The volume of truck freight shipments dropped for the second consecutive quarter and spending by shippers remained at record levels in the first quarter of 2022, according to the U.S. Bank Freight Payment Index released today.
Truck freight spending was up 27.5% year-over-year and 1.2% compared to the fourth quarter of 2021. This marked the fourth consecutive quarter that spending increased for shippers, keeping the total measure at the highest recording in the history of the index.
“Surging diesel prices in the last two months added to a truck freight market that was already at very tight capacity due to a lack of drivers and equipment,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “This confluence of challenges put significant spending pressures on shippers.”
Diesel is often the second highest expense for shippers. At the end of 2021, diesel was already at $3.62, up nearly $1 from a year earlier, according to the Energy Information Administration (EIA). Then in February the price per gallon jumped to $5.25 and ended the quarter at $5.19, according to the EIA.
Truck freight shipments were down 2.2% compared to the Q4 2021. Still, compared to the first quarter of 2021, truck freight volume was up 1.1%. Bob Costello of the American Trucking Associations (ATA) noted that he was surprised the contraction in truck freight volume wasn’t more significant as shippers faced multiple headwinds in the last few months. These included:
-- Rising consumer inflation
-- The temporary closure of the Ambassador Bridge, a key trade route between the U.S. and Canada
-- Disruptions caused by the Omicron variant
“We usually see a drop off in volume in February and March, so with all of the challenges for shippers to start the year, I was expecting there to be a sharper decline in shipments,” said Costello, the ATA’s senior vice president and chief economist. “At the same time, factory output hit the highest level since 2008, businesses added 1.7 million workers to payrolls, and retail numbers were solid. It seems that these economic forces helped power the freight industry through an otherwise difficult quarter.”
-- First quarter: 3%
-- Year over year: 17.5%
-- First quarter: -3.7%
-- Year over year: 42.2%
The West was the only region to have increased truck freight volumes in Q1 2022, the third increase in the last four quarters. Strong port volumes and continued home building in the region supported the increase in freight shipments.
-- First quarter: -3.1%
-- Year over year: -4.3%
-- First quarter: 2.9%
-- Year over year: 22%
Shipments dropped for the third consecutive quarter in the Midwest. The region, with a significant amount of auto production, was particularly impacted by the Ambassador Bridge closure and continued semiconductor shortage.
-- First quarter: -1.8%
-- Year over year: 2.9%
-- First quarter: 2.9%
-- Year over year: 31.3%
The 31.3% increase in spending by shippers in the Northeast in the past year was the third highest, behind the West and the Southwest.
-- First quarter: -4%
-- Year over year: -2.9%
-- First quarter: -1.4%
-- Year over year: 20.8%
Besides the Midwest, only the Southeast – which also has a significant auto industry presence – had a drop in shipments year-over-year; the Southeast joined the West with truck freight spending dropping versus the preceding quarter.
-- First quarter: -2.1%
-- Year over year: 7%
-- First quarter: 8.4%
-- Year over year: 36%
The Southwest had the highest quarterly, and second highest year-over-year spending increase – behind the West – due in part to a capacity crunch in the region and rising diesel fuel prices.
To see the full report including in-depth regional data, visit the U.S. Bank Freight Payment Index website .
For more than 22 years, organizations have turned to U.S. Bank Freight Payment for the service, reliability, and security that only a bank can provide. The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment . The business processed $37 billion in 2021 for some of the world’s largest corporations and government agencies.https://freight.usbank.com/