With data in from the first month of the year, it appears signs of market stabilization are emerging. The boost in spot market freight volumes and rates is largely attributable to poor weather that drove demand, so February data will be telling as to the sustainability of the move.
ACT Research has upped its Class 8 sales and build forecast for the year. And Motive notes carrier exits are slowing as new entrants join at a faster rate.
Canadian spot market roars out of gate
The first month of the year was a good one for those who toil in the Canadian spot market. Loadlink Technologies reported loads surged 47% in January, marking the highest volumes seen since last March.
Truck postings nudged up 4% from December, bringing the truck-to-load ratio to 2.61, a 29% improvement since December and better than any month in the back half of 2023.
The gains were led by a 110% jump in cross-border loads into Canada. Southbound loads were up 12% while domestic freight jumped 20%.
U.S. spot market strengthens, too
January was also a good month on the spot market in the U.S., thanks largely to a weather-related bump in demand that pushed freight volumes on DAT’s loadboard to all-time highs.
“Winter weather increased the need for trucks at a time when shippers were moving holiday returns and springtime retail goods through supply chains, and for-hire carriers were rejecting a higher percentage of contracted loads,” said Ken Adamo, DAT chief of analytics. “This was not a case of freight volumes sustainably trending higher. Barring some other disruptive event, we expect demand for truckload capacity to meet seasonal expectations during the months ahead.”
Nonetheless, the surge in demand pushed rates higher. Van rates jumped four cents to US$2.14/mile, and reefer rates spiked 10 cents to $2.57. Flatbed rates climbed eight cents to $1.95/mile.
The gap between spot and contract rates continued to narrow, signifying some stability.
ACT ups Class 8 forecast
ACT Research has upped its forecast for 2024 Class 8 production and sales expectations.
“In addition to an improving economic outlook, the decision to boost the forecast, despite near-term inventory risks, reflects the industry’s ability to more aggressively sell into Mexico and export markets, while maintaining strength in domestic vocational,” said Kenny Vieth, ACT’s president and senior analyst. “The 2024 market is atypically bifurcated: considerable strength remaining in U.S. and Canadian vocational markets and Mexico helps offset otherwise weak demand in U.S. and Canadian tractor markets, LTL excluded.”
Vieth added: “We think the economy’s cooperation, plus the OEMs’ desire to ensure supply chain integrity by making sure the industry’s labor supply remains largely intact through 2024, adds upside to our higher forecast. While we view upside as more likely than down, we remain concerned that the largest piece of the North American market, U.S. for-hire truckload, is unlikely to be helpful in driving volume this year.”
Signs of market improvement
In its monthly economic report, Motive noted a slowing of contraction in the trucking market, with exits slowing by 20% while new carrier registrations rose 22% in January.
Motive tracks trucking visits to big box retailers and noted a slight 2% increase to retail warehouses. It suggests slower contractions combined with stable visits to retail warehouses are signs of an improving market.
“With the first month of the year behind us, the trucking market appears to be moving in a positive direction after a challenging end to the year,” Motive said in its report. “While much of 2023 focused on adapting to a challenging environment, businesses now may begin to see the opportunity to adapt to more positive changes like retailers restocking more inventory.”
January marked the lowest level of fleet contraction in the U.S., where 3,707 carriers exited the market. New carrier registrations, meanwhile, posted their highest numbers since September with 7,938 joining the industry.
Motive’s prediction: 2024 carrier registrations will outpace those of 2019 by 10-20% as the market continues to stabilize.
