The freight cycle remains weak, according to the latest numbers from ACT Research, but there are rays of light at the end of the tunnel. ACT says it sees the tightly intertwined supply and demand dynamics in the freight market beginning to recover, with demand fundamentals improving and capacity starting to tighten.
“With produce season arriving late this year and the freight market likely passing the peak of the de-stock, freight demand is near the bottom,” shared Tim Denoyer, vice president and senior analyst at ACT Research. “With inflation easing, improving real income trends will allow for a bit more holiday spending this year, when even less de-stocking will mean more freight volume.”
Regarding fleet capacity, Denoyer added, “Interstate operating authorities are contracting at a record rate, with about 11,000 net revocations since last October, including about 1,600 net revocations in April. Total revocations were about 10,800 in April, near record levels, though grants and reinstatements are also elevated. This is beginning to tighten capacity, which will also help spot rates find the bottom and begin to rise.
“Long-distance trucking employment is also contracting, as long-haul trucking jobs declined by 8,700 jobs in Q1, or 1.0%,” he added. “While still up 3.0% year-over-year in that latest March data point, the series will be down on a y/y basis by June on its current level. Since trends in employment follow trends in freight rates, long-haul jobs are set to decline this year.”
Denoyer concluded with the statement that the intersection of additional volume and tightening capacity underpins the near-term bottom forecast in terms of spot truckload rates. Additionally, he explained that the company expected the bottom around this month, since the 2023 spot rate forecasts were introduced 16 months ago, and believes that the Roadcheck will result in a new freight cycle.
