Is the market stabilizing? Shippers are optimistic

More shippers are optimistic the market is stabilizing, even as new data suggests freight shipments continue to decline on a year-over-year basis.

Cass’ monthly Freight Report for April noted that shipments fell 1.6% from March on a seasonally adjusted basis and dropped 4% year over year. This marks a continuation of the downward trend, with volumes hovering near the late 2023-January 2024 mark.

April's data was particularly weak, reflecting the typical seasonal lull and the impact of severe winter storms earlier in the year. Additional factors like a delayed Lunar New Year and the Francis Scott Key Bridge collapse in Baltimore further decreased demand. The report also pointed to the negative impact of private fleets that are “more actively competing for spot freight to fill empty backhauls, lengthening below-trend for-hire demand levels.”

Even as that data suggests a soft market, shippers in BlueGrace Logistics’ Confidence Index are showing more optimism for the remainder of the year. The number of shippers showing a positive sentiment for Q3 revenue growth has grown to 70%, up from 65% in Q1 and Q2. Importantly, the percentage of shippers expressing negative feelings toward the market dropped from 18% in Q2 to just 7% for Q3. Twenty-three percent held a neutral view, a 5 percentage points increase from Q2.

“2024 3Q data illustrates an interesting paradox with shipper optimism on the rise, but the expected magnitude of growth has moderated greatly. The significant drop in negative sentiment combined with a conservative approach to revenue growth expectations reflects a market that’s stabilizing cautiously,” the report noted.

Inventory management concerns are increasing, though, as 21% expressed a negative sentiment for Q3, up from 16% in Q2. That number was just 8% in Q1. Both positive and neutral sentiments are on a downward trajectory, coming in at 41% and 37% in Q3 in this outlook. Positive sentiments had reached 51% in Q1 while neutral sentiments were at 53% as recently as Q3 2023’s report.

Francis Scott Key Bridge Collapse impact

 

Talking Supply Chain: Doomsday never arrives for Baltimore bridge collapse impacts

On March 26, when the massive cargo ship Dali lost power and crashed into Baltimore’s Francis Scott Key bridge, collapsing the structure, the news headlines portended a massive impact to the U.S. supply chain. The data is now rolling in, and while truck traffic is being rerouted and the port of Baltimore has yet to fully reopen, the impact, at least from a rate and capacity standpoint, has been minimal.

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“Negative sentiment around inventory levels is the highest it has been since Q1 2023,” said Mark Derks, chief marketing officer for BlueGrace Logistics. “This downward confidence for inventories supports the current, more mature and balanced market of today will extend through Q3.”

BlueGrace noted that shippers seem to be taking a cautious approach to inventory management as well as to order volume growth. An increase in order volume growth positive sentiments, at 51% in Q3 (up from 41% in Q2) suggests a “sharper focus on future business outlooks,” BlueGrace said.

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