The latest data from the ACT For-Hire Trucking Index reveals a continued convergence between freight demand and fleet capacity.
In June, the Volume Index experienced a notable decline, dropping 5.5 points to settle at 48.9 (seasonally adjusted), down from last month’s Roadcheck-boosted figure of 54.4. “Volumes have been fairly flat this year, but they’ve improved to ‘less bad’ on a y/y basis, with the index averaging 48.8 through the first half of this year, versus 42.8 last year,” commented Carter Vieth, a research analyst at ACT Research. He also highlighted that despite the financial strain on consumers, “real U.S. retail sales are up 1.8% YTD,” and the easing of inflation supports expectations for real income growth. Positive trends in intermodal and import volumes are contributing minimally to the total surface freight volumes, while a slowdown in U.S. Class 8 tractor sales points to a deceleration in private fleet growth, indicating that private fleet insourcing may be impacting for-hire demand.
While some progress is noticeable, the overall data on truckload volume remains erratic, with both the Cass Freight Index and DAT spot loads currently hovering at cyclic lows.
The Capacity Index saw a month-over-month increase of 3.6 points, climbing to 49.3 in June from 45.6 in May. “Though the index increased m/m, this month’s reading marks the 12th month in a row capacity has been below 50, the longest streak of decline since the inception of the survey in late 2009,” Vieth mentioned. He noted that a slower rate of capacity contraction signifies a narrowing supply-demand balance between fleets and freight. With the ongoing downturn and persistently weak fundamentals, the prospect of capacity turning positive in the near future remains dim, particularly as sales of US tractors continue to trend downward.
The Supply-Demand Balance Index fell to 49.6 (seasonally adjusted) in June, a decrease from 58.7 in May, primarily due to diminishing freight volumes alongside rising fleet capacity. “Private fleet expansion, which is not captured in this indicator, is resulting in a longer leadup to higher market rates than in past cycles,” Vieth concluded. He emphasized that with capacity concerns persisting, monitoring overall equipment purchasing trends will be crucial, as sustained demand-side freight growth may continue to support market balance.
Source: The Trucker
