There’s a lot to digest in this weeks’ economic trucking news. For-hire truck tonnage in the U.S. gave back all of August’s gains in September.
The news was better on the Canadian spot market, which saw sharply increased volumes compared to the previous month. In the U.S., rates are in a lull, but the spot market should improve heading into November, according to truckstop.com.
Overall trucking conditions remained relatively flat in August and trailer orders got a boost in September but remain well off historical norms.
For-hire truck tonnage gives back August gains
U.S. for-hire truck tonnage fell to its lowest level in three months in September, according to the latest data from the American Trucking Associations (ATA). Tonnage fell 0.9%, giving back all the gains it made in August.
“Tonnage levels remain choppy, but they are up 2.1% since hitting a low in January,” said ATA chief economist Bob Costello. “Compared to the high three years earlier, however, truck tonnage is still off by 3.9%. In fact, September’s tonnage level was essentially the same as in September 2023, underscoring the tough freight market over the last few years.”
Trailer orders get bump, but continue to lag long-term trends
FTR reported preliminary trailer orders of 10,142 units in September, up 30% from August numbers but 19% lower than last September. They were also well over the 10-year September average of 29,890 units.
Cancellation rates continued to climb in September, totaling 25% of gross orders, mainly in the dry van segment, FTR reported. Backlogs fell 9% and the backlog-to-build ratio now sits at 4.2 months, the lowest level since mid-2020.
“The U.S. trailer market faces mounting cost pressures and policy uncertainty amid rising global trade tensions, especially with China. Separate from a threatened 100% tariff on all imports from China, the U.S. is imposing, effective Nov. 9, a 100% tariff on imports of certain port cargo handling equipment from China, including intermodal chassis and parts,” said Dan Moyer, FTR’s senior analyst, commercial vehicles.
“Moreover, the Section 232 tariffs on steel, aluminum, and copper – explicitly expanded in August to include non-U.S. content in trailers and components – are driving higher input costs, margin compression, and consolidation pressures. Larger, vertically integrated OEMs are better positioned to manage the impact while smaller firms face growing financial strain. Many fleets are delaying replacement, extending equipment life cycles, and slowing or stopping expansion.”
ACT Research reported 11,300 units were ordered in the month, down 5% year over year but up 25% from August numbers.
“Sequentially, September’s higher net order intake was expected, as the annual cycle begins to move toward stronger order months at the end of Q3 when the industry begins opening next year’s order boards,” said Jennifer McNealy, director CV market research and publications at ACT Research.
“Looking forward, concern continues that moderating economic activity, ongoing weak for-hire carrier profitability, and ambiguous governmental policy, especially around the EPA low-NOx rule, remain as challenges to stronger trailer demand. However, two potential positives for trailer demand are in sight; pent-up demand is building, and with Section 232 tariffs risking cost increases for power unit expenditures, fleets may be willing to divert capex to trailing equipment purchases deferred over the past few years. At this point, ACT’s expectations are for an improving but still subdued trailer industry outlook.”
Trucking conditions improved slightly in August
FTR’s Trucking Conditions Index improved to a neutral reading of 0.3 in August from -1.03 in July, thanks to less challenging freight rates and improving utilization (though it remained weak).
“The potential for a capacity-driven recovery in trucking has risen over the past month due to severe restrictions imposed on issuing and renewing commercial driver’s licenses for foreign drivers,” said Avery Vise, FTR’s vice-president, trucking.
“However, despite some anecdotal reports about various effects of a crackdown on immigrant drivers, available data has yet to show a substantial impact on market conditions. We expect pressure on foreign drivers to be a significant factor for capacity in the coming months, but many questions remain about the scope and speed of the effects of tighter CDL and English language enforcement on the truck freight market.”
Canadian spot market strengthened in September
Load postings on Loadlink Technologies’ platform increased 23% in September, though remained down 13% year over year.
Both cross-border and domestic load postings improved on the month, Loadlink reported. Southbound loads to the U.S. spiked 39% from August volumes but were down 21% year over year.
Northbound cross-border loads were 28% stronger than August while intra-Canada loads improved 8% from August levels.
Equipment postings dropped 9% from August and 33% year over year. The truck-to-load ratio was 3.44, down 18% from August when there were 4.20 trucks chasing every load.
“Cross-border lanes are moving faster than we’ve seen all year, and the lower truck-to-load ratio shows demand is rising quickly. Carriers and brokers who act now can take advantage of these active lanes and maintain steady freight through the end of the year,” said James Reyes, general manager at Loadlink Technologies.
U.S. spot rates expected to improve
Spot rates for the week ended Oct. 17 were mostly flat, as were volumes, according to the latest data from truckstop.com and FTR.
“Broker-posted spot rates for flatbed equipment barely moved. Increases in van equipment also were slight. Dry van spot rates increased for the third time in four weeks while refrigerated spot rates rose by the smallest amount in the three straight weeks that they have increased,” truckstop.com reported.
“Historically, dry van and refrigerated equipment rates are fairly soft into early November before rising in the run-up to Thanksgiving and Black Friday/Cyber Monday. With load postings declining slightly and truck postings rising, the Market Demand Index fell to 89.8, which is the weakest level in five weeks.”
