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June 12, 2024 No Comments
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This guide offers supply chain professionals a concise update on the current happenings in the North American freight markets for May 2024.
As we progress into 2024, the freight market remains low, though signs of seasonal activity are emerging. Despite abundant carrier capacity meeting current shipper demand and stable rates over the past few months, we will unlikely see these low base cost-per-mile levels again. The truckload market is poised to enter an inflation phase later in 2024.
The Road Check Effect
From May 14th to 16th, the Commercial Vehicle Safety Alliance (CVSA) will conduct its annual International Road Check. Historically, this event has caused a temporary rate increase, with past years showing rate inflation of approximately 5%. We anticipate similar disruptions and rate increases this year.
The Road Check Effect
From May 14th to 16th, the Commercial Vehicle Safety Alliance (CVSA) will conduct its annual International Road Check. Historically, this event has caused a temporary rate increase, with past years showing rate inflation of approximately 5%. We anticipate similar disruptions and rate increases this year.
Impact of Memorial Day
Following the Road Check, Memorial Day weekend marks the start of the summer shipping season. In 2023, this period saw a 10% rate increase, establishing a higher baseline for the rest of the year. This year, while we face soft volumes and low spot rates, reduced carrier capacity and improved demand from increased imports and manufacturing may again lead to higher rates.
Produce Season Trends
Seasonal produce markets show signs of activity, with rate increases and tightening capacity in southern and central Florida, south Texas, and southern California. Better projected yields and a reduced carrier base suggest potential capacity disruptions and rate hikes in 2024.
In April, rates across all equipment types for full truckload shipping remained flat, with an overall decrease of 1.7% from March. Dry van rates dropped by 1.4%, reefer by 2.3%, and open deck by 0.5%. However, with the combined impact of DOT week, Memorial Day, and produce season, we expect rates to rise in the coming months. The market has entered inflationary territory year-over-year, with total rates up by 3.5%, dry van by 4.1%, and reefer by 4.3%, while flatbed rates decreased by 4.3%. This shift indicates a growing demand for transportation services, particularly in the refrigerated shipping and dry van segments. Industry analysts predict that the upward trend will continue as seasonal factors play a more significant role. Carriers are advised to adjust their strategies accordingly to capitalize on the expected rate increases.
New Terminal Openings
Following Yellow’s closure, carriers like XPO have opened new terminals, with recent openings in Las Vegas, NV; Landover, MD; and Sherman, TX. XPO plans to open 12 more terminals by the end of Q2 and 24 by year-end. Estes and Saia are also expanding, each planning to open 20 new terminals in 2024, increasing capacity and seeking new business.
LTL Carrier Pricing Discipline
LTL carriers maintain strong pricing discipline, with general rate increases (GRIs) ranging from 4.9% to 5.9%. Customer-specific pricing agreements (CSPs) are seeing adjustments from 3% to 7%, targeted at specific lanes, weights, and classes. This disciplined approach is expected to persist in the LTL industry.
In conclusion, the North American freight markets in May 2024 are navigating a complex landscape marked by seasonal shifts, regulatory events, and evolving market dynamics. The upcoming CVSA International Road Check and Memorial Day weekend is expected to temporarily inflate rates while the produce season introduces additional capacity challenges. Despite recent stability, the truckload market is entering an inflationary phase with anticipated rate increases. Concurrently, the LTL sector is expanding its terminal network and maintaining strong pricing discipline, reflecting strategic responses to market demands. Supply chain professionals must stay agile and informed to effectively manage these anticipated disruptions and opportunities in the months ahead.
