Expectations are for freight markets to continue bouncing along the bottom in the near term, with some holiday volatility and a change in trajectory on the way next year, according to the latest release of the freight & transportation forecast.
“We see retail sales turning back to real growth this holiday season, after over a year of declines. The acceleration in real disposable income growth as inflation slowed sharply this year, and the ongoing strong labor market, support a recovery in goods demand. The end of destocking, rise in imports, and recent easing in oil prices improve our confidence that peak season will end on a higher note for freight demand,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “But although private fleet capacity expansion continues to pull freight from the for-hire market, we think equipment purchasing patterns are changing, which should propel the freight cycle forward in 2024.”
Spot load postings remain low, and while spot equipment posts have declined, the rebalancing of capacity is making little net progress with the industry still adding capacity. Slowing Class 8 tractor sales—recent selling rates are already down 20% from the record 1H’23 level—means fewer new additions, and the pace of fleet exits remains historically elevated, so the removal of overcapacity is gaining momentum under the surface.
“With freight volumes broadly starting to pick up, the spot market is still loose heading into winter, but we expect the trajectory of rates to shift in 2024,” Denoyer concluded.
The monthly 58-page ACT freight forecast provides analysis and forecasts for a broad range of U.S. freight measures, including the Cass Freight Index, Cass Truckload Linehaul Index, and DAT spot and contract rates by trailer type. The service provides monthly, quarterly, and annual predictions for the TL, LTL, and intermodal markets over a two- to three-year time horizon, including capacity, volumes, and rates. The Freight Forecast provides unmatched detail on the freight rate outlook, helping companies across the supply chain plan with greater visibility and less uncertainty.
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After a long downturn, freight demand fundamentals are gradually improving as pandemic substitution effects fade, destocking plays out, and real incomes improve, according to the latest release of the freight & transportation forecast.
“With both the shipments component of the Cass Freight Index® and the Cass Truckload Linehaul Index® rising sequentially this month, the freight cycle is at least starting to flatten out, with smaller y/y declines,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “We continue to expect the freight cycle to turn once capacity tightens, but early signs of 2024 equipment production suggest that may be a while.”
“The trucking industry has broadly reached an uncomfortable equilibrium with spot rates steady for several months now. Net fleet exits, which have been going on for a year, are worsening, and although equipment demand at larger fleets remains fairly robust, there are signs that lower new equipment demand will lead to a tighter freight market over the course of 2024,” he added.
“Even as the freight demand cycle should improve in 2024, the demand outlook remains soft for this winter as the industry continues to add equipment capacity into an oversupplied market. Class 8 orders over the next few months will be pivotal in setting the tone for capacity and rates in 2024,” Denoyer concluded.
The shipments component of the Cass Freight Index® rose 1.9% m/m in August, or 0.8% m/m seasonally adjusted.
Private fleet growth is evident as Class 8 tractor retail sales are on pace to set a record this year, yet for-hire fleets are by and large demonstrating capital discipline. Thus, we think a substantial part of the decline in shipments is due to private fleets insourcing freight from the for-hire market.
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