Phil Wenzell

With the 4th of July holiday fast approaching, I wanted to take a look at where June’s dry van truckload spot market rates stand to get a sense if the market is showing any signs of turning. Two charts below using data from DAT Freight & Analytics. Thoughts: •Top chart shows dry van spot rates as well as dry van broker buy contract rates. Dry Van spot rates, while up $0.06 per mile from the April low, are down $0.03 per mile from June 2023. Given diesel prices are down just $0.08 per gallon from a year ago (https://lnkd.in/g5sUVM8V), fuel isn’t driving this difference. •June 2024’s $0.03 increase over May is quite weak relative to what we have traditionally seen in dry van TL bull markets. In 2014 the increase was $0.11 per mile; in 2017 it was $0.10 per mile; and in 2018 it was $0.17 per mile. For that matter, the increase was $0.10 in 2019 (a down year)! As such, spot prices so far are a sign of a cruel summer—my daughter is obsessed with Taylor Swift—from a pricing standpoint. •Bottom chart shows the dry van spot market cycle indicator (DVSMCI), calculated as the broker buy rate less the spot rate, with the difference divided by the average of the two measures. That ratio is currently 16.6%. While better than last year’s 19.9% reading, we are well away from the 10% threshold where we have tended to see markets flip. Implication: dry van spot market data suggest that folks who made predictions of the dry van truckload market flipping from bear to bull in late Q2 or early Q3 likely made an overly optimistic forecast. I increasingly believe the earliest the market could meaningfully flip is Q2 2025, and this will require many things to go right from carriers’ vantages for this to occur. #supplychain #supplychainmanagement #freight #trucking #truckload

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Q1 has come and gone, and the dry van truckload market did not turn as more optimistic predictions had predicted (https://lnkd.in/gbWQFQB6). Q2 hasn’t looked any better? Why? The answer: demand for truck transportation remains weak. This is in spite of strong year-over-year gains in imports and robust retail trade sales. How can this be the case? Simple: domestic manufacturing still produces the bulk of for-hire trucking demand, and freight-weighted domestic manufacturing remains in a deep slump. One chart below showing this using the seasonally adjusted for-hire trucking ton-mile index that I coauthor. Thoughts: •February’s seasonally adjusted ton-mile reading jumped 1.5% from January’s low reading (which occurred due to the polar vortex) but remains down roughly 2% from this time in 2023 (and remember, we had been in a freight recession for roughly 5 months as of February 2023 [September 2022 saw the first major drop in demand]). •Relative to the seasonally adjusted peak from March 2022, demand for truck transportation has dropped 4%. That may not seem like much, but employment has fallen just 0.3% over this same period (see https://lnkd.in/gdYDGD4j). •For those wondering why demand isn’t stronger given those strong import gains, remember what I’ve been preaching for year(s): imports don’t represent that much freight relative to what we manufacture domestically. Consequently, all the stock analysts focusing on import-centric retail trade are missing the boat (pun intended). Implication: for the dry van truckload market to turn from bear to bull, we either need a much larger loss of capacity (unlikely to happen quickly) or for demand to improve substantially, which will require a sharp rebound in domestic manufacturing activity (also unlikely to happen quickly). As such, I would pencil in “blah” conditions for the immediate future. #supplychain #supplychainmanagement #shipsandshipping #freight #trucking  

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Dry Van Freight Market Update May 27 - June 2: ~Chicago’s truckload capacity tightened following last week’s $0.01/mile increase to an outbound average of $1.68/mile. ~Atlanta saw a similar trend with rates increasing $0.02/mile to $1.77/mile average. This is up $0.20/mile in the last month on 22% lower volume of loads moved. ~Atlanta > Lakeland paid carriers $2.52/mile, $0.06/mile higher than the prior month. ~Lakeland > Atlanta paid carriers $0.83/mile and are $0.13/mile higher than the long-term average. ~That means RT is paying carriers $1.79/mile excluding fuel. At this level, carriers are operating under breakeven. #freightmarket #supplychain #transportation #logistics #trucking

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I enjoyed listening to economist Bob Costello share some hopeful news yesterday on the economy's state. While the economy is slowing down, he believes truck freight demand will improve as the market balances out. Here are some key points: Manufacturing has been slow, which has hurt freight volumes, but there are signs of improvement. Private fleets are taking more of the market, creating challenges for for-hire companies. Interest rates and consumer spending are starting to level out, which could help increase demand. While things won’t change overnight, we can expect slow improvement for fleets dealing with these tough times. What do you think the future holds for the freight market? #Trucking #Freight

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SEVEN MONTHS… That’s the countdown, supply chain folks! The NMFTA is about to shake things up with major changes to the National Motor Freight Classification (NMFC) system, and it’s going to impact LTL shipping costs in a big way. Traditionally, NMFC classifications have used a straightforward set of classes based on density, stowability, handling, and liability. High class = high shipping cost. But now, carriers are bringing in new tech sharper than ever at calculating the exact dimensions and density of your shipments. So if that box of widgets has been enjoying a cozy, lower class rate, buckle up—it might get a “first-class” upgrade, minus the free cocktails! Higher rates are ahead for items that don’t meet the new density requirements. With this increased focus on density, shippers can expect more variable pricing, so it’s time to pack smart. To avoid any surprise shipping cost hikes, now’s the time to tighten up packaging, aim for maximum density, and work closely with carriers to stay ahead of these changes. May 1st—7 months to go. If you’re ready, congrats! If not, look forward to some “quality time” with the CFO, a frustrated sales team, and possibly some questions from customers about the spike in cost of goods. Fun times ahead!

