Automotive Production a Bright Spot for Freight Market in Q2

TIA’s latest 3PL Market Report points to ongoing softness but resilience heading into 2024

ALEXANDRIA, Va. (Aug. 22, 2023) — While the freight market continues to experience weakness, total shipments across all sectors rose quarter over quarter (0.8%), a development that softened declines in revenue during the second quarter of 2023, according to the latest data from the Transportation Intermediaries Association’s 3PL Market Report, Second Quarter 2023. Second quarter results were helped along by an all-time high in automotive production as manufacturers pushed to replenish inventories and satisfy pent-up demand.

“We’ve known, based on previous outlooks, that the second quarter was going to be soft,” said Mark Christos, TIA Chair and Chair of the Market Report. “Nevertheless, there are enough positive developments, for example, truckload volume was slightly down year over year and gained from Q1 2023, and the surge in automotive manufacturing as well as the resilience of the total economy, is expected to bolster optimism for our members for future quarters.”

TIA Members saw year-over-year declines in shipments, revenue, and invoice amount per shipment during the quarter. Results were similar quarter-over-quarter apart from shipment volumes, which rose a modest 0.8% owing seasonality. Smaller TIA members outperformed their peers year-over-year, while large brokers saw the greatest softening across all key categories.

In terms of sector performance, truckload (TL) was the only one to see a quarter-over-quarter improvement in shipments (1.9%), though it experienced declines in all other metrics. Intermodal (IM), which typically sees a seasonal uptick in the second quarter, saw volume and other metrics decline, reflecting weaker import activity. Less-than-truckload (LTL) also experienced quarter-over-quarter declines in shipments, revenue and invoice amount per shipment.

TIA’s 3PL Market Report is released on a quarterly basis and uses data collected from more than 50 participating TIA members to analyze shifts in broker activity, which is largely dominated by the truckload sector. FTR Transportation Intelligence prepared this quarter’s report.

More Takeaways and Trends Include:

• Consumer spending trends pose a risk for the freight economy as Americans continue to spend a greater share of their disposable income than they did pre-pandemic. Stimulus-driven cash reserves and lower debt levels could sustain the trend, but it could also change if the labor market cools. Another risk is the resumption of student loan payments this fall.

• The failure of Nashville-based Yellow Corporation at the end of July likely will change the dynamic in the LTL sector during the third quarter, however it’s too early to know by what degree. The disruption likely would shift some volume to brokers, but both invoice amounts and carrier pricing could also rise due to the sudden loss of LTL capacity.

• After an unprecedented surge in new carriers from mid-2020 through mid-2022, the carrier population has been falling sharply for three quarters with each quarter setting a record. Larger carriers have been absorbing the drivers freed up by failing small carriers, so payroll employment remains solid even as total capacity has fallen.
• As of mid-August, diesel prices had jumped about 61 cents in six weeks following a steady decline since June 2022. The recent price surge could be temporary. Yet, if it is the beginning of a sustained increase in fuel costs, the ongoing failures of small carriers could accelerate.

The full report “3PL Market Report, Second Quarter 2023, Issue 59” is available for free to media upon request.

Please note: The 3PL Market Report is intended for TIA subscribers and the full report is not meant to be reproduced or redistributed by any recipients.

About TIA

The Transportation Intermediaries Association (TIA) is the professional organization of the $214 billion third-party logistics industry. TIA is the only organization exclusively representing transportation intermediaries of all disciplines doing business in domestic and international commerce. TIA is the voice of transportation intermediaries to shippers, carriers, government officials, and international organizations. Learn more about TIA at www.tianet.org.