre-pandemic levels. Over the past week, the spread narrowed by 11 cents to minus 41 cents, which is in line with the 2019 average. Compared to this time last year, the spread is 12 cents per mile narrower than it was, another sign that the market is moving to a more carrier-friendly environment.

SONAR: SONAR TRAC rate from Los Angeles to Dallas.
To learn more about SONAR, click here.

The SONAR Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas suffered a fairly large slide over the past week, dipping below the contract rate once again. The TRAC rate from Los Angeles to Dallas decreased by 30 cents per mile to $2.31, a sign that capacity has quickly returned to one of the densest lanes in the country.

SONAR: SONAR TRAC rate from Atlanta to Chicago.
To learn more about SONAR, click here.

From Chicago to Atlanta, spot rates have been volatile, finally moving above contract rates and to the highest level in the past six months. The TRAC rate for this lane increased over the past week by 19 cents per mile to $3.31. Spot rates are now 51 cents per mile higher than contract rates, which will lead to tighter conditions along this lane.

Inflation fears, housing prices startle consumers

Unlike manufacturers’ cautious optimism, economic anxiety is on the rise among consumers for the first time in six months. 

The University of Michigan’s consumer sentiment index fell to 71.1 in January, below both analysts’ expectations of 73.2 and the previous month’s reading of 74.

There’s no cost like home

January’s decline is largely attributable to concerns about the return of inflation — specifically, beliefs about the potential threat of tariff-induced price increases.

Source: The University of Michigan’s Institute for Social Research.

Such concerns are critically important as consumer sentiment governs consumer spending, which is responsible for three-quarters of the U.S. economy. This growing pessimism could trigger a pullback in discretionary purchases, directly weighing on trucking demand.

The housing market is similarly in no great shape: In 2024, sales of existing homes were at their lowest since 1995. 

Sluggish activity in the real estate sector is hardly surprising, however, given that would-be homebuyers face the one-two punch of persistently elevated mortgage rates and rising housing prices. Median home prices surged to a record $407,500 in December, which also saw a 2.2% uptick in sales during the month.

Meanwhile, the average rate on a 30-year fixed mortgage continues to hover around 7%. Rates shot up in late 2022 following a series of aggressive interest-rate hikes from the Federal Reserve. At the time, mortgage rates were rising to a two-decade high. 

But, for the better part of the past two years, rates have remained more or less stable at 7% — a sharp contrast to the sub-3% mortgages of 2020-21. 

Unfortunately for buyers, the Fed is unlikely to alter rates at next week’s meeting and could defer its next cut until March or even May. The labor market, though cooling, is steady enough to placate the Fed. Inflation thus top-of-mind for Fed officials for the next few months, unless a tidal wave of layoffs and/or bankruptcies prompts them to resume cutting.

Irons in the fire

That interest rates are not falling any time soon is also a headache for the industrial sector. Manufacturers often require loans for their large capital investments, such as equipment or materials. In a high-rate environment, such firms will be persuaded to hold off, if possible, on any major investments until loans can be had at a better rate.

The S&P Global Flash (i.e., preliminary) US Manufacturing PMI saw a slight bump out of contraction to 50.1 in January. This reading, which is barely above the no-change line of 50, indicates the start of a very fragile recovery after months of stagnation.

Despite this gain, the US Services PMI tumbled from December’s 56.8 to 52.8, a fall that dragged the composite index to a nine-month low. Both sectors reported an intensification of inflationary pressures, driven by input costs that are rising at their fastest pace in four months. 

Even so, both sectors — but especially manufacturers — were hugely bullish on their future growth prospects. After seeing its largest monthly gain since November 2020, manufacturers’ confidence for the next 12 months swelled to its highest since March 2022. 

“Uncertainty in the lead up to the Presidential Election has been replaced with optimism about the future,” wrote Chris Williamson, chief business economist at S&P Global. “Looser regulation, lower taxes and heightened protectionism were all widely cited [by survey respondents], alongside a broader sense of improving economic conditions in the year ahead under the new administration.”

Nor was this optimism merely lip-service, as employment in January spiked at its fastest pace in two-and-a-half years. This rally was led by the service sector, though manufacturing did see its highest growth in six months.

Reflecting on how this data might influence interest-rate policy going forward, Williamson concluded: “Higher input cost and selling price inflation was broad-based across goods and services and, if sustained, could add to worries that a combination of robust economic growth, a strong job market, and higher inflation could encourage a more hawkish policy approach from the Fed.”

For more insights on trucking industry dynamics and economic outlooks, subscribe to FreightWaves’ newsletters and stay updated with the latest trends and analyses.

Airfreight outlook remains bright to start new year

Cargo is ready to be loaded on a large aircraft using a hydraulic lift.

Air cargo demand growth has maintained momentum on the heels of a robust 2024, but could be cut by up to two-thirds as the market normalizes and trade conditions turn less favorable, analysts say. But even 4% growth, on the low-end of projections, would be considered a solid year by most industry stakeholders.

Global volume and rates have eased in the first two weeks of January, reflecting the post-holiday seasonal decline since the end of peak shipping activity in early December. But industry professionals say the year has started strong compared to historical trends.

Demand during the first three weeks of January was on par with the same period in 2024, when air cargo networks were still in the early stages of recovering from a prolonged downturn, according to freight analytics firm Xeneta. Rates softened early January, according to the Baltic Air Freight Index and Xeneta, but were still up 17% year over year.

