MercuryGate Logistics Landscape

Q4 Transportation Trends and Freight
Industry News

A tentative agreement ended a three-day dockworker strike at U.S. ports, but expectations for an early start to peak season holiday shopping promises to increase global supply chain demands. Weather events threaten additional Q4 disruptions and increased demand for regional transportation capacity.

Although the extension of dockworkers’ labor contract through Jan. 15, 2025, limited port shutdowns, the brief disruption is affecting trans-Atlantic shipping capacity. Port congestion across European hubs compounds the problem. Temporary capacity reduction along Mediterranean and North European routes could reach 30%.

Analysts estimate that an extended strike by the International Longshoremen’s Association could cost the U.S. economy $540 million per day. East Coast and Gulf Coast ports handle about 43% of all U.S. imports – including retail, manufacturing, and 91% of all pharmaceutical imports. Work stoppage at those ports promises higher supply chain costs in numerous areas, from local port disruption surcharges to shipment delays, additional demurrage fees, and product shortages, especially in the retail space.

The retail sector is already focused on meeting an earlier-than-usual holiday shopping season, where 68% of consumers surveyed say they plan to shop before mid-November. Of those consumers, 53% say they are unwilling to pay more to guarantee timely package delivery, and 18% say they are troubled by increased shipping costs. Expect peak season surcharges from some parcel carriers to add to the cost to serve end customers.

Peak season transportation capacity demand coincides with recovery efforts in the U.S. Southeast following Hurricanes Helene and Milton. Already demand spikes are affecting the flatbed sector after spot market load posts soared as shippers tried to reposition goods ahead of the storm. With road closures through affected areas – including a months-long closure of I-40 between Tennessee and North Carolina – shippers moving goods through the region can expect significant delays.

Long-haul freight redirected around the affected areas could absorb excess truckload capacity, putting upward pressure on rates, especially as the agriculture harvest season puts grains, cotton, and meat shipments on the road, many toward Gulf Coast and East Coast ports. There, container shipments account for 10% of grain exports and almost all cotton and meat exports.

Analysts predict these pressures could create a better rate market for carriers as rates rise in the truckload, intermodal, and less-than-truckload markets. Shippers – and end consumers – likely face the brunt of those costs.

Shipment optimization can help supply chain participants control some of those transportation costs, while freight cargo visibility down to the SKU level empowers shippers to monitor movements and adjust supply chain strategies to limit disruption and protect customer experience.

Other Freight Industry News and Economic Factors Affecting Q4

Transborder Freight on the Rise

Total transborder freight between the U.S., Canada, and Mexico during July reached $134.2 billion across all modes, an increase of 5.6% compared to the prior year. Most notably, freight between the U.S., and Mexico was up 8.2% year-over-year to $70.7 billion. Freight moving between Canada and the U.S. was up 2.8% from July 2023 to $63.5 billion. Mexico has led Canada in freight dollar value of transborder freight for the past 17 consecutive months.

  • Trucks moved $86.8 billion of freight, up 8.4% compared to July 2023.
  • Railways moved $16 billion of freight, down 6.8% compared to July 2023.
  • Vessels moved $10.5 billion of freight, down 8.1% compared to the prior year – and 13.2% less mineral fuels.
  • Pipelines carried 25.1% more mineral fuels for a total of $10.2 billion in freight.
  • Air moved $5 billion of freight, up 12.3% compared to the prior year.

U.S. International Trade Deficit Dips

The U.S. goods and services deficit dipped $8.5 billion to $70.4 billion in August, a 10.8% decrease, according to the U.S. Census Bureau of Economic Activity. During the month exports increased to $271.8 billion – an increase of $5.3 billion compared to July. August imports declined $3.2 billion to $342.2 billion.

Year-to-date the goods and services deficit increased $47.1 billion or 8.9% compared to the same period in 2023. Exports increased $79.0 billion or 3.9%, while imports increased $126.1 billion or 4.9%.

Construction Spending Increases Year-Over-Year

Total construction spending during August was estimated at $2,131.9 billion, slightly below the revised July estimate and 4.1% above the August 2023 estimate. During the first eight months of 2024, construction spending totaled $1,428.5 billion, which is 7.6% (±1.2%) above the same period in 2023.

For the period, residential construction was at a seasonally adjusted rate of $899.9 billion, 0.3% (±1.3%) below the revised July estimate. Non-residential construction was at a seasonally adjusted annual rate of $742.2 billion, 0.1% (±0.7%) below the revised July estimate.

