U.S. Bank Freight Payment Index™ reports modest growth in third quarter

October 20, 2021

Truck freight spending at highest level on record as demand grows but capacity remains constrained due to driver shortage and lack of trucks and trailers.

Freight spending and volume for truckload movement continued to climb in the third quarter of 2021, according to the new U.S. Bank Freight Payment Index. However, several headwinds – including persistent supply chain challenges, weather and the economic impact of the COVID-19 Delta variant – caused the number of shipments in the third quarter to increase at a slower rate than the previous quarter.

Third quarter spending by shippers – up 32.6% year-over-year and 5.6% over the second quarter – again pushed the spending metric to its highest level in the history of the U.S. Bank Freight Payment Index. Increased demand for freight transportation at the same time the trucking industry faces very tight capacity is driving the higher costs. Not only is the truck driver shortage causing limited truck capacity, but now the industry is facing a lack of new equipment, including trucks and trailers. During the third quarter, trucking manufacturers were unable to deliver the needed equipment due to broader manufacturing supply chain issues.     

“Our new spending data reflects what we’re hearing on the ground from our clients: there’s high demand for truck freight transportation, but truck capacity is limited by both persistent issues of continued driver shortages and emerging challenges of equipment,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “The industry is working tirelessly to meet the increasing demand, but these challenges will take time to address.”  

Shipment Index

In addition to the 1.5% increase in shipments over second quarter levels, the U.S. Bank National Shipments Index rose 2.4% year-over-year. This is a slowdown from the second quarter, when shipments rose 4.4% sequentially and 6.8% year-over-year. Three of the five regions (Northeast, Southwest and West) saw growth in shipments versus the third quarter of 2020, while two (Southeast and Midwest) contracted.  

“When you consider the slight slowdown in the economy due to the Delta variant, disruptions in the Southeast due to Hurricane Ida, and auto manufacturing plant shutdowns in the Midwest, the slower shipment growth makes sense,” said Bob Costello, senior vice president and chief economist for the American Trucking Associations. “The West region provided a significant boost for the national shipment volume as a record number of imports came in with retailers scrambling to get inventory before the holidays, offsetting some of the softness in the Midwest and Southeast.”

Spend Index 

In addition to the 5.6% increase in spending over second quarter levels, the U.S. Bank National Spend Index rose 32.6% year-over-year. In the second quarter, spending increased 10.1% sequentially and a record 44% year-over-year. Additionally, in the third quarter, each of the five regions saw growth in spend from the previous quarter, ranging from a 13.8% increase in the West to 3% in the Midwest.   

Regional Data  

Third quarter: 13.8% increase
Year over year: 17.3% increase

Third quarter: 15.7% increase
Year over year: 44% increase

The West had the largest gains among all regions, both quarter-over-quarter and year-over-year, thanks to a high volume of imports through the West Coast seaports. The large spend increase was due in part to continued strong freight rates as retailers nationwide replenish their inventories from historic lows ahead of the holiday season.

Third quarter: -0.7% decrease
Year over year: -5.2% decrease

Third quarter: 3% increase
Year over year: 26% increase

This quarter marked the sixth straight year-over-year decrease in shipments for the Midwest. The steep slowdown in auto production during the third quarter hurt Midwest freight levels. Despite the lower volume, truck freight spending increased. This was due in part to tight capacity because of the truck driver shortage and lack of new equipment. Moreover, higher diesel prices drove up fuel surcharges.

Third quarter: 5.1% increase
Year over year: 1.7% increase

Third quarter: 3.1% increase
Year over year: 31.7% increase

The 5.1% increase in volume is the largest quarter-to-quarter increase in two years. The region may have been impacted less by the COVID-19 Delta variant, which helped with household consumption. With a large population, retail sales are a big part of freight volumes. 

Third quarter: -2.9% decrease
Year over year: 3.6% increase

Third quarter: 3.6% increase
Year over year: 34.7% increase

Recently one of the stronger regions for truck freight volume, third quarter shipments in the region were negatively impacted by strong tropical storms, including Hurricane Ida, and a surge in the COVID-19 Delta variant. A decline in auto production last quarter also hampered freight levels. Freight spending in the region was pushed higher due to constrained motor carrier supply and rising fuel surcharges.   

Third quarter: 1.9% increase
Year over year: 4.3% increase

Third quarter: 5.9% increase
Year over year: 26.8% increase

With housing starts growing in this region, as well as consumption and oil production, Southwest freight volume in the third quarter hit its highest point in two years. Shipments were also boosted by a surge in truck freight volumes with Mexico. 

To see the full report including in-depth regional data, visit the U.S. Bank Freight Payment Index website. For more than 20 years, organizations have turned to U.S. Bank Freight Payment for the service, reliability, and security that only a bank can provide. The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment. The business processed $31.4 billion in 2020 for some of the world’s largest corporations and government agencies.

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