FreightWaves experts Fuller and Strickland said spring seasonality will improve global freight market conditions.

The State of Freight webinar hosted by FreightWaves in late March offered some optimism that the freight market could improve at some point later this year.

Craig Fuller, CEO and founder of FreightWaves, and Zach Strickland, director of freight market intelligence, said that while they don't see any clear signs of a significant boost in the industry, freight transport in general, but there are signs that the market is moving in the right direction.

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It is predicted that 2024 will be a step closer to normal for the freight industry

In 2024, there's a sentiment that the freight industry might return to a more typical trajectory. Both Fuller and Strickland find themselves repeatedly fielding inquiries about when the market might undergo a significant change.

"People are always asking," Fuller remarked.

Strickland highlighted FreightWaves’ Outbound Tender Reject Index for the U.S. (OTRI.USA) as a reliable barometer of present market conditions. This index gauges carriers’ willingness to accept loads tendered to them by shippers under contract terms.

"I believe this index will provide the quickest insights. ... We've settled into this 3.8% rejection range. While it's slightly higher than this time last year, the difference is marginal," Strickland observed.

Fuller added, "Looking at the [OTRI.USA] chart, there's a subtle gap between last year and this year. The question for supply chain managers is, 'Will this trend resemble last year's anomaly?' Typically, May marks the market's upturn. I anticipate a return to normalcy. There's ample reason to be optimistic in the latter half of the year. I anticipate a more typical second-quarter scenario akin to a typical May compared to last year."

Spring's arrival typically stimulates demand in the market

"March signifies a transition, not just in weather but also in freight," Strickland noted. "We usually witness a modest uptick in volumes, symbolizing a shift from winter's lull to increased activity."

Fuller pointed out that spring triggers movement in products like construction materials, home and gardening supplies, with big-box retailers benefiting from heightened demand due to seasonal activities.

"Summer apparel and beverages also become sought-after commodities. This period sees a surge in beverage demand, further intensifying around Memorial Day. Spring is always a lucrative time for freight due to seasonal demands," Fuller elaborated.

However, Strickland cautioned that despite the seasonal boost, excess capacity remains a concern.

"We're still grappling with oversupply in the market. I believe people have underestimated the extent of this oversupply," Strickland emphasized.

While the dry van sector might be grappling with surplus capacity, there's been an influx of capacity into specialized trucking segments, Strickland observed.

FreightWaves’ Net Changes in Authorities (CDNCA.USA) index indicates a slight uptick in authority changes in recent months.

"The [CDNCA] chart remained in the red throughout 2023, but it appears we're transitioning towards the green now," Strickland noted. "However, this shift to green doesn't necessarily imply capacity growth. There seems to be a directional shift away from general commodity transport towards other modes like oil and gas, bulk transport, flatbed, and refrigerated trucks."

Effective infrastructure spending has kept the transportation economy moving

Federal infrastructure spending has played a pivotal role in sustaining the economy, according to both Fuller and Strickland. They expressed surprise at the current GDP, which exceeds 5% compared to the same period last year.

"We miscalculated GDP. I anticipated a tougher second half last year," Fuller admitted. "We anticipated challenges from student loan deferments, credit issues, and unexpected bank failures, but none of that materialized."

Fuller recalled the burden faced by over $25 million Americans with the end of student loan forbearance last year, which he addressed in an article titled "An unusually terrible freight market may get a lot worse." He highlighted that while consumer spending remained steady, government spending, particularly in infrastructure programs like the Inflation Reduction Act, the CHIPS and Science Act, and the Bipartisan Infrastructure Law, played a crucial role in buoying the economy.

"The impact of government stimulus, not just on consumers' wallets but also in infrastructure projects, has been significant," Fuller noted. "This infusion of government funds counteracted the softness in the freight economy and kept the economy afloat."

Former President D.Trump announced to impose high tariffs on China if he is re-elected

Regarding trade policies, former President Donald Trump's threat to impose additional tariffs on Chinese goods if reelected sparked concern. Fuller speculated on whether shippers would preemptively adjust their shipments amidst the uncertainty of the election season.

Strickland suggested that Chinese companies might circumvent tariffs by utilizing Mexico as a backdoor for imports to the U.S., citing an increase in inbound ocean volumes from China to Mexico. This trend, different from the 2019 U.S.-China trade war, signifies Mexico's growing role as a trade intermediary.

Texas is gradually replacing California as the center of transportation industry in the US

Fuller emphasized Mexico's increasing significance in global trade, particularly its rising prominence as a U.S. trading partner, surpassing Canada and China in 2023 with $798 billion in trade. He highlighted Texas' transformation into a major freight hub akin to California two decades ago, attributing it to the emergence of distribution centers and Mexico's resurgence as a key trade partner.

"Laredo and Port Houston have witnessed substantial growth due to Mexico's ascent as the top U.S. trading partner," Fuller remarked. "Similar to Phoenix benefiting from California's trade, Texas is now experiencing a similar shift in freight dynamics."

Previously, WCL also had an article about 👉 Warehouse solutions in Texas in 2024 introduced by Jimmy Nguyen Tran - CEO of Worldcraft Logistics LLC. Watch now so you don't miss the new solutions he shares.

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