The volume of freight moved by truck in the peak shipping season of 2022 dropped by the largest year-over-year level since the heart of the pandemic, according to the latest U.S. Bank Freight Payment Index.
Fourth quarter truck freight shipments contracted 7.1% year-over-year – the largest drop since Q3 2020 – and 4.6% compared to the third quarter of 2022. The slowdown was driven by a significant contraction in the West region, where volumes dropped 8.9% year-over-year and 10.6% compared to the third quarter.
“A pullback in consumer spending on goods is causing the truck freight market to soften,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations. “Higher prices for goods are leading to less consumption of items moved via truck. At the same time, monetary policy changes are reducing demand for large-ticket items in interest-rate sensitive areas like autos and homes.”
Even with the drop in shipments, spending by companies shipping goods didn’t decline much in the fourth quarter. Spending fell just 0.2% compared to the third quarter and was up 1.8% over Q4 2021. Only the West region experienced a significant decline in spending, down 7% compared to Q3 2022 and 7.4% year-over-year.
“With shipments dropping considerably and lower diesel fuel prices, we would have expected to see a larger decline in spending this quarter,” said Bobby Holland, director of freight data solutions at U.S. Bank. “This suggests that capacity is getting tighter, potentially due to smaller carriers leaving the market as cost pressures remain high, especially when coupled with lower spot market volumes and rates.”
Regional Data
Midwest
Shipments
Linked quarter: -6%
Year over year: -6.6%
Spending
Linked quarter: 0.1%
Year over year: -0.1%
The Midwest region’s 6.6% year-over-year contraction in shipments was the largest of 2022 and 11th straight quarter of decline. The region’s 0.1% spending contraction marked the first year-over-year decline in spending by shippers since the heavily pandemic-impact third quarter of 2020.
West
Shipments
Linked quarter: -10.6%
Year over year: -8.9%
Spending
Linked quarter: -7%
Year over year: -7.4%
A top performer in recent years, volumes in the West region have dropped significantly in recent quarters. This coincides with a drop in West Coast port activity, where import container volumes fell 26% in November and 23.3% in October. The 7.4% drop in spending by shippers in the region was most since Q2 2020.
Northeast
Shipments
Linked quarter: -5.8%
Year over year: -11.1%
Spending
Linked quarter: -0.9%
Year over year: 2.7%
The 11.1% year-over-year decline in Northeast region shipments follows a 7.1% drop in the third quarter. Higher household spending on services in the Northeast during Q4 impacted freight movement, and subsequently put pressure on holiday season retail. Spending in the region dropped compared to the third quarter, but was still up 2.7% compared to the same period in 2021.
Southeast
Shipments
Linked quarter: -1.4
Year over year: -10.4%
Spending
Linked quarter: 2.7%
Year over year: 4.4%
This marked the sixth straight drop in quarterly shipments for the Southeast region and third straight double-digit year-over-year decline. The decline coincided with a 16.7% drop in housing starts in the region, according to the Census Bureau. Suggesting a decline in capacity, spending in the region was up quarterly and versus a year ago.
Southwest
Shipments
Linked quarter: 0.4%
Year over year: 6.3%
Spending
Third quarter: 3.5%
Year over year: 19.6%
The Southwest continues to be the top region for truck freight volume. Costello points to the region’s energy production, Mexican trade, and elevated seaport activity as contributing factors. For example, Port of Houston container volumes were up 7.9% in November and 19.7% in October. The increase in shipments led to a sharp year-over-year increase in spending by shippers in the Southwest, which far outpaced other regions.
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 $46 billion in 2022 for some of the world’s largest corporations and government agencies.
