The U.S. Bank Freight Payment Index™ – a tool designed to assess the current state of the freight industry in the U.S. – showed declines in the third quarter compared with the second quarter in 2018.
The changes between quarters were driven by several factors according to Bob Costello, a freight industry analyst and chief economist for American Trucking Associations, including a moderating U.S. economy compared with the previous quarter and other factors like Hurricane Florence and potential early signs of tariff impacts. On a year-over-year basis, however, the overall freight spend increased by double-digits despite lower freight shipment volumes, which reflects higher average freight transaction prices.
“Linked quarter declines in both freight shipment volume and spend are in line with the deceleration many expected in third quarter gross domestic product growth,” said Costello. “As trucking often leads the broader economy, the decreases seen in the U.S. Bank Freight Payment Index suggest economic growth may have peaked and may decelerate in the fourth quarter and beyond. Despite the sequential decreases in freight shipments and spending last quarter, the national truck market remains solid and capacity tight.”
Costello also said it is difficult to ascertain the exact impact that Hurricane Florence had in the Southeast region during the third quarter, but undoubtedly it was negative. However, there will eventually be a freight bump associated with hurricane rebuilding efforts. Costello also noted, while still very early in implementation, U.S. tariffs on some foreign products – as well as retaliatory tariffs on some U.S. goods – likely had at least a slight negative impact on the quarter.
U.S. freight shipment volume in Q3 decreased 5.2 percent from the second quarter and is down 1.1 percent from the same period last year.
The amount spent on U.S. freight costs in Q3 decreased 1.2 percent from the second quarter, but is up 13.5 percent from the same period last year. This is driven in large part by the constrained trucking capacity in the U.S.
“The U.S. Bank Freight Payment Index helps our clients make better decisions when planning and forecasting for their businesses,” said John Hardin, U.S. Bank Global Transportation General Manager. “It also helps shippers and carriers understand regional variability.”
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. These transactions are made on behalf of clients across a range of industries, including automotive, manufacturing, food and retail.
A pioneer in automated freight audit and payment, U.S. Bank Freight Payment is celebrating its 20th year of facilitating transactions between shippers and carriers. The business processed more than $24.5 billion in global freight payments in 2017 for some of the world’s largest corporations and government agencies. For more information and to subscribe to the Index, visit www.freight.usbank.com.
All regions saw freight shipments contract from the second to third quarters this year, ranging from a 3.4 percent decline in the West to an 8.6 percent decline in the Southwest. These results are in line with contractions from the second to third quarters in both spot market and contract truck freight volumes.
Conversely, on a year-over-year basis, all regions witnessed solid gains in spending. Despite a sequential drop in freight shipments across all regions, truck capacity remained constrained enough for all regions to witness robust year-over-year gains in spending.
Regional highlights of the Q3 2018 U.S. Bank Freight Payment Index include:
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Antoine LaFromboise | U.S. Bank Corporate Communications
Deborah Harris | William Mills Agency