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August 28 2023

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38 Journal of Commerce | A ugust 28, 2023 Surface Transportation of 2012–13 or the slowdown of 2016–17. "We're probably looking at another six to nine months before we start to get out of this." US nationwide truck shipment levels have now decreased for five consecutive quarters, according to Bobby Holland, director of freight analytics at US Bank. Total volumes dropped 1.2% on a sequential basis and 9% year over year in the second quarter, he said. Shipper spending on transpor- tation dropped 8.3% from the first quarter and 10.9% from a year ago in the second quarter, Holland said. Southwest stands out Those declines in volume and spending weren't universal, however. In the Southwest region from Texas and Oklahoma to Arizona, for exam- ple, shipment volume rose 2.9% from the first quarter and 14.8% year over year in the second quarter. logistics at Michigan State Univer- sity in East Lansing. For-hire trucking companies have expanded their payrolls by 7% since mid-2018, said Miller, based on US Bureau of Labor Statistics data. Truck freight volume, on the other hand, is currently "about where it was at its peak in 2018," trucking's strongest year before the COVID-19 pandemic, Miller said. Demand has to rise to change the equation, he said. "The auto sector is doing phenomenally well right now, but there are other man- ufacturing sectors like paper that are certainly hurting." One of the few "green shoots" is housing demand, which Miller said has proved "shockingly resilient" to higher mortgage interest rates. "It's likely the housing recession is behind us." He said the current freight market resembles the "soft patch" INFLATION IS FALLING and the US economy is expanding at a faster- than-anticipated rate, but US freight demand isn't rebounding. Instead, the freight downturn that began in the fall of 2022 will likely last through the end of the year, and for the US trucking sector, it could stretch into the second quarter of 2024, speakers said during a Journal of Commerce webcast Aug. 10. And even when demand rebounds, they expect modest growth, absent any unantici- pated disruptions. "We think the [truckload] spot market has hit bottom," Chris Caplice, chief scientist at DAT Freight & Analytics, said during the webcast. "We're set up to start a recovery, but I agree it's probably two quarters away, maybe three." Lower manufacturing output and overstocked inventories are two reasons for the extended downturn, along with record levels of employ- ment in trucking and the continued presence of excess capacity. "When you combine a 2% decrease in ton-mile activity with a 3% to 4% increase in trucking employment, you've got a recipe for a very soft market," explained Jason Miller, associate professor of Idle engines No US freight rebound until 2024: analysts By William B. Cassidy US truck tonnage slips 1.4% through May For-hire trucking ton-mile index, seasonally adjusted Index Reading (100 = 2017) 100 80 85 90 95 100 105 110 L L 2022 2020 2021 2019 Notes: Shaded areas indicate US recessions Source: Fed, Census Bureau, BEA, and BLS by Jason Miller, PhD © 2023 S&P Global Trucking | Rail | Intermodal | Air & Expedited | Distribution

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