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PLUG: Here are Knight, we have a few different options for customers seeking dynamic pricing. Ask me about them. :) RE: this article - I’ve read a variety of opinions surrounding CH Robinson’s recent spot-quoting AI reveal. Personally, I applaud them for being an early-adaptor within the Artificial Intelligence/Transportation Industry space. At the end of the day, finding new ways to provide their customers faster, more consistent spot-quote responses is a win/win endeavor. Now will there be an “adaptive AI learning curve” that helps ensure their AI pricing is both competitive and profitable? Yes, of course. The transportation world (as a whole) is so dynamic that it will be interesting to see how quickly AI reasoning can “detect and adjust” to market swings. Most certainly there will be people behind the scenes calling “audibles” in those situations. Will they be able to execute on the business generated? Well that’s the never-ending, never-relenting question mark behind every company in our space. Ultimately, if they can’t execute, nothing else matters. I’m guessing they have a lot of brilliant minds invested here to ensure this project not only has feet but is ultimately successful.

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Interesting chart from Cathy Morrow Roberson's Freight Forward Report. As of May 9, 2024, the S&P Global Journal of Commerce Truckload Capacity Index has reached its lowest level since 2017, as large truckload carriers continue to cut trucks from their fleets. However, as freight rates indicate, there is still excess capacity with smaller trucking companies holding on longer than expected during this difficult freight recession.

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I have long suspected FreightWaves data on truckload tender volumes and accepted loads are strongly weighted towards consumer-centric freight, especially containerized imports. Their most recent market update provides more evidence for my claim. Consider the following: •Accepted tenders have been up ~7% in 2024 from 2023. Do you know what else has been up by a similar amount in 2024 from 2023? Metric tonnage of containerized waterborne imports from Asia, which are up 14.5% year-over-year for 2024 from 2023 on a year-to-date basis. •The article mentions that tender volumes are up 15.8% today than in 2019. As tender rejection rates in 2019 and today are similar, tender volumes and load volumes would result in similar conclusions. I'm very confident that this isn't the case when you look at all of trucking freight (my trucking ton-mile index's most recent readings are within 2% of 2019 levels). However, containerized imports have steadily increased since 2019 and are following the pre-COVID trendline (and are up by roughly the amount FW's is reporting for their trucking volume data). Implication: you need to look closely at different data sources for trucking freight volumes to try and infer what industries receive the most weight. I've long felt Cass is industrial-heavy. FreightWaves appears to be the opposite. My own trucking ton-mile index is heavily slanted towards domestic manufacturing (specifically food, chemicals ex pharma, nonmetallic mineral products, paper, and primary metals) because of the Commodity Flow Survey. Things to keep in mind as you select which indexes to give more weight when undertaking strategic planning (e.g., if you are a carrier with lots of exposure to containerized imports, FreightWaves' data would likely be your preferred metric). #supplychain #supplychainmanagement #shipsandshipping #freight #trucking https://lnkd.in/giQiCCHf

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One statement I routinely hear or read is surprise at how dry van truckload capacity has been so resilient given the collapse of commoditized over-the-road dry van TL lanes. Apart from abnormal profits earned in 2021 and 2022 helping keep carriers afloat, I believe another reason for the resilience of capacity is that many other services these carriers offer have not seen nearly as precipitous of a drop. One chart below showing this. Thoughts: •This chart compares the full producer price index (PPI) for general freight trucking, long-distance, truckload (NAICS 484121) (full PPI) versus the primary service PPI (which captures generic dry van services). Prior to COVID-19, these two series moved in unison. However, since late 2022, they have sharply diverged, with the full PPI falling far less (it currently hovers ~35% above pre-COVID levels, compared with 15% for the primary service PPI). Both indexes include fuel surcharges. •I’ve checked with the BLS economist who collects these data, and what we are seeing isn’t the effect of reweighing or other methodological changes. Rather, the only conclusion is that other services (which account for ~1/3rd of revenue for establishments classified as primarily over-the-road TL carriers) have shown much greater resilience. •These services could include dedicated contract carriage, warehousing and storage, specialized TL transportation, or intermodal. When you think about large public TL carriers like JB Hunt, you can see services like intermodal and dedicated operations have shown much greater price stickiness. Implication: the greater resilience of the PPI for all services offered by dry van truckload carriers helps explain why the sharp decline in rates for the commoditized portion of TL services hasn’t caused a larger shakeout of industry capacity (in addition to record profits earned in 2021 and 2022). #supplychain #supplychainmanagement #freight #trucking #truckload

