Truck freight volume and spending in the second quarter of 2023 declined by the highest levels since the early days of the pandemic, the latest U.S. Bank Freight Payment Index revealed. Spending by shippers dropped 10.9 percent compared to the second quarter of 2022 while shipment volume dropped 9 percent.

 “Trucking is in the midst of a significant slowdown,” said Bob Costello, Senior Vice President and Chief Economist at the American Trucking Associations. “Weaker consumer demand for goods and a slowdown in manufacturing activity and housing starts are having a major impact on the industry – especially carrier operations.”

Nationwide shipment levels have now decreased for five consecutive quarters. In the second quarter, volume dropped most in the Northeast (27.1 percent) and Southeast (12.6 percent) year-over-year. The Southwest continued to be a bright spot, with shipments increasing 14.8 percent.

Truck freight spending levels have now contracted year-over-year for two consecutive quarters. With spending at all-time high levels for the preceding six quarters, the recent drops brought spend activity back to its relatively strong levels of mid-2021.

The Midwest region had the sharpest spending drop in the second quarter, 18.7 percent year-over-year. The Northeast and West also experienced double-digit spending declines, dropping 10.9 percent and 10.2 percent, respectively versus the second quarter of 2022.

“In the spot market, we’ve been observing for a while sharp spending drops caused by lower volumes and increased capacity. This trend has now solidly penetrated the contract freight market,” said Bobby Holland, director of freight business analytics, U.S. Bank. “Nearly every category we track – both nationwide and regionally – contracted in second quarter.”

 Regional Data

West
Shipments
Linked quarter: -2.6 percent
Year over year: -15.7 percent

Spending
Linked quarter: -9.0 percent
Year over year: -10.2 percent

Truck freight continued to struggle in the West region as port activity and housing starts there continued to slow. This is the lowest point for shipments in the West in three years.

Southwest
Shipments
Linked quarter: 2.9 percent
Year over year: 14.8 percent

Spending
Linked quarter: -6.4 percent
Year over year: 4.3 percent

Continuing to outperform other regions, Southwest volume is benefiting from increased truck-transported trade with Mexico. The 14.8 percent year-over-year increase in shipments is the highest since 2018.

Midwest
Shipments
Linked quarter: -0.5 percent
Year over year: -9.0 percent

Spending
Linked quarter: -9.4 percent
Year over year: -18.7 percent

Continued slowdowns in manufacturing likely led to year-over-year shipments dropping by the largest level in the region since Q4 2021. Yearly spending also dropped by the largest amount since Q2 2020.

Northeast
Shipments
Linked quarter: -9.2 percent
Year over year: -27.1 percent

Spending
Linked quarter: -10.9 percent
Year over year: -11.0 percent

The 27.1 percent volume contraction is the largest in the history of the Freight Payment Index. The region faces multiple headwinds, including low housing starts. However, the contraction in household consumption likely had the biggest impact for this populated area.

Southeast
Shipments
Linked quarter: -0.2
Year over year: -12.6 percent

Spending
Linked quarter: -6.7 percent
Year over year: -2.5 percent

Even though shipments contracted 12.6 percent year over year and slightly on a linked quarter basis, this was an improvement for the region. In the first quarter, shipments fell 16.1 percent year over year and 10.1 percent on a linked quarter basis.