Fuel Costs Continue Downard Trend

Fluctuating fuel prices continue a generally downward trend, with the U.S. average price for regular gasoline on Oct. 7 down 54.8 cents compared to last year. The average cost of $3.136 per gallon is 7.8 cents above the 2024 low of $3.058 on Jan. 15. Similarly, the U.S. average price on-highway diesel is down $91.4 cents compared to the same period in 2023.

Manufacturing Contraction Persists

New orders for manufactured goods are down three of the past four months, and the Institute of Supply Management said its manufacturing PMI reflects a sixth straight month of contracted activity. Some of the weakness comes from a slump in inventories, but in a positive sign, productivity continues to inch up.

Retail & Wholesale Inventories

Retail and wholesale inventories inched up slightly month-over-month. Estimated at $905.7 billion, wholesale inventories for August were up 0.2% from July and 0.7% from August 2023. Both changes are within the margin of error. Retail inventories at the end of August climbed 0.5% (±0.2%) to $816 billion, an increase of 6.3% (±0.5 percent) compared to August 2023.

Freight Industry News & Trends to Monitor in 2H 2024

In this environment, companies pursuing supply chain strategy shifts – such as bringing production into the U.S. and adjusting inventory management – are realizing sales benefits.

Persistent economic headwinds in the second half of the year will continue to drive freight industry news and transportation market volatility into 2025. Granted, shippers can achieve transportation savings through lower contract and spot rates – but likely only until the first of next year. While rising inbound cargo volumes at U.S. ports promise increased freight transportation demand, the overall market picture combined with additional costs jeopardize growth in Q3-Q4.

On the flip side, freight moving toward ports will be dramatically slowed by striking dockworkers along the East Coast and Gulf Coast. Members of the International Longshoreman’s Association, which represents 45,000 workers at those ports, began picketing Oct. 1 at cargo terminals that handle more than half of American import and export volumes, according to the Wall Street Journal. Import commodities flowing through East Coast and Gulf Coast ports include food, vehicles, heavy machinery, construction materials, chemicals, furniture, clothes and toys. 

Projected container imports into major U.S. ports in July, in 20-foot equivalent units (TEUs), reflect a 15.5% increase over last year, while the August forecast of 2.22 million inbound TEUs is up 13.5% year-over-year, according to Global Port Tracker.
U.S. International Trade in Goods in billions of dollars for August 2024.

The international trade deficit was $94.3 billion in August, down $8.6 billion from July, the U.S. Census Bureau announced Sept. 27. Exports of goods in August were $177.0 billion, $4.1 billion more than July exports. Imports of goods for August were $271.3 billion, $4.5 billion less than July imports.

Economic Influencers affecting Freight Industry News

Challenges clouding the economic outlook include ongoing pressures on consumer spending, illustrated by weak quarterly results from large-volume shippers like PepsiCo and Conagra Brands. Although U.S. inflation eased last month and the consumer price index fell from May into June hitting the lowest point since June 2023, the manufacturing outlook has not yet recovered.

Although merchant wholesaler sales inched up during May, new orders for manufacturing goods dropped following three consecutive monthly increases. Elevated supply costs and stagnant demand are lowering manufacturing companies’ expectations for a second-half rebound. As a result, many manufacturers are delaying investments in production and labor until uncertainty wanes. 

Monthly wholesale sales and inventories from January 2022 until December 2024, on a seasonally adjusted basis.

June 2024 sales of merchant wholesalers were $661.5 billion, down 0.6% from the revised May level, according to the U.S. Census Bureau of Economic Activity. Sales are up 2.4% from the revised June 2023 level. Below, total inventories of merchant wholesalers, except manufacturers’ sales brances and offices, were $903.0 billion at the end of June, up 0.2% (within margin of error) from the revised May level.

Total wholesale inventories in millions of dollars for July 2023, June 2024 and July 2024.

Manufacturing orders in June decreased $19.1 billion or 3.3%, according to the U.S. Census Bureau of Economic Activity.

Meanwhile, jobless claims fell in the week ending July 6, reaching the lowest level since late May, and the weekly decline in unemployment claims is the largest since September 2023. However, transportation sector unemployment in June rose above the pre-pandemic level of June 2019 and the overall U.S. unemployment rate.

The transportation sector unemployment rate rose 1.5 percentage points compared to June 2023 and was above the pre-pandemic level in 2019, according to the Bureau of Transportation Statistics. The U.S. Bureau of Labor Statistics reports that the U.S. unemployment rate, not seasonally adjusted, in June 2024 was 4.3% or 0.5 percentage points below the transportation sector rate. Truck transportation remained virtually unchanged in June 2024 at 1,548,600 from the prior month but was down 1.9% from June 2023.

