Axle Logistics Market Update - October 2023

Key Takeaways

• Cost of diesel rises, and falls, throughout the month. Ends $0.10/gallon higher than the start and up $0.35/gallon over the last 2 months.

• All in rates stay flat even with the rise in diesel. Continued elevated fuel cost could force smaller carriers from the market.

• Outlook for cost and demand stays relatively unchanged. Normal seasonality in parts of the country will begin as we enter Q4.

United Auto Workers Strike

The United Auto Workers union went on strike on 9/14/23 at 3 of the nation’s largest automotive manufacturing sites impacting nearly 1 in 10 of the country’s unionized auto workers. Workers are seeking a nearly 40% raise spread out over 4 years. The union planned work outages in stages, starting with 3 plants but now having expanded to 5 facilities. More outages are planned should the sides be unable to come up with an agreement.

Regional impacts from the strike are sure to be felt. Year over year the Total Industrial Production and Total Manufacturing percentage change has been -0.2% and -0.6%, respectively, while Automotive and Light Duty Motor Vehicle Production is up 16.3% over the same time. Parts and Components manufacturers could see diminished demand as the strike lingers, however, low inventory and pent up demand should mute longer term effects.

Government Shutdown Narrowly Avoided

A last minute vote in the U.S. House of Representatives staved off a government shutdown which would have started 10/1/23. The bill, which ensures funding through 11/17/23, was passed with support from both parties and signed into law by President Biden just minutes before a shutdown ensued.

The prospect of another bill being worked out before the 11/17 deadline took a blow when House Speaker Kevin McCarthy was ousted from his role following the vote. We’ll be watching as talks progress. A shutdown would impact more than 4 million federal employees. Many will likely be furloughed or not receiving a paycheck.

Supply Update

Net revocations (total revocations minus the number of reinstatements) were 6,409 in the latest reading. This was down 9% from the previous month and the lowest number since June 2022. That said, revocation numbers have proved volatile. August numbers are expected soon, but it will also be important to watch September numbers as they will include the impact of rising fuel costs.

The National average cost for a gallon of diesel has risen $0.795 since the first reading in July. This rise in costs may push smaller operators out of the market, particularly those that rely on Spot Market demand.

Demand Update

Both the Van and Reefer Demand numbers stayed essentially flat month over month.  Freight Transportation Research Associates, Inc.'s (“FTR”) forecast for total truck loadings was down just slightly - moving to flat from 0.1% growth in 2023. The forecast for refrigerated loadings eased to 0.5% growth y/y from 0.7% in the previous month.

Flatbed, however, did show a little more change. Stronger building materials moved the forecast for 2023 to -0.4% from -0.8% in the previous forecast.

Rate Update

According to DAT, the National Average All In RPM for September was $2.11/mi for dry van, just $0.05 above the July average. This may be particularly concerning for our partners in the carrier community given the change in fuel cost over the same time. As mentioned earlier, this cost increase will likely have a significant impact on the broader small carrier community.

Very little change came from the latest readings when looking at broader forecasts. According to FTR, dry van and refrigerated rates will look the most negative in 2023 given their strength in early 2022. With that, they will also show the strongest gains in 2024.

Not all markets will experience the market the same and normal seasonality has returned. October typically will bring some tightness to markets in the Upper Midwest, including Ohio, Illinois, and Indiana as produce moves in. Wisconsin and Minnesota are also seeing tightness and increased tender rejection rates.

The Pacific Northwest is also known for Q4 tightening as Apples, Potatoes, and other vegetables come to harvest. Expect Christmas trees to have their seasonal effects as well later in the quarter.

Speak to your Axle Logistics Consultant to understand how the market is impacting your specific industry and business!

Our Team

It’s Football Time in Tennessee and our team has been enjoying watching our Vols play! Axle hosts a tailgate for the Axle team each home game where we can get together, unwind, and cheer on our home team!

#AxleGivesBack

Axle had another active month out in the community in September with events supporting several local charities, including Boys & Girls Club , Wesley House, Ronald McDonald House Charities , and a number of others!

Did you know...

Axle Logistics is digitally integrated with thousands of customers and carriers allowing us to leverage different integration options to automate everyday tasks. In September alone we sent over 1.52 million status updates automatically to our customers and nearly 20k quotes! Talk to your Logistics Consultant about connecting today!