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Signs Freight Recession Improving, but Outlook Still Soft

The North American freight recession continues to scrape along, with concerns freight demand has modestly improved but still soft, according to recent reports from economic analysts, reports Heavy Duty Trucking.

“Despite the monthly gain, truck freight remains soft as it continues to contract on a year-over-year basis,” says ATA’s Bob Costello said. “The traditional spot market remains much weaker than contract tonnage,” he said.

ACT Research meanwhile, said expectations are for freight markets to continue bouncing along the bottom in the near term, with some holiday volatility and a change in trajectory on the way next year.

They believe retail sales will improve following a year of declines.

“The acceleration in real disposable income growth as inflation slowed sharply this year, and the ongoing strong labour market, support a recovery in goods demand,” said Tim Denoyer, ACT Research VP and senior analyst. “The end of destocking, rise in imports, and recent easing in oil prices improve our confidence that peak season will end on a higher note for freight demand.

“With freight volumes broadly starting to pick up, the spot market is still loose heading into winter, but we expect the trajectory of rates to shift in 2024,” Denoyer said

FTR’s Trucking Conditions Index in September improved thanks to more stable fuel prices and modestly stronger freight demand. However, FTR analysts say market conditions remain quite tough for carriers and the outlook is for consistently negative readings into late 2024.

“Although carriers today are seeing some temporary relief due to the recent drop in diesel prices, freight rates look to improve only gradually over the next year,” said Avery Vise, FTR’s vice president of trucking.

Better freight volumes likely won’t be enough on their own. There’s still too much capacity chasing too little freight, analysts suggest.

“The trucking industry continues to struggle with more capacity than is ideal given sluggish freight volume,” said FTR’s Vise. “Many operations apparently are hanging on or maintaining driver levels in hopes of a near-term rebound, but that approach amounts to an increasingly high stakes game of chicken.”

Full report here.

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