Q3 U.S. Bank Freight Payment Index highlights changes in a shifting market
The recently-released third quarter edition of the U.S. Bank Freight Payment Index, was mixed, to different degrees, for freight payments and expenditures.
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's business processed $31.4 billion in 2020 for some of the world’s largest corporations and government agencies.
The report’s third quarter shipment index value—at 118.5—was down 2.6% compared to the second quarter and was down 4.9% annually, marking the steepest annual decline going back to the first quarter of 2021.
As for spending, first quarter freight expenditures came in with a 272.6 reading, down 2.4% compared to the first quarter—marking the second quarterly decrease in spending since the third quarter of 2020—and up 10.6% annually.
The report’s author, American Trucking Associations Chief Economist Bob Costello, observed that the national truck freight market, including both truckload and less-than-truckload (LTL), softened during the third quarter, due to various reasons, including households continuing to shift more to spending on services than on goods.
“As that happens, it reduces truck freight volumes,” he wrote. “Furthermore, inflation shifts outlays on goods, as consumers spend more for staple items, like food, leaving less money for other products. Home construction was also off during the third quarter, which impacted truck volumes.”
Looking at expenditures, Costello wrote that in addition to reduced freight volumes, it was likely that contract rates also flattened, from the second quarter to the third quarter, coupled with declining fuel prices over the same period, as the national diesel average price per gallon was off 4.6%, from the second quarter to the third quarter, which resulted in lower fuel surcharges and subsequently lowered truck freight spending.
“As freight shipments slowed, upward pressure on contract rates eased during the third quarter, but spend still increased a solid 10.6% from a year earlier,” wrote Costello.
On a regional basis, the report found that third quarter shipments largely saw gains, from the second quarter to the third quarter, with the West down 0.4, the Midwest down 4.0%, the Northeast down 10.4%, the Southeast down 1.1%, and the Southwest up 5.8%. Annually, shipments were down 4.6% out West, down 3.5% in the Midwest, down 7.1% in the Northeast, down 10.5% in the Southeast, and up 6.6% in the Southwest.
Third quarter spend was mostly down across the board, from the second quarter to the third quarter, with a 0.8% decline out West, a 5.3% decline in the Midwest and a 1.4% decrease in the Northeast, a 0.1% decrease in the Southeast, and a 1.7% increase in the Southwest. Annually, spend saw an 11.6% gain out West, a 6.5% gain in the Midwest, an 11.9% gain in the Northeast, a 10.2% increase in the Southeast, and a 24.8% gain in the Southwest.
