Truckload demand in Q2 held steady compared to the previous quarter, but remained 1.2% higher year-over-year. This growth is likely due to a rise in real consumer spending on goods (up 2.3% annually) and containerized imports (up 10.4% annually), according to Uber Freight.
On the supply side, long-distance truckload employment dipped slightly compared to last year, leading to a small decrease (0.3%) in truckload supply in Q2. However, despite expectations of a larger correction, the overall supply only fell 0.2% year-over-year, due to stronger-than-anticipated sales of Class 8 trucks.
“Real personal spending on goods rose 2% in the second quarter. Despite being up 2.3% year-over-year, spending growth fell short of the historical average of 3% to 4%. Consumers’ real incomes rose slightly in June, but were only 1.0% higher year-over-year, also below the historical growth of 2% to 4%,” according to Uber Freight.
Key takeaways:
- Trucking employment fell 11.7K in the last 4 months (-0.75%) and was 2% lower than its year-earlier level. Long-distance TL employment, a better predictor of spot rates, also fell for 3 consecutive months and was 1.7% lower year-over-year, but was still higher than the 2019 levels, an already oversupplied market back then.
- Dry van linehaul spot rates rose 6 cents per mile in June, mirroring seasonal trends and extending gains from May. Rates were on average 2.5% below Q1, but only because of January’s winter storms which pushed rates higher.
- Spot rates fell sharply following the July 4 peak. However, the recent increase brought rates flat year-over-year, finally ending a 26-month stretch of negative comparisons—the longest since the Great Recession.
- As excess capacity gradually exits and demand remains stagnant, expect a slow, supply-driven recovery in H2 at best.
- Contract rates remained flat, and will likely continue to be so for the remainder of the year.
- Truck operating costs rose 2 cents per mile despite a 9-cent decline in diesel prices.
- Annual full-network RFP events continue to be the trend with supplemental mini-RFPs utilized to support the route guide as needed between bid cycles
- After record activity in 2023, RFP events have been about flat through H1 2024 Strategic Trends.
- Dray capacity is plentiful across the intermodal network. With lower volumes, the focus continues to be on improving dray efficiency through reloads and a reduction of empty miles.
- Rail capacity and container availability are plentiful. There is still a lot of idle container capacity that is ready to be utilized as demand increases.
- Intermodal volume was up year-over-year in the second quarter. It is now projected to be up year-over-year by 6.4% in 2024, and is projected to be up just over 2% in 2025 (per FTR).
- Nearshoring activity is driving shipper volume to Mexico, and the railroads are responding with new and improved service offerings.
- The market continues to favor shippers. Spot activity in bulk network continues to drop – from 14.8% of loads in 2Q23 to 10.9% in 2Q24. Capacity remains soft, other than short-term spikes related to recent weather events. Shippers with private fleets continue to prioritize their own fleet utilization, which impacts available freight for external carriers when overall volume is down. Outlook for 2025 has softened slightly since last quarter, but there are some indications of a temporary bump in late 2024.
- The United States hit 4.3% unemployment, marking the highest unemployment rate since November 2021. After 6 consecutive months of warehouse employment retracting, June marked the first month of positive job growth in this sector at +0.03%. The entirety of Q3 was very flat for warehouse employment.
- Non-supervisory warehouse wages hit another new all-time high of $24.30 in May before landing at $24 at the end of Q2. This is +0.8% QOQ jump and +4.4% YOY.
- The European spot rate index rose 4.9% in the last 3 months, whilst the contract rate index fell by 0.25%. FTL and LTL capacity remains positive, with network carriers keen to win new LTL and groupage business to maintain density.
- U.S. import container volume in June declined 2.1% from May but was 10.4% higher YoY.
- Mexican carriers continue including empty miles within their linehaul rates to keep up with northbound demand and reposition equipment from the border to the shipping points in Mexico.
- U.S. equipment availability in Mexico for direct shipments might decrease starting Q3 2024 as the U.S. domestic market recovers.
- Cargo theft and driver shortage continues to be one of the biggest challenges for the transportation industry in Mexico.
