Supply Chain Digest Says...
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| News like the recent divestiture of Walmart’s Canada fleet to a for-hire provider suggest the insourcing trend may be running its course, but much will depend on the changing regulatory environment.” |
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It’s been tough times in the US freight sector for more than two years, and the numbers for January continued the trends, according the Cass Freight Report.
The Cass report for January was released late last week and it showed shipment volumes were down 2.7% on a seasonally adjusted basis versus December, which saw the same measure fall 3.1%.
Shipments also declined by a big 8.2% in January versus the same month in 2024, taking the shipments index to its lowest level since July 2020.
The monthly report from Cass and partner Tim Denoyer of ACT Research is based on data from the billions of dollars of freight bills that Cass pays for its shipper clients.
The index covers several modes but is weighed towards full truckload.
After rising 13% in 2021 and 0.6% in 2022, the shipments index declined 5.5% in 2023 and 4.1% in 2024, and so far is trending toward another decline in 2025.
The Expenditures Index, which measures the total amount spent on freight, fell 4.8% month-over-month in January. The year-over-year decline widened to 4.2% from 3.4% in December (seasonally adjusted).
With shipments down 2.7% and expenditures a bit more, at 4.8%, it implies a modest decline in rates.
However, Denoyer states that “After a 7% decline in 2024, freight rates are starting 2025 on track for low-to-mid-single-digit increases in 2025.”
Another look at rates comes from the Cass Linehaul Index, which measures US per mile truckload rates before fuel surcharge and other accessorials.
In January, the index rose 0.6% month-over-month, the fifth straight small increase from a cycle low in August.
Year-over-year, the index rose to 0.8% from a 0.4% decline in December.
In some interesting concluding comments, Denoyer again cites the growth of contract carriage by private fleets as impacting for-hire carriers.
“While feeling like a bit of a broken record, we still think private fleet capacity additions are likely the main reason for-hire freight volumes continue to decline,” Denoyer observed, adding that “as cost economics reassert their influence, the long-term trend toward outsourcing will eventually return, but the extended 2023 and 2024 down cycle was characterized by an extraordinary post-pandemic insourcing.
He adds that this trend is now slowing, which suggests improving for-hire demand trends, but 2025 and 2026 capacity decisions will be characterized by looming industry regulations.
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Denoyer further observes that “New Class 8 tractor sales tell us that overall, capacity is still being added. News like the recent divestiture of Walmart’s Canada fleet to a for-hire provider suggest the insourcing trend may be running its course, but much will depend on the changing regulatory environment.”
Each month, Cass nicely summarizes the state of freight, as seen in the graphic below for January:
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