Freight Payment Shipment and Spend Indexes Fell Sequentially in the Fourth Quarter
Q4 2019 U.S. Bank Freight Payment Index
By Bobby Holland, Director of Freight Data Solutions, U.S. Bank Freight Payment
The freight industry is rapidly changing as more and more data becomes available. We used to be asked how to get the right data, but now organizations want to understand how they can be better prepared for what’s going to happen in the future.
That’s why U.S. Bank created a solution that can help discern what the overall market is doing—a key to effective planning and forecasting. The U.S. Bank Freight Payment Index separates the valuable data from the noise to provide insight into what’s happening in the trucking market and indicators for the economy at large. It can help achieve insight into determining where your business performs against the marketplace. For example—if you felt like your performance was moderating towards the end of the year, our index shows that you are trending with the market.
In looking deeper into our latest index, data revealed that 2019 ended with drops in both quarterly and year-over-year shipment and spend metrics due to weaker economic activity, including a slowing manufacturing sector. While spending was up 3.4% over 2018, trucking experienced a tough year in shipments as well as spend. Despite these losses, shipments could start to improve as capacity starts to tighten with fewer truck purchases as well as additional carrier closures.
One of the biggest factors expected to impact the economy is the coronavirus. With the outbreak starting in China and rapidly spreading across the world, it’s likely that trucking will feel the effects as shipments are increasingly delayed and detained in an effort to reduce exposure to the virus. Additionally, though the trade environment experienced progress in the de-escalation of the trade war, there’s still some uncertainty with what supply chain opportunities and challenges we’ll face as a result of the negotiations and the new USMCA. It will be interesting to see the overall impact of both the virus outbreak and the trade environment on the trucking industry as we gather data from the first quarter of 2020.
Understanding shipping volumes and expenditures both nationally and regionally allows you to make decisions based on what’s most relevant to your organization. Carriers can use this data to identify opportunities for more aggressive pricing or anticipate when customers might demand price reductions. From the impacts of the foreign trade on the West to the construction activity in the Northeast, freight volumes show a valuable glimpse into the differences in economic climate from one end of the country to the other.
Regional trends could also present more granular opportunities to increase or decrease pricing and capacity in certain service areas. For example, despite being off 1.6% from the third quarter, spend in the Southeast was up 7.3% from a year earlier whereas in the Southwest spending fell 4% from a year earlier. During capacity fluctuations, it may be worth taking a closer look at your pricing approach.
As we move further into the new decade and the trade environment continues to evolve, it will be imperative to monitor how freight spend is being affected. Our next quarterly index will be released in April and will provide updated perspectives to give you the actionable information that’s relevant to your business. Subscribe to the U.S. Bank Freight Payment Index and receive updates about the newest release at freight.usbank.com.
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