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LTL should not be viewed merely as a secondary choice but rather as a key component that bridges the voids within your transportation framework. Discover three effective strategies for incorporating LTL into your multimodal strategy to fully leverage its capabilities. I suggest checking out this guide on LTL: http://sndr.pro/5M

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Where are dry van truckload prices at? With DAT’s most recent data released this week, as well as the BLS’s PPI for general freight trucking, long-distance, truckload [primary services], I wanted to share my thoughts. Two charts below. Thoughts: •Top chart shows DAT’s dry van spot rates (red) and what they call contract rates (black) (including fuel). Both continue to move in parallel. Historically, every major market shift (2014, mid-2017, mid-2020) has corresponded to a sharp uptick in dry van spot rates, inclusive of diesel prices. We just aren’t seeing any signs of such an uptick now, which further solidifies my view that we can write of 2024 as the year the market could turn. It’s time to turn the page to 2025. •Bottom chart shows the producer price index for the commoditized portion of dry van TL freight (which includes fuel). That index continues to move sideways. Historically, as with spot rates (but to a much lesser extent [at least in 2014 and 2017-2018), we will see these rates spike when market cycles change. The BLS’s data likewise is corroborating this hasn’t happened yet. Implication: despite a lot of excitement with the election outcome, the brutal reality is that the dry van truckload sector needs a significant infusion of freight to get out of the current “limbo” conditions where we have seen one cycle end but have yet to see another cycle begin. To continue to echo the prediction I’ve made for several months, the soonest I see the market meaningfully changing towards carriers’ favor would be late Q1 to early Q2 2025. We will need to closely watch demand signals over the coming months, especially data on manufacturing new orders. For the late Q1 to early Q2 market turn to materialize, we will need to see a rapid uptick in new orders over the next few releases from ISM. #supplychain #supplychainmanagement #freight #economics #trucking 

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Dry Van Freight Market Update April 22-28: ~The nation’s Top 5 Dry Van Spot Markets (LA, Dallas, Chicago, Elizabeth, & Atlanta) average linehaul rate decreased to $1.50/mile.  ~LA improved to $1.65/mile, same y/y, on a 5% higher volume of loads moved last week. ~Dallas & Atlanta saw volumes of loads moved improved last week and low linehaul spot rates didn’t improve. ~Elizabeth saw load volumes flatten and linehaul spot market rates dropped $0.02/mile to $1.16/mile last week. #freightmarket #supplychain #transportation #logistics #trucking

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Its that time of year again! Are annual LTL rate increases putting pressure on your transportation budget? You're not alone. Many businesses face rising costs in less-than-truckload (LTL) shipping, driven by fuel surcharges, labor expenses, and capacity constraints. One solution to counteract these increases is consolidating multiple LTL shipments into full truckload (FTL) shipments. Here's why this strategy makes sense: ✅ Cost Savings: Combining LTL shipments into a single truckload can significantly lower per-unit shipping costs by maximizing trailer utilization and avoiding high LTL fees. ✅ Improved Transit Times: Consolidated shipments typically follow a direct route, reducing handling and transit time compared to traditional LTL that moves through multiple terminals. ✅ Reduced Damage Risk and W&I: With fewer touchpoints, your products are less likely to be damaged or delayed, enhancing customer satisfaction. ✅ Environmental Impact: Fewer trucks on the road mean reduced fuel consumption and lower carbon emissions—a win for your business and the planet. This option is not for every shipper! You need to identify your top receivers, where they are located and IF shipments can be strung into a multi-stop route. If you're considering optimizing your supply chain with consolidated shipping, let's discuss how our team at Hermann Services can help you make the transition smoothly and cost-effectively. Have you tried this strategy, or are you interested in learning more? Let’s connect in the comments or via direct message! #Logistics #Hermannservices #Shipping #Transportation

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Despite a 1% annual gain in May, Logistics Management reports a decline in truck tonnage again in June, the 15th time it’s dropped in the last 16 months. It’s a reflection of the volatility in the trucking industry and current economic fluctuations. Everything considered, the American Trucking Association (ATA) feels that the overall freight market is resilient. #thefreightarchitects #jaguarfreight #logistics

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Or CCO Dean Jones has some great insights and mentions that th trend for LTL GRIs are expected to be around 5.9% - a shift away from aggressive pricing. Check out the post and let me know if you have questions.

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Zipline Logistics' Q2 freight market update taps into the expertise of the one and only Katie McGovern, our Senior Director of Operations. McGovern shares her insights on the current state of the freight market and predicts what may come for CPG shippers. Check it out: https://hubs.li/Q02rydm70 #logistics #cpg3PL #freightmarket #report

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🚚 Freight Market Update 🚚 Despite port strikes and hurricanes, the freight market remains stable. Capacity absorbed disruptions, and no major shifts are expected until mid-2025. Driver shortages from upcoming regulations could tighten capacity, so planning ahead is key! #Logistics #Freight #SupplyChain

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People + Technology yields the highest level of service. Communicating and collaborating with customers becomes difficult when the human aspect is diminished. #Freight #Logistics #SupplyChain #Truckload #FreightBroker #DryVan #ShippingSolutions #layoffs https://lnkd.in/eQ2U_j5S

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