State of Logistics 2022: Truckload

The $332 Billion Truckload (TL) market is showing exceptional strength in the contract market even as some latest company earnings show shippers are fast shifting freight away from the spot market.

“Reports of the death of the freight market ... have been greatly exaggerated,” said David Jackson, CEO of Knight-Swift Transportation Holdings, during a first-quarter earnings call with Wall Street analysts. The carrier reported a solid start to the year, with revenue, excluding fuel surcharges, jumping 45% year over year in the first quarter, which is usually the slowest period for most trucking companies.

J.B. Hunt enjoyed a 33% jump in revenue in the first quarter to $3.49 billion, the company reports. Sales from its trucking division jumped 77%, mostly on increased load volume and higher revenue per load.

“As the quarter progressed, volume levels strengthened as customer unloading activity improved, although rail network velocity continued to govern our ability to capitalize on even greater intermodal demand,” Hunt reports.

Truckload volumes typically decline from March to April when TL freight movement hits a seasonal lull. That was borne out again this year when the American Trucking Associations’ seasonally adjusted For-Hire Truck Tonnage Index decreased 2% in April after rising 1.8% in March.

There are signs of what FTR, the Indianapolis-based trucking research firm, calls “signals of potentially weaker demand and softer rates.” They could temper that outlook should fuel costs remain in record territory, well above $5 a gallon.

“The truck freight market has entered the inevitable period where conditions for carriers are transitioning from uniformly strong to those that will be more variable from month to month and from segment to segment,” says Avery Vise, FTR’s vice president of trucking.

Uncertainty, Vise says, is “high on both the demand and supply” sides. “Consumers are generally remaining strong financially, but prices are increasing due to inflation, cutting into buying power.” Demand in the industrial sector remains “high,” but he adds that supply chain woes persist and durability of that demand is not a given.

However, the chart by SJ Consulting (to the right) is a good indicator of strong contract pricing—not spot rates—during the first quarter of 2022 and negates the headlines such as: “Bloodbath for Trucking in 2022.” It shows the top 10 TL carriers enjoying revenue gains of 24.8% in the first quarter year over year from the 2021 first quarter.

The exceptions to the strong pricing in the TL market are some small carriers with 10 trucks to 20 trucks, which may have had a less favorable rate environment due to the fact that they provide their capacity to brokers and not to shippers directly, analysts said.

Orders for manufactured goods rose for the 22nd time in 23 months, rising 2.2% in April, according to the Commerce Department. Wall Street economists were expecting a 1% increase. Factory orders have been a bright spot during the pandemic and its aftermath.

Headwinds in the TL sector come down to inflation’s continuing drain and a potential shift in consumer spending. The war in Ukraine is another wild card, making it difficult to predict the future direction of U.S. freight transportation, analysts and carrier executives said.

Truckload revenue ($) per load
(excluding FSC)