COLUMBUS, Ind. — The freight cycle remains weak, according to the latest release of the ACT Freight Forecast, U.S. Rate and Volume OUTLOOK report, but there are rays of light at the end of those warehouses.
ACT economists say they see the tightly intertwined supply and demand dynamics in the freight market beginning to recover with demand fundamentals improving and capacity starting to tighten.
“With produce season arriving late this year and the freight market likely passing the peak of the destock, freight demand is near the bottom,” said Tim Denoyer, ACT Research’s vice president and senior analyst. “With inflation easing, improving real income trends will allow for a bit more holiday spending this year, when even less destocking will mean more freight volume.”
Regarding fleet capacity, Denoyer added: “Interstate operating authorities are contracting at a record rate, with about 11,000 net revocations since last October, including about 1,600 net revocations in April. Total revocations were about 10,800 in April, near record levels, though grants and reinstatements are also elevated. This is beginning to tighten capacity, which will also help spot rates find the bottom and begin to rise.”
Meanwhile, long-distance trucking employment is also contracting, as long-haul trucking jobs declined by 8,700 jobs in Q1’23, or 1.0%, Denoyer noted.
“While still up 3.0% year-over-year, in that latest March data point, the series will be down on a year-over-year basis by June on its current level,” he said. “Since trends in employment follow trends in freight rates, long-haul jobs are set to decline this year.”
Denoyer said that the intersection of additional volume and tightening capacity “underpins our forecast for a near-term bottom in spot truckload rates. We’ve been expecting the bottom roughly around this month since we introduced 2023 spot rate forecasts 16 months ago, and we still think (International) Roadcheck this week will help usher in a new freight cycle.”
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