U.S. Average Diesel and Gasoline Price Trends

Average prices for on-highway diesel increased $0.005 to $3.544 in the Sept. 30 report from the U.S. Energy Information Administration. The average U.S. price is down $1.049 compared to last year. 

According to the Sept. 30 EIA report, the U.S. average price for regular gasoline is $3.179, down $0.006 compared to the prior week and down 61.9 cents compared to September 2023.

Freight Industry and Transportation Indicators

Freight company layoffs in Q2 and early Q3 affected drivers, as well as enterprise and brokerage sales positions. At the same time, carrier exits outweighed new and reinstated operating authorities during Q2 with nearly 9,000 trucking businesses leaving the market in April.

Truck sale declines in June and a drop in Class 8 net orders predict a likely capacity contraction – and potentially rate increases – on the horizon. Sales decreased 24.7% compared to June 2023 and fell 8.2% compared to May 2024. For the year, sales are down 16.4%. Preliminary Class 8 net orders dropped to 13,100 units in June from 18,900 in May, down slightly from the 13,800 units in June 2023.

Net changes on a monthly basis of active carrier market additions (grants and reinstatements) compared to exits (revocations) in operating authority. About 9,000 trucking businesses exited the market in April, but that rate of exits lessened in May and June, according to the Federal Motor Carrier Safety Administration data compiled by Trucking Dive.

The Freight Transportation Services Index (TSI) which is based on the amount of freight carriers by the for-hire transportation industry, decreased 0.3% from May to June, according to the U.S. Department of Transportation Bureau of Transportation Statistics. The June 2024 level was 0.7% above last year.

Air freight industry experts anticipate surging peak rates, as bargain e-commerce shopping apps like Temu and Shein pressure the air cargo market out of China.

Peak season surcharges and fuel index changes are already affecting the parcel environment where many e-commerce shipments move. Announced increases affect fuel surcharges for UPS and FedEx, as well as demand surcharges for UPS services.

Support for Freight Industry Resilience

Supply chain participants have many technology tools available to support operations and competitive advantage through the end of 2024.

“Investments in emerging technologies, such as artificial intelligence, end-to-end visibility and advanced automation are expected to drive competitive advantage and greater resilience to future disruption in the logistics sector,” Logistics Management concludes in its analysis of the 35th Annual State of Logistics Report. “Because if there’s anything that can be concluded from the last five years it’s that there’s no certainty in anything anymore. Global conflicts spread into the logistics arena quickly. Nimbleness is not just an asset any longer—it’s a requirement.”

Discover how analytics, machine learning and artificial intelligence are ready to improve transportation management during MercuryGate’s recent webinar with thought leaders Steve Blough and Kevin LoGuidice. Watch it on-demand to understand how you can combine data reporting and analysis to streamline and improve execution across your supply chain.

Freight Industry News Determines Q2 Transportation Strategy Adjustments

Just as freight industry news hinted at a market rebound and an uptick in global supply chain performance, the Baltimore bridge catastrophe sent ripples across transportation networks. As a result, maintaining end-to-end shipment visibility and quickly adapting your transportation strategy is integral to controlling costs.

Economic impacts are still emerging following the closure of the Port of Baltimore, the nation’s top destination for roll-on/roll-off cargo. Locally, the closure affects freight transportation costs and service as 4,900 trucks using the Francis Scott Key Bridge daily face diversions, congestion, and longer travel distances. The U.S. Department of Transportation on April 19 reaffirmed that the port is slated to re-open by the end of May.

Until then, annual import arrivals of $23 billion in autos & light trucks and $5 billion in construction machinery, as well as agricultural implements, iron & steel, and other material handling equipment will divert to other East Coast ports. Expect cost and travel times to increase and demand to shift into new markets and modes. 

At the same time, additional supply chain pressures loom due to ongoing conditions in the Panama and Suez canals, labor negotiations at U.S. South Atlantic and Gulf Coast ports, and drought threats for Mississippi River bottlenecks.

Fuel Prices Drive added Transportation Costs

Q2 fuel price trends drive cost increases, especially in parcel transportation.

UPS announced fuel surcharges for U.S. Ground Domestic, UPS Surepost and U.S. Domestic air. Surcharges are effective April 29.

Likewise, FedEx announced fuel surcharges effective May 6. Surchargest affect FedEx Domestic and FedExpress Domestic.

Finally OnTrac’s fuel index changes May 27. This is the second fuel surcharge table increase since Feb. 5.

