In the Truckload market, dry van spot rates rose from $2.06 in July to $2.08 in August, while the volume remained relatively flat. The spread between spot RPM and contract RPM remained at around $0.76 cents. Given the recent market flatness, it is possible that we have reached the floor of the freight recession and are moving toward an equilibrium point.

Capacity is also exiting the industry. With spot rates declining for over a year, record-high interest rates, and rising fuel prices, smaller fleets in the industry are bearing the brunt of these challenges. Carriers that primarily operate in the spot market are also feeling the pressure. What we are hearing on the carrier side is that more qualified drivers are becoming available, and leased equipment is being returned.

In the month of August, the EIA diesel benchmark rose from $4.128/gal to $4.492/gal. Fuel prices have been on the rise for the past nine weeks, increasing by almost 73 cents per gallon, marking the highest level since early February.

The increases in fuel costs have been somewhat regional, with significant rises seen in New England, the Rocky Mountains, and California. This may have a negative impact on carriers in those regions that tie their fuel surcharges to the national benchmark.

As stated in last month’s report, it is highly unlikely that we will see a decrease in fuel prices with winter approaching. The forecasted high demand for heating oil in a harsh winter is expected to keep fuel prices at an elevated level. Rising fuel costs may also reduce overall carrier capacity, as the already soft freight market struggles to cope with the increasing cost of operation.

Things have been a little quieter in the LTL market this month as the task of getting to work and cleaning up the disarray caused by the Yellow closure and bankruptcy kicked off. Luckily, the task was already somewhat in motion by the time of their demise, as the possibility of a wind-down was very publicly played out in front of the entire industry. This allowed for contingencies to already be in place or in the process by the time of the Yellow closure.

The initial reaction varied from carrier to carrier, as some took the opportunity to embed surcharges and increases into transactional pricing, handed out pricing increases on existing business, metered or reduced volumes in specific lanes, or employed a mixture of all these strategies.

August numbers reported by public carriers in July and August have helped to tell the story of where the Yellow freight volumes have gone. Saia and XPO both show increased volumes, likely coming from Yellow in large part. There hasn’t been much change for ODFL; they remained quite static in their volumes from July and August. As this available market share is reallocated, it’s essential to keep in mind Yellow’s historically low average weight per shipment, which will also drive down that metric for other carriers in the market as they adopt these accounts.

Overall, the FreightPlus prediction of a 30-45 day timeline to resolve this issue seems to be holding.

The August PPI marker for long-haul LTL experienced its most significant jump since March 2022. This indicates that carriers have been put back in the driver’s seat for the time being.

Fuel prices are on the rise again, which means increased overall LTL costs for shippers and incrementally more profit for carriers. During times of higher oil and diesel prices, their revenue from the sliding scale model starts to outpace the cost of fueling their equipment due to bulk and wholesale purchases.

Rail service demonstrated initial improvements during the first quarter and the early part of the second quarter. However, it subsequently reverted to its historical averages, a departure from the typical trend of improving, as weather conditions ease during the second quarter. This inconsistency in service levels has fueled skepticism among shippers regarding the sustainability and long-term achievability of service levels exceeding historical norms. Meanwhile, railcar availability in the intermodal sector has remained persistently high, despite fluctuations in service ranging from historical norms to the stronger levels we saw in the first quarter.

This shows that shippers still lack confidence in the railroads’ ability to sustain the improvements in service or significantly elevate service levels beyond the current sluggish status. Given the competitiveness of the trucking market and lower-than-usual active truck utilization, the lack of substantial improvements in rail service above historical norms will continue to be a challenge to the railroads’ ability to increase their volumes and market share. This challenge is expected to persist until a rebalancing occurs, likely sometime late 2024.

