April 2023

The Freight Economist

Monthly Economic and Market Update

Featuring insights and contributions from Uber Freight leadership, technologists and market specialists.

By Mazen Danaf, Senior Economist and Applied Scientist, Uber Freight

Executive Summary

US Economy

Earth Week

Freight Market

Shipper and Carrier Recommendations

Uber Freight Platform

Key Data Points

Executive Summary

As the US economy shrugs off the effects of recent bank failures, there are signs that the labor market is softening and inflation in services is trending down. The consumer goods economy remains relatively healthy, as consumers are still buffered by a wealth of savings they accumulated during the pandemic. However, the manufacturing sector continues to contract. In addition, declining factory orders point to more weakness ahead. Our outlook for aggregate freight demand is flat to slightly down year-over-year.

Spot rates are at their lowest level in 10 years on an inflation-adjusted basis.

US Economy

Inflation and Labor Market

Manufacturing

Consumer Spending on Goods

Housing and Construction

It's Earth Week

Electric trucks are finally here

The EPA outlines new emissions standards for heavy-duty trucks

As electric trucks hit the road, environmentally-conscious shippers and customers are turning to electrified capacity to meet their transportation needs and achieve their sustainability commitments. In February, Uber Freight, WattEV, and CHEP announced a strategic, joint effort to deploy electric trucks on select routes in Southern California. As part of this collaboration, WattEV will provide electric trucking capacity to Uber Freight shippers, starting with CHEP. Since then, electric trucks have traveled more than 1,500 miles on the Uber Freight network. In the coming months, this technology will become available to more shippers, powered by Uber Freight’s expansive network of digitally-enabled carriers, especially those with EVs. To learn more about how Uber Freight can help your supply chain transition towards a green future, please visit us at www.uberfreight.com.

Building on the Inflation Reduction Act and advancements in clean-vehicle technologies, the US Environmental Protection Agency (EPA) has proposed new rules setting vehicle emissions standards for heavy-duty trucks. These regulations are meant to accelerate the ongoing transition to clean vehicles. If implemented, these regulations would avert about 10 billion tons of CO2 emissions. In addition, they would lower maintenance costs and deliver significant fuel savings to drivers and truck operators. These standards would apply to vehicles from model years 2027 through 2032 and beyond. The set of regulations targeting heavy-duty trucks “Greenhouse Gas Standards for Heavy-Duty Vehicles - Phase 3,” would apply to heavy-duty vocational vehicles (such as delivery trucks, refuse haulers or dump trucks, public utility trucks, transit, shuttle, school buses) and trucks typically used to haul freight, according to the EPA. These standards will complement the pollutant standards for MY 2027 and beyond that the EPA outlined in December 2022.

Freight Market

Supply / Demand Indices

Spot Rates

Freight Demand

Freight Supply

Shipper and Carrier Recommendations

Shipper

During periods when freight is light, shippers have a perfect opportunity to plan and optimize their networks ahead of future market swings. Here are some steps that shippers can take to prepare for the future: Deploy procurement and carrier strategies that will prepare for when the market turns. Look internally to network, inventory, and warehouse assessment and optimization. CPG shippers can prepare for the upcoming OTIF program changes. Create better visibility that delivers actionable insights. Explore smoothing inventory and creating efficiency on inbound networks.

Shipper

Carrier

The Uber Freight Platform

With contract rates hyper competitive to start the year and tender acceptance at all time highs, many customers have put a pause on exploring real time pricing options and chosen to invest in other areas of their business. What we are already noticing a quarter into ‘23 though is that even with hyper competitive contract rates in place, the market is slightly softer than expected and savings could have been driven in Q1 with a diversified real time procurement strategy in place. For this reason, we launched Index-based Pricing in Q1. Our Index-Base Pricing logic and execution is rooted off of a RFP rate (6- or 12-month) at the lane level and a market index agreed to between us and the customer. Executing this program allows our customers to only select the lanes where we have a competitive advantage vs. carriers on linehaul while also locking in the cost delta vs. the market index. As markets change monthly or quarterly at the lane level, we compare the market change vs. the base index and adjust the base RFP rate accordingly (example below). Because rates are forward-looking no rebates or reconciliations are needed. Uber Freight calculates all rate refreshes so customers can review, audit, and upload the most competitive rates for their routing guides/to their TMS. How to try: Customers can pilot Index-Based Pricing with Uber Freight within 48 hours—no tech integrations are needed and we work off our current SCAC. Contact your Uber Freight representative to learn more and see how rates could become more competitive in your current contracts or be integrated into your upcoming RFPs.

Key Data Points and Commentary

Routing Guide Trends

Trucking Supply

Demand Indicators

Freight Volumes

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