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MARCH 2023 FREIGHT FOCUS

Is the refrigerated market going to lead us out of the downcycle?

 

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“At cycle bottoms, the inflection can center around driver capacity, which has slowed sharply recently. As 2023 progresses, we expect driver demographics, drug testing, and low spot rates to increasingly shift the market balance.” 

-Tim Denoyer, VP & Sr. Analyst

ACT's Top 5 Freight Focus - March 2023

1.  Dry van spot rates, net fuel, fell 10₵ m/m in February to $1.73 per mile, 4₵ below normal seasonality following 8₵ above-normal performance in both December and January.  

2. The truckload driver population has nearly stopped growing and we think it will start to contract y/y by second half of 2023. BLS trucking employment has already slowed to a 0.3% annualized rate in the seven months through February. Spot market capacity is contracting as carrier failures have accelerated.

3. The cycle-bottom phase features slowing capacity and thinning marginal capacity amid lower rates, preceding an early-cycle tight market. We think both the cycle-bottom and early-cycle phases are possible in 2023.

4. ACT For-Hire Driver Availability Index increased from 58.3 in December to a record-high 60.6 in January. 

5. The Cass Truckload Linehaul Index fell 0.4% m/m in February to 148.3, after a 0.9% m/m decline in January. 

 

Truck Transportation Employment

Map Released- March 9, 2023The mild freight downturn is likely to persist as banking crises fray nerves and the retail destock progresses, and restocking is unlikely for a while. The truckload spot market is bottoming as labor capacity slows, according to the latest release of the ACT Freight Forecast, U.S. Rate and Volume OUTLOOK report.

Tim Denoyer, ACT Research’s Vice President and Senior Analyst, said, “What a difference a year makes. Some of the truckload spot market’s deepest roots are in western produce markets, and after one of the worst droughts in history over the past three years, weather patterns are much different this year. There could be a slow start to CA produce season due to flooding damage in some places, but the outlook for the western growing season is vastly better than the past few years. 

Reservoirs are filling and snowpacks in CA are near record levels. The stark contrast in the US Drought Monitor from last year to current conditions clearly shows western fruit and vegetable produce volumes are likely to be significantly higher this year as the wet season has brought some much-needed relief. This should gradually boost reefer spot loads as overall spot capacity is contracting. We see this as a key part of the formula for rates to bottom in the near term.”

He added, “At cycle bottoms, the inflection can center around driver capacity, which has slowed sharply recently. As 2023 progresses, we expect driver demographics,U.S. Drought Monitor drug testing, and low spot rates to increasingly shift the market balance.”

Denoyer concluded, “The decline in DOT operating authorities that started in October 2022 is more evidence of progress in the bottoming process. The truckload driver population has nearly stopped growing and we think it will start to contract y/y by second half of 2023, setting up the next driver shortage. We’re not there yet, but BLS trucking employment in February was slightly below last August.”

The monthly 58-page ACT Freight Forecast report provides analysis and forecasts for a broad range of U.S. freight measures, including the Cass Freight Index, Cass Truckload Linehaul Index, and DAT spot and contract rates by trailer type. The service provides monthly, quarterly, and annual predictions for the TL, LTL, and intermodal markets over a two- to three-year time horizon, including capacity, volumes, and rates. The Freight Forecast provides unmatched detail on the freight rate outlook, helping companies across the supply chain plan with greater visibility and less uncertainty.

Tim Denoyer HeadshotTim Denoyer,

VP & Senior Analyst

 

 

 

 

 

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Key Items Covered Monthly In the ACT Freight Forecast:

  • ACT Class 8 Tractor Sales Forecast
  • Cass Shipment Index Forecast®
  • Cass Truckload Linehaul Index® Forecast
  • DAT Dry Van Spot Rate Forecast
  • DAT Refrigerated Spot Rate Forecast
  • DAT Flatbed Spot Rate Forecast
  • LTL Tonnage and Yield Forecast
  • Intermodal Load and Rate Forecast
  • U.S. Economic Forecast

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