U.S. Average Diesel and Gasoline Price Trends

After six straight weeks of declines, the U.S. average for on-highway diesel fuel dipped below $3.80 per gallon for the first times since July 3, 2023 when it was $3.767. The U.S. average of $3.789 for diesel in the May 21 report from the U.S. Energy Information Administration is 5.9 cents below the prior week. In the same period last year, diesel fuel costs 9.4 cents more. Average diesel prices declined in all 10 EIA regions in the May 20 report, with the largest decrease of 8.3 cents in the Midwest region. The smallest decrease was 0.9 cents in the Lower Atlantic reporting region. Prices decreased 7.4 cents in California, but they are 22.4 cents above 2023, according to the EIA.

U.S. average prices for on-highway diesel from May 2023 until May 20, 2024.

Average prices for on-highway diesel continued into a sixth straight week of declines, according to the May 20 report from the U.S. Energy Information Administration. In the same report, the national average is down 9.4 cents from the same period last year. Prices are lowest in the Gulf Coast region at $3.490 (down 6.9 cents since May 13), and the highest in California at $5.049 per gallon (down 7.4 cents since May 20).

The national average for regular gasoline prices is $3.584 in the May 20 report, down 2.4 cents compared to the previous week but up 5 cents from the prior year.

Gasoline prices are the lowest in the Gulf Coast region ($3.113), where they declined 5.5 cents from prior week. Prices are highest in California ($4.965) where they declined 8.1 cents compared to the prior week, and are up 35.6 cents compared to last year. The average price for regular gasoline went down in eight of the nine regions in the EIA’s weekly survey.

U.S. average prices for regular gasoline from May 2023 until May 20, 2024.

According to the May 20 EIA report, the U.S. average for regular gasoline is $3.584, down 2.4 cents compared to the prior week and up 5 cents compared to May 2023.

Q2 International Trade Conditions

Shipping disruptions occur as the nation’s 10 largest ports recorded a 25.3% increase in inbound freight volumes during February, the fifth consecutive increase after months of decreases. Likewise, ocean shipping lines expected an early peak season with more goods moving in June and August following ongoing global inventory depletion.

Top 25 Ports by Total Tonnage (2021)

Source: U.S. Department of Transportation Bureau of Transportation Statistics, based on 2021 data (latest available) provided by U.S. Army Corps of Engineers, Waterborne Commerce Statistics Center. Special tabulation as of November 2023.

Further complicating the international import environment, half of supply chain professionals cited shipment delays at U.S. Customs as the leading challenge for cross-border e-commerce, especially as nearly 80% of those shipments occurred by air. That leaves customs brokers and freight forwarders increasingly reliant on import compliance technology to automate and consolidate high volumes of transactions in a single filing.

U.S. Goods and Services Trade Deficit from February 2022 through February 2024.

The nation’s international trade deficit in goods and services increased to $68.9 billion in February, as imports increased $7.1 billion from January, according to the U.S. Bureau of Economic Analysis. Year-over-year, the global trade deficit decreased $3.9 billion – or 2.8% from February 2023, as exports increased $9.3 billion and imports increased $5.4 billion.

U.S. Domestic Transportation News and Trends

Emerging supply chain technologies feature in Gartner’s 8 prominent supply chain technology trends for 2024. Artificial intelligence plays a significant role, alongside supply chain data governance, end-to-end sustainable supply chains, and cyber extortion. 

After reports of freight fraud quadrupled to at least $500 million in 2023 and new threats from ELD worms emerged, cybersecurity, supplier oversight, and efforts to combat double-brokering are becoming increasingly important focal points for many companies.

Signs of a rebounding economy offer more incentives to shore up supply chain practices to protect profit. .

Meanwhile Knight-Swift Transportation says it is looking to build out its less-than-truck-load network, where earnings and competition are stable. The nation’s larges truckload carrier, Knight-Swift aims to expand its LTL business through acquisition after 2021 acquisitions of AAA Cooper Transportation and Midwest Motor Express. The carrier targets a $2 billion annual revenue goal, according to WSJ.

Evidence of LTL stability is apparent in Old Dominion Freight Lines reported a 2.6% increase in Q1 profit. Year-over-year earnings were up to $1.34 per share compared to $1.29 per share in Q1 2023.

Total business inventories for February 2024 as released on April 15, 2024

U.S. total business end-of-month inventories for February 2024 were $2.567 trillion, up 0.4% from January. U.S. total business sales were up 1.6% to $1.866 trillion from the prior month.

The Freight Transportation Services Index (TSI), which is based on the amount of freight carriers by the for-hire transportation industry, declined 1.2% from February to March. The decline follows a one-month increase. From March 2023 to March 2024, the index fell 1%.

Total Transborder freight between the U.S. and North American countries Canada and Mexico increased in February 2024 compared to February 2023, according to the Bureau of Transportation Statistics.

