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U.S. Bank: Freight shipments and costs step higher in Q2

West and Southwest see 30% jump in freight spend

Freight payments data shows increase in contractual truck freight. (Photo: Jim Allen/FreightWaves)

Freight payments data released Wednesday showed a sequential uptick in trucking shipments during the second quarter, reversing the declining trend seen in the prior two quarters. Freight spending advanced again in the period as elevated fuel costs continue to push up all-in rates.

A national trucking index published by U.S. Bank (NYSE: USB) showed volumes were up 2.3% from the first quarter with spending up 3.3%. Shipments in the quarter were slightly higher than the historical average “as contract freight outperformed the traditional spot market,” the report stated. As the spot market has loosened and rates have fallen, routing guide compliance among carriers has stepped higher, resulting in the index’s advance.

“The economy contracted in the first quarter of 2022, which allowed shippers to pull freight out of the spot market,” the report continued. “This resulted in significant drops in spot market prices and volumes. More freight was moved back to their contract carriers.”

Data provided by the American Trucking Associations on Tuesday also showed that truck freight continues to be robust for carriers hauling under contracts. The group’s seasonally-adjusted, for-hire tonnage index increased 2.7% from May to June. The index was 7.9% higher than June of 2021, which was the largest year over year increase recorded in the past four years. The data set is mostly derived from contract freight.

On a y/y comparison, truck freight was down 0.9% in the second quarter, according to U.S. Bank data, but spending surged 19.7%. However, this was the smallest y/y increase in freight spend recorded since the first quarter of 2021.

The data showed contract pricing held up in the period with the spot market seeing a material step lower. Also, a notable spike in diesel fuel prices, 70% higher y/y on average during the quarter, was a big reason for the jump in the cost data set.

“Household consumption of goods decelerated or even contracted slightly, housing starts decreased with higher home prices and mortgage rates, but factory output held strong,” the report said.

Chart: (SONAR: NTI.USA) The National Truckload Index – a seven-day moving average of booked spot dry van loads inclusive of fuel across 250,000 lanes – has fallen significantly from highs recorded earlier this year. To learn more about FreightWaves SONAR, click here.

The Northeast saw the biggest jump in shipments, up 7.3% from the first quarter and 8.8% above the year-ago level. The Midwest saw the second-largest jump, 6.8% higher sequentially but 0.3% lower y/y. The report credited “solid manufacturing output” as the driver of the relative outperformance in these regions.

Freight spend was the highest in the Southwest and West, advancing 4.8% and 4.3%, respectively, from the first quarter. Both regions also saw the highest y/y growth at roughly 30% in the quarter. The West also saw the largest y/y increase in shipments at 9%, but those volumes were still 0.7% lower than the first quarter.

“While we’ve seen bigger jumps in spending in other quarters over the past year, the second-quarter increases were significant,” said Bobby Holland, VP and director of Freight Data Solutions at U.S. Bank. “Contract carriers seemed to hold their prices relatively steady, but high levels of fuel surcharges likely drove up spending.”

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.