Freight Spend, Shipments Soft Again In August

In a new article from ZeroHedge, Freight Spend, Shipments Soft Again In August

Folks, these numbers are just ugly I'm afraid. I asked AI to give a breakdown of the significant statistics from the article. I highlighted the particularly ugly ones:

Shipments:

• August 2024: Down 1.9% year over year (y/y).
• July 2024: Down 1.1% y/y.
• Projected Decline for September 2024: Expected to be down 3% y/y.
• 2024 Forecast: Expected to decrease by 3% to 4% for the full year.
• 2023 Decline from 2022: 5.5% y/y.

Volume Data:

• Seasonally Adjusted Increase from July to August 2024: Up 1%.
• Comparison to 2022: Down 12.3%.

Freight Spend (Expenditures Index):

• August 2024: Down 9% y/y and 1.3% from July.
• July 2024: Down 6.2% y/y.
• First Half of 2024: Down 16% y/y.
• 2024 Forecast: Expected to decrease by 11% to 12%.
• Comparison to August 2022: Down nearly 32%.

Inferred Freight Rates:

• August 2024: Down 7% y/y and 2% from July.
• 2024 Forecast: Expected to decline by 8% y/y.
• 2023 Decline from 2022: 14% y/y.

Diesel Fuel Prices:

• August 2024: Down 3% from July, 16% y/y.
• Cass Truckload Linehaul Index:
• August 2024: Down 3.3% y/y and 0.6% from July.

Man, that is just ugly. Notice that 2024 is down significantly from 2023, which was down significantly from 2022. So we've had two very bad years back to back. I wish I had better news, but things will not pick up anytime soon, it appears.

These statistics highlight a consistent downward trend in both shipments and expenditures within the freight market, with some slight improvements in monthly comparisons but still showing significant declines when compared to previous years.

Being a driver on a dedicated account has shielded me from some of the market trends. When I would read here in our forum about drivers waiting for loads, I would always marvel at how well my situation was working. To be honest, it's still going fairly well, but I've noticed a trend lately.

My loads keep getting lighter. In other words, the volume of freight I'm moving is way down from what it has been. I'm still running high miles because of my customer's locations in relation to the shipper. The customer isn't buying as much, but that doesn't change the cost of delivering the goods.

My employer is taking the hit. I don't want to see pay cuts coming our way, but that kind of thing wouldn't surprise me. I don't think what we're going through is sustainable. Something has to give somewhere.

Markets always correct themselves. There's no doubt this one will. The weakest point in the chain fails first. I'm still waiting to see where the adjustments will take place. So far, the market keeps accepting low rates, but that is clearing out a lot of the weaker companies and really putting a strain on the stronger entities.

I had a load last week with 1,900 miles, but it was less than 7,500 pounds. Then they brought me back empty because they couldn't secure a back haul that would get me back in a timely manner. That's no way to run a truck. I'm getting more revenue than the truck. That means the company is losing money.

My loads keep getting lighter. In other words, the volume of freight I'm moving is way down from what it has been. I'm still running high miles because of my customer's locations in relation to the shipper. The customer isn't buying as much, but that doesn't change the cost of delivering the goods.

These nuances are why large-scale economic activity is almost impossible to measure and nearly impossible to predict. There are a million ways to run any single corporation. Understanding how millions of businesses interact across our economy, and figuring out how we're doing as a whole is simple too complex, like the weather or nutrition. There are too many variables to consider.

I can't predict it any better than anyone else, but I feel like we have years of bumpy roads ahead.

My weekly average paid miles trend follows the economic slowdown.

2022 = 2,550 mi/wk 2023 = 2,493 mi/wk 2024 = 2,281 mi/wk

I’ve been out 3 weeks now in September with 2,207 mi/wk so far.

These averages include all weather and shop DT, plus sitting waiting during loads.

Since April 2023 many of my reefer loads have an extra 18 to 24 hours than would normally be needed to make deliveries.

I’m sitting 26 hours on current load in Fort Worth waiting to not arrive more than 1 hour early at my customer 1/2 mile away.

