Freight volumes, rates, and supply-demand balance see positive progress in May, according to the latest release of ACT’s For-Hire Trucking Index. The Trucking Volume Index jumped in May to 49.4 (SA) from 37.7 in April, as destocking began to slow. For context, destocking likely peaked recently, with March container imports down 30% year-over-year, versus April’s decrease of 20% y/y and signs of further improvement in May.
“While demand remains soft, less destocking may be starting to add to freight available to haul,” said Tim Denoyer, vice president and senior analyst at ACT Research. “Although volumes remain in a slight contraction, this large improvement in our fleet survey suggests we’re in the later stages of the freight downturn.”
According to ACT Research, the Pricing Index continues to contract but rose 5.1 points to 38.3 in May (SA) from the near record low of 33.2 in April. The Capacity Index ticked down by 2.6 points m/m to 50.6 in April, still growing, albeit just. After 18 months of growth, capacity is quickly slowing, and some fleets are selling off older tractors or pausing hiring to manage capacity in the softer freight environment.
FREIGHT RATES CHART
“Rates are beginning to stabilize, as marginal capacity continues to exit amid brutal conditions,” Denoyer added. “Fleets are freezing hiring and selling equipment to manage utilization in this soft freight environment. Slowing capacity coupled with stabilizing volumes suggest, rates are likely near bottom, and the market is near balance, for now.”
The Supply-Demand Balance showed a major rebalancing in May, improving to 48.8 (SA) from 34.6 in April, the company noted.
According to Denoyer, the main reason for the significant increase in volumes and the subsequent decrease in capacity was the primary factor contributing to a more balanced reading, albeit still slightly loose. The month of May represented the fifteenth consecutive decline in the series, but the reading for May suggests that the cycle is approaching a potential turning point.
