U.S. Bank Freight Payment Index™ Sees High Q3 Freight Shipment and Spend Levels, Shows Some Deceleration
October 24 2018 - 9:00AM
Business Wire
Constrained trucking capacity likely to
continue due to solid U.S. economy and ongoing commercial driver
shortage
The U.S. Bank Freight Payment Index™ – a tool designed to assess
the current state of the freight industry in the U.S. – showed
declines in the third quarter compared with the second quarter in
2018.
The changes between quarters were driven by several factors
according to Bob Costello, a freight industry analyst and chief
economist for American Trucking Associations, including a
moderating U.S. economy compared with the previous quarter and
other factors like Hurricane Florence and potential early signs of
tariff impacts. On a year-over-year basis, however, the overall
freight spend increased by double-digits despite lower freight
shipment volumes, which reflects higher average freight transaction
prices.
“Linked quarter declines in both freight shipment volume and
spend are in line with the deceleration many expected in third
quarter gross domestic product growth,” said Costello. “As trucking
often leads the broader economy, the decreases seen in the U.S.
Bank Freight Payment Index suggest economic growth may have peaked
and may decelerate in the fourth quarter and beyond. Despite the
sequential decreases in freight shipments and spending last
quarter, the national truck market remains solid and capacity
tight.”
Costello also said it is difficult to ascertain the exact impact
that Hurricane Florence had in the Southeast region during the
third quarter, but undoubtedly it was negative. However, there will
eventually be a freight bump associated with hurricane rebuilding
efforts. Costello also noted, while still very early in
implementation, U.S. tariffs on some foreign products – as well as
retaliatory tariffs on some U.S. goods – likely had at least a
slight negative impact on the quarter.
Freight ShipmentsU.S. freight shipment volume in Q3
decreased 5.2 percent from the second quarter and is down 1.1
percent from the same period last year.
SpendThe amount spent on U.S. freight costs in Q3
decreased 1.2 percent from the second quarter, but is up 13.5
percent from the same period last year. This is driven in large
part by the constrained trucking capacity in the U.S.
About the U.S. Bank Freight Payment Index“The U.S. Bank
Freight Payment Index helps our clients make better decisions when
planning and forecasting for their businesses,” said John Hardin,
U.S. Bank Global Transportation General Manager. “It also helps
shippers and carriers understand regional variability.”
The U.S. Bank Freight Payment Index measures quantitative
changes in freight shipments and spend activity based on data from
transactions processed through U.S. Bank Freight Payment. These
transactions are made on behalf of clients across a range of
industries, including automotive, manufacturing, food and
retail.
A pioneer in automated freight audit and payment, U.S. Bank
Freight Payment is celebrating its 20th year of facilitating
transactions between shippers and carriers. The business processed
more than $24.5 billion in global freight payments in 2017 for some
of the world’s largest corporations and government agencies. For
more information and to subscribe to the Index, visit
www.freight.usbank.com.
Activity by U.S. RegionAll regions saw freight shipments
contract from the second to third quarters this year, ranging from
a 3.4 percent decline in the West to an 8.6 percent decline in the
Southwest. These results are in line with contractions from the
second to third quarters in both spot market and contract truck
freight volumes.
Conversely, on a year-over-year basis, all regions witnessed
solid gains in spending. Despite a sequential drop in freight
shipments across all regions, truck capacity remained constrained
enough for all regions to witness robust year-over-year gains in
spending.
Regional highlights of the Q3 2018 U.S. Bank Freight Payment
Index include:
- West Region
- The West region had the best third
quarter among all five regions as volumes contracted the least over
the second quarter and it was the only region to post a gain in
spending.
- Softer trade volumes at West Coast
ports – especially in July and August – had a negative impact on
volumes in Q3, as did new housing starts, which were also weaker in
this region.
- Despite the reductions in freight
shipments, freight spend increased 1.4 percent over the last
quarter and 7.4 percent over Q3 last year.
- Southwest Region
- Freight shipments and spending in the
Southwest region fell more than any other region compared with the
second quarter.
- The Southwest regional economy
continues to be one of the strongest in the country. Truck volumes
and spending, while moderating in the third quarter, will remain at
high levels there.
- Midwest Region
- The freight shipment index in the
Midwest region fell by 6.4 percent during the third quarter, which
was the largest sequential drop since 2010.
- One of the factors hurting this region
in the third quarter was weak home construction.
- Northeast Region
- The Northeast freight shipment volume
and spend fell by similar levels from the second to third
quarters.
- A third quarter drag in the region was
softness in home construction, especially in multi-family units,
like apartment buildings.
- Despite the soft third quarter, going
forward, the Northeast region should benefit from better factory
activity and a solid holiday spending season.
- Southeast Region
- Hurricane Florence had a negative
impact in the Southeast region during the third quarter. However,
there will eventually be a freight bump associated with hurricane
rebuilding effort.
- Not only was this the first sequential
decline in freight shipments since the final quarter in 2016, it
was the largest since 2010.
- The Southeast region will likely
benefit from solid factory output in the quarters ahead, as well as
strong household consumption.
About U.S. BankU.S. Bancorp, with 74,000 employees and
$465 billion in assets as of September 30, 2018, is the parent
company of U.S. Bank, the fifth-largest commercial bank in the
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For U.S. BankAntoine LaFromboiseU.S. Bank
Corporate
Communications612-303-0793antoine.lafromboise@usbank.comorDeborah
HarrisWilliam Mills
Agency678-781-7220deborah@williammills.com
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