March Market Update

Thank you so much for taking the time to read the March Truckload Market Update! This is a monthly newsletter, released the first or second week of every month, be sure to subscribe to be notified when the updates are released!

There has been an ongoing battle against inflation in the US economy by the Federal Reserve. They have been attempting to tame inflation without driving up unemployment rates and pushing the economy into a recession. One of the reasons that inflation rose so quickly was the robust labor market that grew post pandemic lockdowns. I have been saying for over a year now that we need to see significant cooling of the labor market to help cool inflation. It would appear the labor market has made good progress in moving this direction, and Matthew Klein writes that:

The latest comprehensive estimates of actual wages earned across the U.S. based on taxes paid into unemployment insurance coverage suggest that both average and aggregate wage growth has slowed dramatically in 2024. And while the January personal income numbers imply that the average American got a substantial pay bump, with personal income before transfers rising at a 9% annualized rate, that seems to be driven by a surge in dividend payouts that is unlikely to finance much, if any, consumer spending.

The sustained increase in consumer spending on goods over the last several years contributed to the inflation of consumer goods products, and spending was driven by strong wage growth and stimulus. As stimulus savings ran out, wage growth continued allowing consumers to maintain their new spending levels. So now we find ourselves with cooling wage growth and little optimism around a new surge in consumer spending. However, despite the decrease in wages, inflation has been rising again across many manufacturing inputs and goods.

Credit: The Overshoot

Matthew goes on to credit this uptick  in part to the decreases in wholesalers inventories. This was covered in previous newsletter editions, but even as retail inventories were decreasing to acceptable levels the last couple of years, wholesale inventories remained elevated. As wholesalers have worked down their inventories this is putting slightly more pressure on manufacturers to produce new goods instead of drawing on inventories that already exist.

Credit: The Overshoot

Speaking of manufacturing… Manufacturing firms' new orders suggest we may have reached the bottom of the current downturn. We have some initial signs on the new order front that we may be seeing some growth in the manufacturing sector. A reminder that domestic manufacturing accounts for what is estimated to be 60+% of trucking ton miles, which is why we follow it closely in this update.

As Jason Miller wrote in his recent post: “ISM's seasonally adjusted new orders index is hovering around 50 (the threshold for expansion), though still far from levels that truly suggest expansion (e.g., 55).

Credit: Jason Miller

Overall, the US economy has been praised for its resilience and strong growth over the last year. Edward Jones Commented on the primary leaders in the US Stock Market and said:

"The three conditions that are likely needed and that will likely be in place later this year for the leadership rotation to materialize are

  • A Fed pivot to rate cuts that will provide support to the interest-rate-sensitive sectors;
  • Improvement in the manufacturing PMI and other survey-based growth measures, which have been signaling caution for more than a year now; and
  • A narrowing in the earnings outperformance between the mega-cap tech and the rest of the market."

In other words, for companies to emerge as new leaders in the stock market, there will need to be interest rate cuts to stimulate business growth and consumer spending on goods, and increases in domestic manufacturing activity. This sounds very in line with what many truckload market experts have been saying is needed for rate increases in the full truckload market for months as well. What is interesting is that Edward Jones seems confident both of these conditions will be present at some point in the later half of 2024.

Some experts in the truckload space have remained optimistic that we may see a change in rates as early as Q2, but I think that those hopes should be waning.

With decelerating wages, and what may be re-accelerating inflation on goods, I think it is safe to say we will not be seeing a major demand side (trucking volumes) stimulus in the full truckload market in the next couple of months stemming from consumer spending.

As we move through the year we will continue to keep a close eye on inflation, wages, consumer spending, interest rates, and manufacturing activity to better forecast the direction of the full truckload market (and the broader economy).


February spot market rates were not hopeful for carriers operating in that space. Overall we saw decreases in the space from the month prior. Contract rates remained stagnant or decreased across mode types as well, which led to no progress in the tightening of the gap between spot and contract rates. The market is still operating with ample supply (trucking capacity), and as long as the demand side (volumes) remain static we will continue to see capacity leave the market as carriers close their doors after struggling through almost 2 years of tough market conditions. Let’s dive into further detail around the state of rates in the full truckload market, through data in collaboration with reliable industry leading experts.

