U.S. Bank Q3 freight index cautions slow freight market recovery

U.S. Bank recently released its Q3 Freight Payment Index, which saw continued downward pressure on shipments and spend volume. The report notes, “The declines in truck freight shipments and spend in Q3 were the smallest in the last six quarters, suggesting positive signs for truck freight, as well as indications that true market recovery will take time.” The shipments index fell 1.9% compared to Q2 and is down 21.2% compared to Q3 2023. Similarly, the spending index saw a decline of 1.4% compared to the previous quarter, down 21.3% year over year.

Part of the reason for the decline was U.S. manufacturing activity, which remained sluggish from July through September. One area of concern from Fed data was factory output contracting between 1% and 1.5% quarter over quarter. Durable goods were the other highlight, with big-ticket items usable for a minimum of three years falling 2% to 2.5% compared to Q2.

Drilling down in more detail, the report noted that falling housing starts was another headwind, U.S. Census Bureau data reported total new housing units during Q3 at 5.5% to 6% lower than Q2. For flatbed carriers, this was reflected in FreightWaves SONAR data, with flatbed outbound tender rejection rates averaging around 6.49% for Q3 from July 1 through Sept. 30. Comparatively, FOTRI averaged 14.7% during Q2, according to SONAR data. Other modes outside flatbed may also have been impacted, the report adds: “Not only does home construction help freight volumes with construction materials (for example, lumber, shingles, drywall) but also furnishings, appliances, flooring and paint.”

One bright spot in Q3, according to the report, was retail sales excluding auto dealerships, gasoline stations and restaurant sales. Retail sales rose nearly 2.5% compared to the previous quarter and were 4% higher than in Q3 2023.