In a Friday note to investors, Ken Hoexter, the managing director of Bank of America’s trucking research, wrote that shippers’ view of demand is down 23% year-over-year. The proprietary Truckload Demand Indicator hit 58 — the lowest since June 2020.
Hoexter said the shippers’ view of rates have “melt(ed) down,” hitting a low not seen since May 2020. Bank of America’s survey represented views from 44 shippers in industries including retail, consumer goods and manufacturing.
Meanwhile, these shippers are finding it easy to find capacity to move their loads; outlook on capacity hit its highest level since June 2020. They also noted their view on inventory levels had climbed to its highest point since May 2020.
A few anecdotal examples from the Bank of America survey illustrate that data. One food shipper said it was receiving more cold calls from freight brokers rather than those brokers having to seek capacity for shipments on their own. A shipper moving home-building products said flatbed capacity is loosening slightly, though is still tight. And a representative of a forest products company said rates were beginning to soften as truck capacity opened up.
Other indicators are pointing to freight recession
Now that spot market rates have declined, more drivers are moving their contracted loads. As of Sunday, the rejection rate had sunk to 9.92%.
Chart: (SONAR: OTRI.USA). Loads tendered under contract are being rejected by carriers under 10% of the time. That compares to a rejection rate of more than 25% a year ago. To learn more about SONAR, click here.
A key leading indicator
Trucking experiences recessionary periods twice as much as the rest of the economy. But for the 2 million American truck drivers who power much of this industry, the effects can be brutal.