In collaboration with industry thought leader Jason Miller:

Credit: Jason Miller with DAT data
The dry van spot market cycle indicator (SMCI), calculated from broker buy contract rates and dry van spot rates (both including fuel). The formula is SMCI = (Contract – Spot) / ((Contract + Spot)/2). As can be seen, February showed a substantial upward increase to 18.8%, which places us solidly in bear market pricing territory.
Credit: Jason Miller with DAT data
DAT’s dry van spot pricing and broker buy contract pricing (including fuel). We see the increase in the SMCI was due primarily to February’s spot rates dropping $0.07 relative to January. This drop can’t be explained by diesel prices, which rose in February from January. On the positive front, March is the month where freight volumes will start to shake off the winter lows, though I will caution that the seasonal adjustment model I use for the trucking ton-mile index is expecting March 2024 to be weaker due to March starting on a Friday plus featuring Easter. However, April is predicted to be stronger than March (unusual) due to it starting on a Monday.

In collaboration with DAT:

Dry van rate averages decreased in both contract and spot spaces over recent weeks due to a weak February.

Credit: DAT

Reefer rate averages decreased in both contract (barely) and spot spaces over recent weeks due to a weak February. There are also reports that produce volumes have been noticeably weaker thus far this year.

Credit: DAT

Dry Van spot and contract rates YOY% change:

Credit: DAT

Reefer spot and contract YOY% change:

Credit: DAT

Extra Content:

A VERY important case for the direction of "Nuclear Verdicts" in the trucking space is nearing a final decision after years of legal battles:

“The facts of the accident are not in dispute. A pickup truck heading east on Interstate 20 in West Texas driven by Trey Salinas and ferrying members of the Blake family hit a black ice patch, streaked across a more than 10-yard-wide median and crashed into a westbound Werner truck driven by Shiraz Ali. Winter storm watches were in effect. One of the Blake children died, and a second was severely injured. Other passengers had less serious injuries.”

Credit: Freightwaves

Nestle is preparing to open a new manufacturing plant in Phoenix, adding new truck ton volumes to the metro

"Construction is nearly complete for Nestlé USA's coffee creamer manufacturing plant in metro Phoenix.”

Meet Me For Coffee Recent Podcast Episodes:

Brought to you by TAI TMS

Listen on Spotify

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Episode 30 with Sean McGillicuddy - TAI TMS

Key Topics discussed:

  • How mid-sized brokerages can be capitalizing on tough markets through the agility they naturally possess that mega brokerages do not
  • How technology can help brokerages avoid being “people heavy” in their operations
  • How efficient processes and effective technology can improve brokerage culture and attract and retain top talent
  • Double down on what you do WELL NOW, but consider adding an additional service if demand is there (like LTL)
  • How technology innovation and investment is growing in platforms and tools geared around brokerage operations
  • How automation can fit in a brokerage by freeing up humans to let them focus more on what matters, why should shippers care if a brokerage has strong technology
  • API rating and dynamic pricing, how to be preparing for it's increasing presence in this industry

Episode 31 with Chris Pickett - Flock Freight & Pickett Research

Key Topics Discussed:

  • The early days of growing Coyote and how to grow big they knew they needed to target contract freight with large scale shippers
  • If you are selling contract lanes and buying spot, how do you forecast and predict your pricing accordingly to ensure sustainable revenue growth
  • The US trucking market operates in a recurring cycle, which can be used to predict general pricing trends years in advance. On average market cycles last 3-4 years
  • What drives market cycles? What are supply and demand indicators we can look at?
  • How brokers can better understand the conditions that impact their carrier partners businesses
  • Our current market cycle isn't actually THAT different from previous market cycles.
  • Macro-economic indicators that matter when trying to predict demand for trucking capacity
  • Does an election year impact the freight market? What geopolitical events might impact supply chains?
  • Where Pickett Research is expecting the 2024 freight market to go (sneak peak: spot rates will run up to 30-40% higher by the end of 2024)

Thank you so much for reading and supporting the Truckload Market Update Report, produced by Samantha Jones Consulting LLC. Samantha Jones Consulting focuses on helping logistics providers better brand and sell their services to create sustainable revenue growth and support their company growth goals!

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