Q2 U.S. Bank Freight Payment Index highlights strong freight shipment and spend levels

Myriad signs of economic improvement—driven by things like more people getting vaccinated, strong retail sales, high imports, construction and manufacturing output—helped propel second quarter freight shipments and spend levels to high levels, according to the most recent edition of the U.S. Bank Freight Payment Index, which was recently released by Minneapolis-based U.S. Bank.

This report, which was initially launched in the third quarter of 2017, is comprised of data on freight shipping volumes and spend on both a national and regional basis. The report’s data is based on the actual transaction payment date, highest-volume domestic freight modes of truckload and less-than-truckload and is seasonally- and calendar-adjusted. Its historical data goes back to 2010, with a base point of 100, and its index point for each subsequent quarter marks that quarter’s volume in relation to the preceding quarter. U.S. Bank Freight Payment processes more than $28.8 billion in global freight payments for U.S. Bank’s corporate and federal government clients.

The report’s shipments index value—at 122.7—was up 4.4% compared to the first quarter and up 6.8% annually. And freight spend—at 233.6—rose 10.1% compared to the first quarter, to a new record high, and was up 44.0% annually.

American Trucking Associations (ATA) Chief Economist Bob Costello wrote in the report that while shipments are still below peak pre-pandemic levels, the index has seen significant gains, adding that the national truck freight market improved during the second quarter, as the economy gained momentum emerging from the effects of the pandemic.

“The national shipments gain was notable during the second quarter, but the spend index surged from both the first quarter and year-over-year,” wrote Costello. “These robust gains stem from extremely tight truck capacity due to a profound driver shortage, as motor carriers have been unable to increase supply sufficiently to meet the growing demand. As a result, pricing increased considerably as shippers worked to get loads moved in the time frames needed. In addition to increased freight rates during the second quarter, the spend index was pushed up by rising diesel fuel prices, which are reflected in increased fuel surcharges. As industries ramp up output from increased demand in the second half of the year, truck freight demand will grow as well. The challenge for the motor carrier industry will be meeting that demand in the face of one of the largest supply crunches in history. Increased new driver training and rapidly rising pay will help, but it will take time to get additional drivers into the market.”

And he added that second quarter shipments were also supported by sectors emerging from the impacts of the pandemic like travel and restaurants. On the spending side, Costello pointed to the pairing of higher volumes and pricing, including higher fuel surcharges, resulting in a new record, also noting that the pricing gains are visible through a much larger gain in spending than in shipments compared to a year ago.  

On a regional basis, the report stated that second quarter shipments were up on a sequential basis, with the West up 7.1%, Southwest up 6.5%, Midwest up 2.5%, Northeast up 1.5%, Southwest up 6.5%, and Southeast up 5.8%. Annually, shipments were up 12.1% out West, up 1.8% in the Southwest, down 2.1% in the Midwest, up 20.0% in the Southeast, and down 1.6% in the Northeast.

On the spending side, the report stated that second quarter spend saw gains on a sequential basis, with the West up 13.9%, Southwest up 9.8%, Midwest up 7.9%, Northeast up 14.6%, and Southeast up 9.0%. Annually, spend levels were up 51.5% out West, up 34.1% in the Southwest, up 32.1% in the Midwest, up 54.2% in the Southeast, and up 43.1% in the Northeast.

“We are seeing a continued rise in demand for freight shipments and this is expected to only increase as the economy continues to recover and retailers work to replenish their inventories,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “At the same time, the industry is facing one of the largest supply crunches in history, driven in large part by a major truck driver shortage. This shortage, along with rising fuel prices, is causing considerable spending increases for shippers.”  

Holland said there remains a continued rise in demand for freight shipments, which is expected to only increase as the economy continues to recover and retailers work to replenish their inventories.

“At the same time, the industry is facing one of the largest supply crunches in history, driven in large part by a major truck driver shortage,” he explained. “This shortage, along with rising fuel prices, is causing considerable spending increases for shippers.”  

With over the road capacity still very tight, Holland noted it is hard to gauge whether rates stay at current levels, based on data alone, while rates have been climbing for some time, as the capacity constraints have continued and shippers and carriers continue to adapt.

And with shipment growth still below pre-pandemic levels, he said that the market continues to adjust to what he called the new normal, with shifts in consumer patterns, in the form of travel and social events ramping up, retail adjusting back to more brick and mortar while online stays high.

“As consumer confidence continues to grow, industries and market sectors are expected to continue their rebounds,” he said. “In addition, the capacity shortage will need time to resolve, both in terms of new drivers on the roads, as well as additional trucks.”