Improving Market for Truckers:  

The latest data reflects improving conditions for truckers, an uptick in for-hire truck tonnage to end the year, and a jump in spot market prices, reports’s James Menzies in a recent economic report.

The December reading of the American Trucking Associations’ (ATA) For-Hire Truck Tonnage Index is in and 2023 was the worst year for freight since 2020, and the only year since then in which tonnage contracted.

This despite ending the year on an up-note in December, up 2.1% from November.

Year over year, tonnage was down 0.5% in December, marking the 10th straight YoY decrease.

Additional data from the ATA, specifically its Technology & Maintenance Council (TMC) and service management platform Decisiv, confirms that parts and labor expenses rose 1.9% in the third quarter of 2023.

“This return to increasing parts and labor costs highlights the fact that fleets must remain vigilant when it comes to managing their maintenance expense data,” said TMC executive director Robert Braswell.

“Despite running fewer miles to handle lower freight volumes and the influx of less repair intensive new trucks, fleets and service providers are still challenged by inflationary cost pressures on parts prices and higher labor costs,” said Decisiv president and CEO Dick Hyatt.

ACT Research reports in its For-Hire Trucking Index that there are signs of a gradually recovering freight market.

“With volumes stabilizing and capacity contracting, the for-hire Supply-Demand Balance has been signaling an impending increase in freight rates for a few months,” explained Tim Denoyer, ACT’s vice-president and senior analyst. “Truckload spot rates are 12% above the seasonal pattern in January following the cold snap. While weather effects should revert in the coming months, freight is an outdoor sport, so the cycle will likely find a higher trajectory as the reversion happens amid tightening capacity and recovering demand.”

Denoyer added capacity continues to be added by private fleets, but the pace of additions is slowing. For-hire trucking capacity, by contrast, is contracting.

Trucking conditions improved in November thanks to steadily falling diesel prices. FTR’s Trucking Conditions Index jumped from -6.07 in October to a near-neutral -1.35 reading in November.

“Unfortunately for carriers, November’s market conditions likely were the least unfavorable that they will be through at least the first half of this year barring another sustained slide in diesel prices,” said Avery Vise, FTR’s vice-president of trucking.

“However, as we have noted frequently, lower fuel costs are complicated. Falling diesel prices tend to slow exits of very small carriers, which could further depress capacity utilization and deflate any upward pressure on rates. Meanwhile, freight demand shows no signs of improving significantly in the near term. Trucking should see incremental improvement throughout 2024 but not enough to create any real inflection in the market.”

Read full report here.

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