The latest release of ACT Research’s For-Hire Trucking Index indicated slower growth in freight volumes outweighed the slight contraction in capacity in December.
The volume index decreased 1.0 point in December to 51.0, seasonally adjusted, from 52.0 in November.
“Despite the economy continuing to exceed expectations, particularly consumer spending, for-hire volumes have yet to find meaningful purchase out of the trough. While freight is growing broadly, two years of private fleet capacity additions have diminished for-hire carriers’ slice of the freight pie,” Carter Vieth, research analyst at ACT Research, said. “Additionally, while the retail sector is healthy, interest rate sensitive sectors like manufacturing and construction are sluggish. Tighter financial conditions are likely to slow volumes in these sectors, despite support from hurricanes and wildfires.”
The capacity index was essentially flat, down 0.3 points M/M to 49.7 in December, from 50.0 in November.
“Approaching three years of weak profitability, for-hire carriers aren’t in the position to add significant new capacity,” Vieth said. “Given the current volume and rate environment, we would anticipate for-hire capacity additions to remain at replacement levels, leaving the index at or around 50.”
The supply-demand balance grew at a slower rate in December, at 51.3, from 52.0 in November, as the slower growth in freight volumes outweighed the slight contraction in capacity.
“Private fleet expansion, which is not captured in this indicator, has resulted in a longer period with the market close to balance than in past cycles,” Vieth said. “Consumers remain robust, and inflation is in relatively good shape for now. But sustained high interest rates could dampen demand in construction and industrials and may limit volume improvement in the near term. A slowdown in private fleet growth is likely and should lead to further improvement in the for-hire market balance.”
