Trucking freight challenges continued during the second quarter of the year, as the U.S. Bank Freight Payment Index recorded the first time in its history that shipments and spending showed both quarterly and yearly declines for a second consecutive quarter.
However, spend reduced significantly more than shipment volumes during the quarter, Minneapolis-based U.S. Bank said. That result was in line with trends in the broader economy, which has battled multiple headwinds of late, highlighted by consumers continuing to spend more on services, versus goods. That circumstance punishes the trucking sector in particular because service transactions require less freight capacity than goods.
By the numbers, the bank said that preliminary data reported by the Bureau of Economic Analysis (BEA) shows that personal outlays for all goods during the second quarter were up approximately 2.1% from a year earlier. That modest rise was not enough to keep pace with inflation, implying that the actual volumes of goods buying was down. Conversely, similar data from BEA shows that outlays on travel (e.g., air transportation, hotels) were up between 15% and 20% over the same period.
Manufacturing activity was also down during the second quarter, based on preliminary data from the Federal Reserve. Housing starts, another significant contributor to truck freight, despite a strong May, was down during the second quarter from a year earlier.
Another recent trend that’s been a headwind for truck shipments is that shippers are now consolidating freight by waiting on full trailers, and thus reducing their overall shipment numbers. In light of those factors, truck freight continues to underperform relative to the broader economy, the bank said.
Yet another factor reducing truck freight volumes is weaker international trade, reflected in less cargo coming into seaports. Early second quarter data from the Census Bureau shows that the value of imported goods was off in the 7.5% to 10% range from a year earlier, while exports of goods were down between 6% to 8.5% during the same period.
Broken out into regions, shipments rose sequentially for the fifth consecutive quarter in the Southwest, gaining another 2.9% thanks to continued robust cross-border truck traffic with Mexico. However, the other three regions witnessed declines in shipments compared with the first quarter of the year, with the Northeast showing the steepest drop of 9.2%. And spending was universally down as truck capacity loosened everywhere during the last three months.