First-Quarter Trucking Outlook

Special Report

As post-Yellow surge subsides , US LTL forecast cools

By William B . Cassidy

ATLANTA — US less-than-truckload ( LTL ) rates are expected to rise in 2024 , but not as much as shippers feared following the collapse of the third-largest LTL operator last July .

Individual carriers raised rates much higher in the months that followed as shippers shifted freight from one carrier to another , but as the market settles , the distortions caused by Yellow ’ s exit are fading .

According to the latest TD Cowen / AFS Logistics Freight Index forecast , LTL rates will continue to fall from their post-Yellow peak in the first quarter , declining 0.7 % sequentially , but will remain 0.8 % higher than in the first quarter of 2023 .

That the index is still up 58.9 % from its 2018 baseline despite relatively soft demand is a signal that LTL pricing is still on an upward trajectory .

In fact , FTR Transportation Intelligence predicts that LTL rates will rise 4.1 % on average for the full year in 2024 following a 2.4 % increase last year , according to Avery Vise , vice president of trucking at FTR .

“ People were expecting things to tighten up when Yellow went out , and they did , but not to the degree some people hoped ,” Vise said during the SMC3 JumpStart 2024 conference in late January , pointing to the US Bureau of Labor Statistics ( BLS ) producer price index ( PPI ) for long-distance LTL as evidence .

The LTL PPI , a measure of all-inclusive selling prices for LTL services , including fuel and other fees , fell 3.3 % in November and December following a 5.8 % increase from July to October . The decline in the PPI also reflects a drop in retail diesel fuel prices from October through December , which led to lower surcharges .

A market ‘ in stasis ’

In terms of overall demand , the market seems to be “ in stasis ” in early 2024 , said Kevin Day , president of LTL for AFS , which negotiates LTL contracts on behalf of shippers .

“ What ’ s not mentioned is that demand is matching the existing capacity in the market to keep rates relatively flat ,” Day said in an interview . If it weren ’ t for the loss of LTL capacity following the collapse of Yellow , there would be more downward pressure on rates .

Vise likewise described an LTL landscape shaped by low freight demand , excess capacity and productivity below pre-pandemic levels .

“ There just isn ’ t a lot for workers to do out there , relatively speaking ,” he said . “ We ’ re running at roughly

US LTL costs slip from post-Yellow high

US long-haul less-than-truckload ( LTL ) producer price index ( PPI )

250

240 180 230

220 217

210 Jan L 2022

Jul Jan 2023 Apr , 2023 Jul

Jan 2024

LTL PPI

Notes : US BLS producer price indices are based on selling prices for trucking services

Source : US Bureau of Labor Statistics data , JOC analysis

2012 levels , according to the hours worked .” Average weekly hours worked by LTL non-supervisory employees were down to about 38 hours in late 2023 , compared with 43.1 hours in January 2019 , according to BLS data .

Vise said he doesn ’ t expect meaningful change in the market until industrial production — a major source of LTL freight — revives , either late in 2024 or in 2025 .

“ We just see freight being really sluggish throughout the rest of this year ,” he said . “ The real driver of LTL is industrial freight , and the industrial economy is just [ so-so ].”

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FTR forecasts US LTL rates to rise 4.1 % in 2024 after a 2.4 % increase in 2023 . rblfmr / Shutterstock . com

L www . joc . com February 12 , 2024 | Journal of Commerce 29