Preliminary Class 8 truck orders decreased 28% year-over-year in April, falling to 14,000 units. Orders for the past 12 months totaled 267,700 units. The April figure is in line with seasonal expectations, according to FTR, and consistent with recent demand trends.

Net trailer orders decreased nearly 20,000 from February into March, reflecting an 18% decrease year-over-year. According to FTR, orders were 25% below the average for the last 12 months.

For hire truck tonnage index, seasonally adjusted from January 2016 through March 2024.

Reflecting freight movements through contracts as opposed to spot moves, the American Trucking Association Truck Tonnage Index decreased 2% during March compared to the seasonally adjusted prior month. COmpared to March 2023, the index is down 1%, which is the 13th straight year-over-year decline, but the second smallest over that period. In February, the index was down 1.7% from the prior year.

In this complex transportation environment, protect your profit by using transportation management solutions that offer adaptable planning, multi-modal management, comprehensive visibility and actionable intelligence.

Contact our team today for help and keep an eye on the MercuryGate Logistics Landscape to track evolving freight industry news.

Additional Freight Industry News & Trends to Monitor in Q2

The second quarter release of the TD Cowan/AFS Logistics Freight Index expects LTL and Truckload rates to remain steady, “consistent with trends established since Q2 of last year.” In parcel, the index reflects the effect of fuel surcharge increases and other accessorial changes that are driving net rate growth in Q1 and Q2 despite limited overall demand, according to the press release.

Also in the parcel environment, UPS Q1 earnings reflected declines in revenue, profits across all divisions.

National spot rates for van,. flatbed and reefer freight transportation equipment.

In DAT Trendlines weekly brief for May 13-19, truck-to-load posts increased in all three equipment types compared to the prior week. Van load-to-truck increased 37.5% flatbed load-to-truck increased 18.5% and reefer load-to-truck increased 53.3%. As a result, spot rates increased in van (3.1%), flatbed (1.9%), and reefer (3%), according to DAT.

Manufacturing Environment

New orders for manufactured goods in February increased $8.2 billion – or 1.4% – after two consecutive months of declines. Shipments increased $8 billion or 1.4% – also up after two consecutive monthly decreases. Inventories, up following two consecutive monthly decreases, climbed $2.3 billion or 0.3%.

New orders for durable goods in March posted the second consecutive gain, increasing $7.3 billion or 2.6% to $283.4 billion. Transportation equipment – also up two consecutive months – led the increase, up $6.8 billion or 7.7% to $95.9 billion. Meanwhile, shipments of manufactured durable goods in march decreased $0.1 billion or virtually unchanged to $482.4 billion. This follows a 1.2% increase in February. 

New Residential Construction Declines

Privately-owned housing starts in March 2024 decreased 14.7% to a seasonally adjusted annual rate of 1,458,000.

New housing unit starts in the U.S. from 2004 until March 2024, including total starts and starts for single-family homes.

E-Commerce Sales Climb 2% in Q1 2024

U.S. retail e-commerce sales for Q1 2024 increased 2.1% to $289.2 billion (adjusted for seasonal variation but not price changes) from Q4 2024. Year-over-year Q1 e-commerce sales increased 8.6% from 2023 to 2024, while total retail sales increased 1.5% during the same period. Q1 e-commerce sales accounted for 15.9% of total sales, according to the U.S. Department of Commerce Census Bureau. 

E-commerce sales in Q1 2024 accounted for 15.9% of total sales. During Q4 2023, e-commerce sales accounted for 15.6% of total sales.

Corporate Profits Rise and Fall in Q4 2023

Seasonally adjusted after-tax profits for retail corporations with assets of $50 million+ were $48.3 billion for the Q4 2023 (the 3 months ending Jan. 31, 2024). That total is up $4.4 billion from Q3 2023 (the 3 months ending Oct. 31, 2023). Seasonally adjusted sales during Q4 totaled 1.027 trillion, not statistically different from the 1.041 billion in the Q3, but up 3.27% compared to Q4 2022.

Seasonally adjusted, year-over-year Q4 retail profits climbed 18.5 billion or about 62% from 2022 to 2023, according to the U.S. Census Bureau.

Conversely, manufacturing corporations’ seasonally adjusted after-tax profits declined $30.2 billion or 15.5% from Q3 and Q4 2023 to $194.8 billion. Seasonally adjusted sales for Q4 2023 totaled $1.96 trillion, not statistically different from the 2.0 billion in Q3 2024. Sales during Q4 2023 were down 100 billion compared to 2022.

Seasonally adjusted, year-over-year Q4 manufacturing profits declined $35.8 billion or 15.5% from 2022 to 2023 according to the U.S. Census Bureau.
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