Surface Transportation rising just 0.3 % from July and remaining flat compared with the same month last year .

Capacity still plentiful

Despite signs that truckload capacity may be tightening , the market remains soft and capacity is abundant , and the market ’ s route through late 2024 is uncertain .

In what could be a preliminary good sign for freight demand , the US Federal Reserve ’ s monthly index of industrial production moved higher in August , rising 0.8 % following a 0.9 % decline in July . The pickup in US manufacturing reflected a 2.1 % increase in durable goods production in August led by motor vehicles , offsetting a 0.2 % decline in nondurable goods .

“ Slight increases in spot rates are not yet enough to turn contract rates higher .”

Industrial freight connected to manufacturing accounts for nearly 70 % of US truck shipments , according to Commerce Department surveys .

The Federal Reserve on Sept . 18 lowered its benchmark interest rate by 0.5 percentage points , the first rate cut in four years . Lower interest rates are expected to reduce the cost of capital and potentially spark greater investment and spending on housing and durable goods .

The impact on freight demand depends on how deeply the Fed cuts rates over time .

FedEx Freight realigning in rapidly changing US LTL market

By William B . Cassidy

Less-than-truckload ( LTL ) carrier FedEx Freight is reconfiguring its network , closing terminals in some markets and planning to expand in others .

The FedEx subsidiary and largest US trucking company by annual revenue closed seven terminals during its fiscal quarter ended Aug . 31 after shutting down 29 terminals in the previous 12 months . The company told the Journal of Commerce it plans to add more than 200 LTL doors in strategic markets by the end of its fiscal year next May . More adjustments are likely as FedEx reacts to a changing market and considers whether to spin off its profitable LTL arm to focus on air and ground packages .

“ Where we make closures , they simply just are not the right place from a growth perspective .” email : bill . cassidy @ spglobal . com

US surface volumes rose 3 % in July and 1 % in August , according to the Cass Freight Index . Shutterstock . com

“[ W ] e are conducting an assessment of the role of FedEx Freight in our portfolio structure ,” Raj Subramaniam , president and CEO , said during a Sept . 19 earnings call . “ The assessment is well underway and on track to be completed by the end of the calendar year .”

That assessment comes as other LTL providers are expanding . Estes Express Lines , XPO , Saia and Knight- Swift Transportation Holdings all have reopened facilities purchased from Yellow in the past year . With about 360 facilities still in operation , FedEx Freight ’ s closures are part of a realignment , not a retreat .

“ We are looking always for dock-door expansion in the right markets ,” Brie Carere , executive vice president and chief customer officer at FedEx , said during the earnings call . “ Where we make closures , they simply just are not the right place from a growth perspective .”

A ‘ challenging economy ’

FedEx Freight ’ s network changes are the latest sign of a correction in a distorted LTL market . The July 2023 collapse of Yellow , the third-largest US LTL provider , sent waves of freight and facilities into the market , pushing up rates by high single digit percentages . That artificial boom is subsiding , revealing a more tepid market . www . joc . com October 7 , 2024 | Journal of Commerce 33