The freight market continues to remain stable and in shippers’ favor, according to recent data from Uber Freight. Consumer spending has recovered from a winter slowdown, and the manufacturing sector has expanded for the first time in 16 months—factors that illuminate a resilient economy.
However, a market turn is still possible later this year, as spot-to-contract rate spread normalizes and carriers right-size their headcount.
Key takeaways:
- The truckload market is continuing its journey to supply-demand balance. After the U.S. manufacturing sector grew for the first time in 16 months—with the ISM Manufacturing PMI index rising to 50.3 in March—the demand for truckload recovered following a slowdown in early 2024.
- On the supply side, for-hire trucking carriers added 4,100 jobs in March, the highest increase since June 2022.
- The state of spot and contract rates should be of particular interest to shippers, especially as they seek to plan and manage their budgets for the second half of the year. Spot and contract rates fell in February, March, and April; and contract rates, specifically, remained flat and were 14% lower year-over-year.
- After surpassing China as the lead trading partner for the United States last year, Mexico remains a cornerstone of economic progress. The total trade value between both countries reached $745.6 billion in 2023, and 81% of Mexico’s exports were shipped to the United States.
- Cargo theft also continues to escalate. During January and February, the country reported 1,381 theft incidents. Additionally, Mexico continues to capitalize on the benefits of nearshoring. Last quarter, the Secretary of Economy identified 73 investment announcements, representing $31.5 billion and 39,000 new direct employment over the next 2-4 years.
- The transportation industry is responsible for as much as 11% of worldwide carbon emissions, emphasizing the need for logistics teams to build greener supply chains.
“Both inflation and the labor market seem to be more resilient to the tightest monetary policy seen in decades. Consumer prices in the U.S. have surprised to the upside for three months in a row. The unemployment rate fell to 3.8% in March as the economy added 300,000 payroll jobs, the highest increase since January 2023 (tied with May 2023),” according to Uber Freight. “The recent rise in inflation and employment indicate that the Fed is likely to keep the Federal Funds Rate higher for longer. Despite that, freight demand is back to growth mode. Retail sales rebounded in March and manufacturing output expanded for the first time in 16 months. However, the freight market unexpectedly added more capacity in March. For-hire trucking carriers added 5.1K jobs, the highest increase since June 2022, except for September 2023, when carriers rushed to hire [Yellow’s] laid off workers. In addition, the number of new trucking carriers authorized by FMCSA exceeded authority revocations for the first time since March of last year, and the second month only since October 2022.”
