Transportation
Transportation
In the News
In the News
Innovation Trends
Innovation Trends
Real Estate
Real Estate
Q3 2024
SUPPLY CHAIN
TRENDING
TRANSPORTATION / DISTRIBUTION / ECOMMERCE / MATERIAL HANDLING / INNOVATION
TRANSPORTATION
Truckload
Truckload
Is this the end of the freight recession? June 2024 saw transportation prices expanding faster than capacity for two consecutive months, the first time since Q1 2022.
Transportation capacity contracted for the first time since March 2022. This is partly due to more carrier bankruptcies, such as U.S. Logistics Solutions shuttering at the end of June, laying off approximately 2,000 employees. While this came as a surprise to many at the company, it does follow the trend of capacity exiting the market as freight moves back towards equilibrium. Peak season may move the market back into growth.
Transportation Prices & Capacity 2022-2024
DAT Load to
Truck Ratio
DAT National
Freight Rates
80.0
70.0
60.0
50.0
40.0
30.0
20.0
Apr 22
Jun 22
Jul 22
Oct 22
Jan 23
Feb 23
Apr 23
Jun 23
Jul 23
Oct 23
Jan 24
Feb 24
Apr 24
Jun 24
May 22
Sep 22
Nov 22
Dec 22
Mar 23
May 23
Aug 23
Sep 23
Nov 23
Dec 23
Mar 24
May 24
Aug 22
$3.25
$3.00
$2.75
$2.50
$2.25
$2.00
$1.75
$1.50
$1.25
$1.00
$0.75
$0.50
$0.25
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
10
9
8
7
6
5
4
3
2
1
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Transportation Capacity
Transportation Prices
Breakeven
Spot Rates
Contact Rates
2024
2023
2022
Source: https://www.the-lmi.com/june-2024-logistics-managers-index.html
Moving Forward
Doing nothing now puts your 2025 budget at risk
CLICK TO EXPLORE
Prepare for imminent rate pressure as truckload carriers and brokers seek to return to profitability in the next 12 months.
- Do you have the technology infrastructure to prepare, execute, and analyze competitive RFPs to ensure you are buying at the market rate?
- Do you have the in-house expertise to know when to bid and how to tactically execute an RFP?
- Do you have the carrier relationships and buying power to bring the right mix of RFP participants?
Recommend that shippers continue to monitor the external environment due to volatility.
Act swiftly when required to balance your spot and contract usage, mitigating late 2024 and 2025 increases.
Monitor
Prepare
Act
Monitor
Prepare
Act
lTL
LTL Contract
Final reporting of average base rate per 100 lbs
(United States of America)
55.00
5.50
DOE.USA
53.00
4.034
50.00
5.00
45.00
4.50
4.02
40.00
3.50
35.00
3.00
30.00
2.50
25.00
Apr
Jul
Oct
2021
Apr
Oct
2022
Apr
Jul
Oct
2023
Apr
Jul
Oct
2024
- CWT average has started off at $48 in 2024 - 6% increase over 2023.
- Base rates have increased more in the last 6-8 months as fuel has returned to $4.00/gallon.
- Overall tonnage is down from 2023 to 2024.
- Although tonnage is down in the LTL industry most carriers have improved their OR with XPO making the biggest jump.
- Carriers are being mindful of operating costs across the industry. As we see ODFL continue to operate in the 70's this is the benchmark for other LTL providers to get to.
NMFTA is making changes for 2025. As 2024 progresses, the process is set to become more intensive, informative, and inclusive. Both the NMFTA and NMFC expect the changes to streamline workflows, enhance communication and visibility, and increase the overall satisfaction of everyone involved. “We estimate to move as many as 3,500 single-class items to 13 subcategories,” said Nate Ripke, director of commodity and standards development for NMFTA.
- Standardized density scale for LTL freight when handling, stowability and liability issues are not present;
- Unique identifiers for freight with special handling, stowability, or liability needs;
- Condensed and modernized commodity listings; and
- Improved usability of the ClassIT® classification tool.
Moving Forward
The days of stating my class is 50 for the last 15 years is over. This move will move most of the freight to density-based items. This means that data will be key. We must do everything in our power to get accurate dimensions and weight for each order. Getting accurate information will help with this change but will also help us get to the E-BOL which carriers are offering savings.
FedEx to Explore Divestment of FedEx Freight
FedEx continues to improve their operating ratio even though tunnage is down across the LTL industry. FedEx may be looking to achieve what UPS did by selling its LTL business and creating T-Force.
There are significant differences in these scenarios:
- FedEx is the largest LTL carrier today while at the time UPS sold off their LTL business they were the nations 6th carrier in volume and was only 40% of FedEx’s revenue at the time.
- UPS LTL was operating at 90.1% at the time they were sold and FedEx is operating at 80% today which as stated above is the 2nd best in the industry.
Whether FedEx decides to keep the LTL business or sell/spin off into a new business, the capacity will not go away. Unlike recent LTL carriers to close their doors, FedEx is not in this position and the FedEx trucks will continue to be used in the LTL industry.
6.9%
5.9%
5.9%
4.9%
4.9%
Inflation PCT
Headlined GRI