VOLUME INDEX: 
The Volume Index decreased 2.5 points in July, to 42.7 (SA) from 45.2 in June, as the prolonged weak freight environment persists. Declining real retail sales, destocking, and private fleet growth pulling freight from the for-hire market are all hampering volumes. That said, there’s room for cautious optimism: real retail sales declines are moderating as goods consumption trends stabilize after the substitution to services since 2022. Destocking continues to slow, with imports declining at a slower rate since the nadir in March, indicating further gradual recovery.
The Volume Index has been below 50 for 13 of the past 16 months. If this cycle is like the last two, demand growth will return in 2024, if not sooner.
PRICING INDEX:
The Pricing Index continues to decline, though up 2.0 points to 37.7 in July (SA), and continuing to improve from the near-record low of 30.5 in April, consistent with the stabilization in spot rates. The loose market will persist in the near term as new contract rates come into effect with a market balance that remains loose.
Though the pricing pendulum remains with shippers for now, capacity has begun to rebalance. The Capacity Index tightened this month, consistent with contraction in for-hire capacity, though growth in private fleets may be delaying the recovery in rates.
CAPACITY INDEX: 
The Capacity Index fell by 4.1 points m/m to 49.9 in July, in a sign that fleets are starting to rein in supply after significant growth in the industry in the past couple of years.
Our survey group reflects mostly larger for-hire TL and LTL fleets, and with new Class 8 tractor sales still near record levels, we suspect private fleets continue to add capacity. After severe driver shortage during the pandemic, employers are understandably focused on retention, prolonging the rebalancing process.
Equipment manufacturers are building at essentially full capacity in 2023, and this is unlikely to change until 2024.
DRIVERS:
The Driver Availability Index remains elevated at near-record levels at 59.6 in July.
The results are likely overstated versus the broader market, as drivers seek refuge from low spot rates in larger, financially sound fleets. We expect the driver index to moderate as capacity growth slows and real wages have started to decline.
Longer-term challenges to driver availability will persist, such as the retiring baby boomer demographic, resulting weak US labor force growth, and the FMCSA Drug & Alcohol Clearinghouse. The industry trained hundreds of thousands of new drivers in the past couple of years, and changing this trend is taking time.
FLEET PURCHASE INTENTIONS: 
Buying intentions increased m/m in July, with 53.8% of respondents intending to purchase equipment in the next three months. We expect fleet ordering intentions to be subdued, as contract rates are under severe pressure and replacement demand is starting to fade following capacity constraints the last two years. CARB regulations coming into play starting in 2024 are also contributing to higher demand.
With average fleet ages still higher than many fleets would prefer, orders at large fleets remain sticky and are generally not being cancelled. Equipment orders placed over the past year are coming through and may support higher purchase intentions in the coming months.
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SUPPLY-DEMAND BALANCE:
The Supply-Demand Balance remained loose, at 42.8 (SA) in July from 41.2 in June. Continued weak volumes and the decline in capacity contributed to the low reading. July marked the seventeenth consecutive underwater point in the series. For context, in the 2015-2016 downcycle, the Supply-Demand Balance was loose for 17 of 19 months. While conditions remain loose, the foundations for rebalancing have been laid as volumes begin to recover and capacity begins to contract.
The cyclical reaction to the historically strong and long cycle of mid-2020 through early 2022 has been a historically sharp downturn. But dynamics are beginning to improve, albeit from low levels. And though demand is soft amid significant retail inventory destocking, consumer fundamentals are starting to recover, and destocks are inevitably followed by restocks.
PRODUCTIVITY INDEX: 
(miles/tractor)
Fleet productivity was essentially flat m/m, at 48.3 in July (SA). Productivity remains under pressure from soft freight volume. In the near term, this could limit productivity improvement amid ongoing soft freight volumes and elevated new tractor production. The index is still below the long-term average of 53.8 and is likely to remain that way until equipment production rates decline.