The volume of freight moved by truck in the peak shipping season of 2022 dropped by the largest year-over-year level since the heart of the pandemic, according to the latest U.S. Bank Freight Payment Index. Fourth-quarter truck freight shipments contracted 7.1% year-over-year–the largest drop since Q3 2020–and 4.6% compared to the third quarter of 2022. The slowdown was driven by a significant contraction in the West region, the index says, where volumes dropped 8.9% year-over-year and 10.6% compared to the third quarter.
“A pullback in consumer spending on goods is causing the truck freight market to soften,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations. “Higher prices for goods are leading to less consumption of items moved via truck. At the same time, monetary policy changes are reducing demand for large-ticket items in interest-rate sensitive areas like autos and homes.”
Even with the drop in shipments, spending by companies shipping goods didn’t decline much in the fourth quarter. Spending fell just 0.2% compared to the third quarter and was up 1.8% over Q4 2021. Only the West region experienced a significant decline in spending, down 7% compared to Q3 2022 and 7.4% year-over-year.
“With shipments dropping considerably and lower diesel fuel prices, we would have expected to see a larger decline in spending this quarter,” said Bobby Holland, director of freight data solutions at U.S. Bank. “This suggests that capacity is getting tighter, potentially due to smaller carriers leaving the market as cost pressures remain high, especially when coupled with lower spot market volumes and rates.”