Last month had two 34 resets that I didn’t need.

I’ve been driving 2+ years now for Prime as a company OTR driver. They are trying to spread the work around to give us all something.

Even though my CPM rate has increased over 2 years, my pay has decreased with fewer miles. I grossed $74K for 2023. This year I might make $70K, but could be less.

I had a lot of shop DT in 1st quarter, finally changing trucks in March. Unfortunately I can’t make it up as freight keeps slowing down.

This is no suprise to me. We have been hearing the last 2 years we are at the bottom and in 2 quarters things will rebound. Then in 2 quarters it doesn’t happen. They just keep kicking the can down the road.

Noone knows how long this is going to last, but until the gov’t pulls it head out of the sand and actively does things toward improvement of this economy it will continue.

A while back on a thread I had put forth that the retailers and manufacturers are going to keep these market conditions as long as possible. They have been having the highest profits in the history of their companies in many cases. I also said they were intentionally throttling supply to create the effect of deman pricing and leverage low cost shipping. I think it's pretty clear that is playing out.

I don't think this is a market swing, I thing it's a fundamental shift in the marketplace and it's here to stay.

I maintained that shipping costs are one of the largest factors, so by throttling production and supply, theyre keeping shipping costs on the floor while simultaneously raping masive price hikes to the consumer. On the surface it wouldn't seem like shipping is a large cost, but that's because we only look at the shipping cost for the finished product and not all the rest of it.

Take a gallon of milk for example. Here's a breakdown of the shipping required for it.

1. Truckload of hay to the dairy farm, most use feeder lots, not free range.

2. Ship the bulk milk from the farm lot to creamery.

3. Shipment of plastic pellets to the carton plant.

4. Shipment of cartons and lids to the creamery.

5. Shipment of bottled milk to DC.

6. Shipment of bottled milk from the DC to stores.

I've personally done all those steps in the chain with the exception of bulk milk. It's not uncommon to have 5 or 6 shipping events for a single finished product. When you look at a composite total of the shipping, it's a huge expense.

Aa long as they continue to post massive profits while spending less on the component costs, the market is unlikely to change. It may seem counterintuitive, but I think the marketplace is moving from high volume low price to lower volume high prices. Consumers have shown that they will accept the price hikes.

Whoever controls the food & water supply controls the people. That’s been the game plan for a long time. COVID gave them the “crisis” to ramp it up. There is another “plandemic” in the works.

retailers and manufacturers are going to keep these market conditions as long as possible.

I don't see this market as something retailers and manufacturers created. It's basically the results from our government shutting down our economy and then thinking they'd just flip the switch back and we'd go right back to normal.

Trucking was in huge demand during the pandemic. Otherwise people had no way of getting their goods. Excess capacity, or too little capacity, is generally the factor that pushes rates up or down. We've been at excessive capacity rates all during this time of "recovery."

Retailers and manufacturers don't have any power to keep rates where they are unless shipping capacity gives it to them. What I mean is, trucking companies can tell the retailers and manufacturers to "shove it" if they don't want to work for those rates. The problem is this excessive capacity means that some other freight company will gladly do it.

So, while I won't argue with anyone who thinks the pandemic was orchestrated, I can assure you retailers and manufacturers are merely taking advantage of the climate. They don't have a lot of control without the current conditions allowing it.

I agree that they didn't create it, but they are doing everything they can to keep it. That means slowing production and reducing volume. The corelation between their profits and the reduced volume is clear.

The large trucking corporations have responded and they will do everything thing in their power to keep lowering labor costs and keep them there even if the market volume does increase.

I think the market will be in this pattern for a long time to come.

Davy, you are basically describing what happens during times of inflation. Companies have to charge more for their products because consumers are buying less.

I was in manufacturing for 30 years. We never purposely produced less just so we could charge more for it. When business slowed, we weren't out there making deals. We had to raise prices because we had employees and bills to pay. The money had to come from somewhere.

We would cut expenses, let people go, or not pay ourselves for a while. I always said only a fool would borrow to meet payroll, but that's especially true during times of inflation.