As of early January, airfreight rates on the all-important China-North America trade corridor have fallen slightly less than typical from their traditional December peak. Prices out of Shanghai and Hong Kong are down about 20.5% compared to an average historical decline of 26%, a report by Bascome Majors of Susquehanna Financial Group showed. 

Logistics companies say volumes are rebuilding after a short slump at the tail end of December. 

Analysts attributed the improved seasonal economics to businesses stockpiling inventory to protect against China tariffs threatened by President Donald Trump and an earlier Lunar New Year, which starts Jan. 29. Businesses often move shipments forward to avoid delays in anticipation of factories and warehouses in China gradually reducing production and then closing for the holiday, which can result in operations being halted for up to a month. 

“The end of 2024 was exceptionally strong. While we traditionally see a dip in the second half of December, this year was different. Week 51 experienced only a minimal decline, and Week 52 outperformed expectations, delivering the strongest load factors we’ve seen for this period in years,” Leonard Rodrigues, director of revenue management and network planning at Etihad Cargo, the cargo subsidiary of Etihad Airways, said by email. “The consensus suggests this strength will carry into January, leading up to Chinese New Year. While some geographies are performing below historical levels, others are outperforming, which has balanced the overall market performance.”

Taiwan-based freight forwarder Dimerco Express Group sees the market in similar terms.

“Starting mid-December, we’ve seen a significant uptick in cargo volumes, particularly for consumer electronics. This is unusual, as the market typically slows down after Dec. 5,” said Kathy Liu, vice president global sales in marketing, in the company’s monthly market update. “However, this year, the peak is expected to extend all the way to late January, just ahead of Chinese New Year. What’s interesting is how general cargo has avoided the usual October-November e-commerce rush to better optimize capacity and costs. This could indicate a new trend going into 2025.”

Demand for the entire month of December increased 11% year over year against a 2% bump in capacity (consulting firm Rotate showed capacity at plus 8% versus 2023), helping global spot rates increase 15% to nearly $3/kg, Xeneta said in a monthly report. It marked the fourteenth consecutive month of double-digit growth and meant 2024 volumes increased 12%. Demand growth slowed to 10.5% between September and December from about 13% earlier in the year, largely because of more difficult year-over-year comparisons as the market’s recovery took off in 2023. With less volatility, spot rate growth for the final four months decelerated to 11% from 21%.

Rates for immediate transport increased the most last month on the Europe-to-North America corridor, rising 21% to $3.27/kg, its highest level in more than two years. The spike is likely due to reduced cargo capacity as passenger airlines reduce winter flying schedules and all-cargo operators relocate freighters to Asia, Xeneta said. 

Meanwhile, air cargo yield increased 7.8% in November – 52% higher than in 2019, according to the latest statistics from the International Air Transport Association.

The ingredients for last year’s stout market included the effective cutoff of the Red Sea by Houthi rebel attacks on merchant shipping that led companies to divert some time-sensitive shipments to air, air space restrictions around Russia that forced Western airlines into longer routes and effectively reduced capacity, and the surge in e-commerce exports from China.

It was a banner fourth quarter for airlines. United Airlines on Tuesday reported cargo revenue jumped 30% to $521 million, while full-year revenue was up 16.6% to $1.7 billion. Delta Airlines said cargo revenue increased 32% to $249 million. Revenue grew 14% to $822 million in 2024. American Airlines’ cargo division didn’t perform as well, with revenue growth of 10% to $220 million. Cargo revenue actually declined 1% for the entire year to $804 million – a surprising outcome considering the strong market conditions. 

E-commerce is expected to continue being the primary catalyst for air cargo volume growth this year. Experts attribute more than 50% of air cargo volumes out of Asia last year to e-commerce. The influx of large online marketplaces reserving huge allotments of container space has limited capacity for traditional freight like apparel, electronics and automotive parts, and influenced the upward move in yields. 

More cargo owners last year shifted to longer-term airfreight contracts with durations of one year or more to lock in better rates. Those contracts accounted for 63% of all transactions executed in the fourth quarter, a 16 point increase compared to the same period in 2023, according to Xeneta. At the same time, freight forwarders negotiated nearly half of their volumes in the more volatile spot market, which undercut margins as airlines raised selling rates. For 2025, airlines have announced a 10% increase in contract rates, Taiwan-based logistics provider Dimerco Express said in a recent market update. 

Caution flags

Economic recoveries don’t last forever, though. Multiple analysts, including Cargo Facts Consulting, project volume growth will cool down to 4% to 6% this year. Downside risks include the resumption of shipping through the Suez Canal if the Israel-Hamas cease-fire holds, a soft manufacturing outlook, rising protectionism, continued geopolitical tensions and U.S. plans to restrict Chinese e-commerce sellers from leveraging a duty-free, expedited clearance program that enables their direct-to-consumer logistics business. Those e-commerce shipments almost entirely rely on air transport. 

Also, a potential strike at many U.S. ports was averted this month when dockworkers and marine terminal operators agreed on a six-year contract, eliminating the need for shippers to rebook urgent cargo with air carriers.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

White House moves to exclude Chinese e-commerce from duty-free import

Analysts predict air cargo bull market will cool 50% in 2025