Cucking a trend of weak performance that began in the second quarter of 2022, the freight industry showed signs of life according to third quarter 2023 data from the Transportation Intermediaries Association’s (TIA)3PL Market Report, Third Quarter 2023
However, sluggish freight volumes and trucking overcapacity will likely keep future results tepid until at least the back half of 2024,t he report notes.
“Our forward-looking data has had us bracing for continued weakness in the freight economy,” said TIA CEO Anne Reinke, in a statement. “However, the surprising strength we saw during the third quarter goes to show that the market can still outperform forecasts. Our members continue to be incredibly resilient and have made the most of less-than-stellar conditions in recent quarters.”
The freight economy, which the report calls the GDP Goods Transport Sector, rose 6.5% quarter over quarter, breaking a 5-quarter streak of negative or nearly negative quarter-over-quarter growth. That growth aligned with a 4.9% increase in U.S. real gross domestic product (GDP) during the third quarter.
TIA Members saw quarter-over-quarter declines in total shipments (-2.2%) and total revenue (-0.2%), but an increase in invoice amount per shipment (2.1%). Members saw double-digit percentage declines in all three metrics year over year.
“We’re looking at tough year-over-year comparisons for brokers given that the third quarter of 2022 was a strong one for members,” said Mark Christos, TIA Chair, in astatement. “That being said, the positive results detailed in this most recent report are encouraging for members as we brace for further headwinds until id-2024.”
In terms of sector performance, intermodal (IM) and less-than-truckload (LTL) recorded quarter-over-quarter gains in total shipments, while truckload (TL) saw a decline in total shipments. All three segments posted mid-single-digit to double-digit year-over-year percentage declines in total shipments.
More Takeaways and Trends Include:
- A key driver of the freight economy’s slowdown is trucking capacity, which grew significantly between 2020 and year-end 2022, even as freight demand began to stall in 2022. Several small carriers created during the past three years have since failed. However, capacity hasn’t declined enough to tighten the market.
- Consumer spending continues to be a metric to watch, given its strong influence on the freight economy. The most recent data indicate the levels of consumer spending that have kept freight demand solid, if not growing, could continue for some time. One factor that could undermine consumer confidence is further weakness in job growth.
- Motor vehicles and parts output has boosted the broader manufacturing sector throughout 2023. Strong output during the first two quarters may be due to a production increase in anticipation of the United Auto Workers’ strikes at three major U.S. automakers between mid-September and the end of October. It’s uncertain whether output will resume at pre-strike 2023 levels or return to weaker pre-pandemic levels.