The average cost of moving freight by truck is set to rise by 0.2% year-on-year in July, according to DAT Solutions. “Only point-two percent?” you might ask. Is that worth writing an article about?
This rise in raise follows 27 months in a row of declines. This is the first growth in years. Trucking executives are over the moon with happiness!
Trends were already moving in the right direction with volume up 30% year-over-year in June. Investors rallied behind stocks such as JB Hunt, Schneider National, and others. This investment trend continues with the Russell 3000 Trucking Index up 9% in July as of July 25th.
Analysts believed that much of trucking’s woes stemmed from the heights of the pandemic. Consumers abandoned industries such as travel and in-person experiences and instead spent their disposable income on ecommerce.
In 2022, when American consumers began returning to the service economy and travel, the online retailers were left holding the bag. More specifically, they were left with a lot of inventory without the mass demand to ship it off to locations across the country. The glut of inventory began crashing rates for freight around early 2022. It potentially took until July 2024 to finally clear out the inventory and return demand for shipping to its normal levels.
We say “potentially” because trucking stakeholders are staying cautiously optimistic. While rates have finally risen into positive growth, there are other data points that remain troubling. Manufacturing is low, and many consumers are still struggling economically. With 2024 entering a presidential election cycle, both topics may be featured more prominently.
Nonetheless, positive growth is positive growth. The end of the great freight recession may be upon us. Hopefully.