Railway Updates:

• BNSF Railway (BNSF) Lathrop and Oakland origin lanes were delayed due to low port volume.
• Union Pacific (UP) • Network remains sluggish through the month. Volume and service is expected to continue to rebound post Hurricane Hillary in September.
• Kansas City Southern Railway (KCS) • Network remains fluid.
• Canadian National Railway (CN) • Network remains fluid.
• Canadian Pacific (CP) • Network remains fluid.
• Norfolk Southern Rail (NS) • Network remains fluid.
• Florida East Coast Railway (FEC) • Network remains fluid.
• CSX Idle containers at inland rail ramp averaging 3 days.

The current transpacific peak season has been neither underwhelming nor overwhelming. With 1.91 million TEUs imported in July, it is projected that August import numbers surpassed the 2 million TEU mark. Volumes are expected to remain elevated through October, but only about 6% higher than 2019 import levels, according to the NRF (National Retail Federation). Import volumes in November and December are projected to be 16% higher than 2019 levels, as per the NRF’s projections.

As for container rates, spot rates remain healthy compared to current contract rates and pre-COVID pricing. Many spot rate indexes are also showing a decrease from the recent highs of this summer. Rates were elevated primarily due to forced General Rate Increases (GRIs) by carriers and capacity limitations through blank sailings and reduced service offerings. The GRI planned for September 1st was also unsuccessful, as rates have mostly declined since that date.

Schneider National has acquired Massachusetts-based M&M Transport Services, a dedicated contract carrier with 500 trucks and 1,900 trailers in 12 locations across the Northeast, Midwest, and Southwest, primarily serving the retail and manufacturing sectors. This acquisition is expected to boost Schneider’s dedicated contract revenues to $1.5 billion in the current year, integrating M&M’s financial results into its Q3 earnings within the dedicated operations segment of its truckload segment. Schneider’s recent acquisitions, including Midwest Logistics Systems and deBoer Transportation, have strengthened its dedicated segment, which the company has identified as a growth area. M&M Transport will continue operating under its name as a wholly owned subsidiary of Schneider.

The Importance of Accurate Weight & Freight Class Calculations for LTL Shipping

Load Capacity and Optimization For carriers, accurate weight calculations are crucial for maximizing load capacity. By knowing the exact weight of each shipment, carriers can optimize the consolidation of freight and avoid exceeding weight limits. This results in reduced fuel consumption and transportation costs, ultimately benefiting both carriers and shippers. The Significance of Correct Freight […] Read More

 Understanding the Impact of Fuel Surcharges on LTL Shipping Costs

How Are Fuel Surcharges Calculated? Fuel surcharges are typically calculated as a percentage of the base rate. The specific percentage often varies based on the carrier and prevailing fuel prices. Different types of fuel charges exist, ranging from standard fuel surcharges to advanced fuel surcharge models. These variations influence the final shipping rates and significantly […] Read More

 Tips for Efficient LTL Shipping: Preparing Shipments for Pickup and Delivery

Freight Class and NMFC Codes Understanding freight class and National Motor Freight Classification (NMFC) codes is crucial for accurate pricing and billing. Determine the appropriate freight class for your goods based on factors such as density, stowability, and handling characteristics. Accurate classification helps avoid surprises in your shipping costs. Choosing the Right Packaging Materials Selecting […] Read More

 Best Practices for Selecting an LTL Carrier

In the dynamic landscape of shipping and logistics, making the right choice when it comes to Less-Than-Truckload (LTL) carriers is pivotal. Your business’ operational efficiency, customer satisfaction, and overall success depend on this crucial decision. This blog outlines essential strategies for selecting an LTL carrier and enhancing your logistical processes. Understanding LTL Shipping LTL Shipping […] […] Read More

Curtis Garrett
Senior Vice President, LTL
cgarrett@freightplus.io 

Dan Burke
Senior Manager, Strategic Capacity & Pricing
dburke@freightplus.io

Connor Kerwin
Capacity Manager
ckerwin@freightplus.io

Jeremy Eliades
Capacity Manager
jeliades@freightplus.io