US truck freight ends 2022 strongly, but signs of weakening demand in Q1 2023

Tonnage growth in 2022 was the best since 2018, but shippers expected to be in driving seat for prices from Q1 2023 onwards

Credit: American Trucking Associations

The American Trucking Associations' seasonally adjusted (SA) For-Hire Truck Tonnage Index rose 3.4% across 2022, making it the best annual gain since 2018.

It finished off the year with a 0.4% rise in December, marking a strong season for late holiday spending among US consumers following on from a 2.5% fall in November.

"Despite weakening in the second half, 2022 overall was a solid year for truck freight tonnage," said ATA Chief Economist Bob Costello, noting that “contract truckload freight is still outperforming the spot market”.

Compared with December 2021, the SA index increased 0.3%, marking the sixteenth straight year-over-year gain, albeit the smallest one recorded in that time.

Falling rates expected

However, the Cowen/AFS Freight Index predicted that Q1 2023 would see a weakening US trucking market, with falling contract rates as shippers are able to negotiate more favourable terms.

The Index noted that cost per shipment for truckload freight in the final quarter of 2022 showed a Quarter-on-Quarter (QoQ) decline of 4.2% and the miles per shipment showed a QoQ decline of 2.5%, as more movements were cheaper, short-haul shipments.

The Index noted that a “continued decline in the truckload rate per mile index is projected to erase almost all of the gains accumulated since Q2 2021. Compared to the record-high 25.8% figure of just a year ago, the index is projected to be 11.2% in Q1 2023 – an 11.6% year-over-year (YoY) decline.”

The projections came with a warning that more pain was coming down the pipeline for trucking companies in 2023 from inflation, stubbornly high fuel prices and shipper pricing power, which could impair carrier profitability.

Seven interest rate hikes since March of last year and continued inflation have taken a significant bite out of economic demand,” said Tom Nightingale, CEO, AFS Logistics. “While the index does not show a uniform decline across all modes, looking deeper shows the effects of macroeconomic conditions playing out, with carriers competing for more limited demand while searching for ways to claw back revenue.”

Micheal McDonagh, president, parcel, AFS Logistics. “Shippers had ample volume during the COVID era that created capacity issues. Carriers now find themselves in an environment with softening volume and need to change their strategy to grow it.”

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