Last year, it was nearing madness in March for freight movement, however this time around, the third month on the calendar saw a muted performance in 2023.
Along with volume, transportation costs also took a dip last month.
Freight volume, costs are down in March
Payment services provider Cass Information Systems reported declines in its freight index of 1 percent from February and 4 percent year-over-year (March 2022).
Additionally, its expenditures subindex, which measures shipping costs, fell 1.5 percent from February and 12 percent year-over-year.
Predictive indexes forecast further declines in the year. Some even speculate that truckload rates will be down 13.1 percent year-over-year through the second quarter.
Trucking’s declines across the board are not a sign that rail is somehow stealing freight share, but rather a broader theme that affects the totality of transportation.
Demand from shippers is low.
Historical, mistimed, demand in 2022 has led to a soft 2023
These declines should not come as a surprise.
In March 2022, freight volumes were on the precipice of a late spring surge—a historical wave of demand that’d ultimately become 2022’s peak season—so there was zero expectation the performance this time around would be on par.
In fact, everyone should be expecting these results.
A historical 2022 was the product of shippers mistiming their inventories. Rampant overordering throughout the last year has led to the excess inventories that many retailers are still reporting.
Hopefully not all of 2023 will be muted thanks to a gluttonous 2022, but so far the impacts have carried over into the first quarter and remain lingering through the second.
As a result, less shippers have had to move freight, softening the market tremendously. While they’ve since strengthened, rates and capacity were inline with pre-pandemic conditions earlier in the year.
The great restock of 2023?
Optimism still looms over for a stronger second half of 2023 as a restocking of inventories will eventually be in order for retailers.
Of course, it’s uncertain when a restock trend will reveal itself. Some believe it’s coming faster than others, perhaps as early as the middle of the year.
There’s reason to have a flowery outlook. In the ocean sector, inbound volumes are marginally climbing which could gift modest gains for trucking in the second quarter and beyond, however it’s too early to make certain with this trend.
Final Thoughts
Speculation is a pastime for the anxious who are waiting to see how things play out. Some imagine 2023 will be a recovery year, some say it’ll be a return to pre-pandemic times, while others assert it’ll be a tale of two halves—a weaker first giving way to a stronger second.
There’s indicators that have value, like predictive indexes or trends across transportation, but it’s best to be prepared for any development. No matter which forecast is right, there’s always a need of someone to move their freight.
Recent Comments