U.S. Truck Freight Market Witnesses Historic Decline in 2023
The U.S. truck freight industry experienced a significant downturn in 2023, with a historic decline in shipment volumes and spending, as reported by the U.S. Bank Freight Payment Index.
The fourth quarter of 2023 marked a sharp decrease compared to the same period in 2022, with shipment volumes plunging by 15.7% and spending by shippers receding by 13.5%. This year-over-year drop in volume is the largest since the inception of the Index.
Bob Costello, senior vice president and chief economist at the American Trucking Associations, noted the market's downturn is influenced by companies reducing inventories and a shift in consumer spending towards experiences rather than goods. “The truck freight market is feeling the impacts of these changes, and we're keeping a close eye on whether companies will replenish inventories in the coming quarters, potentially revitalizing trucking,” Costello stated.
Southeast and Northeast: These regions experienced the most acute slowdowns in volume, with decreases of 25.4% and 23.8% respectively.
Midwest: Although all regions saw a drop in spending year over year, the Midwest led this decline at 17%.
West: The West managed a quarter-over-quarter increase in spending, albeit still down 7.4% compared to last year.
Southwest: This region, previously robust in truck freight, witnessed significant contraction in the fourth quarter due to slowing retail and home sales.
Northeast and Southeast: These regions faced the toughest challenges, with the Southeast recording the largest year-over-year drop in volume.
Bobby Holland, director of freight business analytics at U.S. Bank, commented on the overall trend: “Our Index throughout 2023 consistently showed a significant downturn in shipper spending. However, there are signs suggesting a rebalancing of trucking supply with demand.”
National and Regional Data Snapshots
Linked quarter: -10.9%
Year over year: -15.7%
Linked quarter: -1.4%
Year over year: -13.5%
Linked quarter: -2.9%
Year over year: -16.3%
Linked quarter: 0.2%
Year over year: -7.4%
The U.S. Bank Freight Payment Index report paints a picture of an industry grappling with significant shifts in both supply and demand, regional variations, and broader economic trends. The truck freight market's future hinges on the balance between inventory replenishment and consumer spending patterns, which are currently tilted towards experiences over tangible goods.
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