The recent FreightWaves State of Freight webinar provided a cautiously optimistic outlook for 2024, suggesting that the freight market might see some improvement later this year. Hosted by Craig Fuller, FreightWaves CEO and founder, and Zach Strickland, Director of Freight Market Intelligence, the webinar underscored several key points that could shape the industry’s future. Here are the top five takeaways from the webinar.
1. 2024 Could Be a More Typical Year for the Freight Industry
One of the primary inquiries Fuller and Strickland receive is about when the market will shift. While they don’t foresee any immediate substantial uptick, FreightWaves’ Outbound Tender Reject Index (OTRI.USA) serves as a valuable indicator of market conditions. The index, which measures carriers’ willingness to accept contracted loads, currently stands at around 3.8%, slightly higher than last year but significantly lower than 2022—a record-breaking year.
Strickland emphasized, “This index indicates a minor gap compared to last year. Typically, the market picks up around May. We expect this year to be more normal, with a bullish outlook for the second half.”
2. Spring Seasonality Will Boost Market Demand
The transition from winter to spring traditionally signals an uptick in freight volumes. Strickland noted, “March usually marks the beginning of increased activity in freight, driven by the movement of construction materials, home and gardening supplies, and summer apparel.”
Fuller echoed this sentiment, pointing out that big-box retailers thrive during this season due to heightened demand for gardening and yard work products. However, it’s worth noting that excess capacity remains an issue, and while specialized trucking sectors are seeing an influx, the overall market is still oversupplied.
3. Federal Infrastructure Spending is Sustaining the Economy
Contrary to earlier predictions, U.S. GDP has grown by more than 5% compared to the same period last year. Fuller attributed this unexpected resilience to significant government spending on infrastructure programs like the Inflation Reduction Act and the CHIPS and Science Act. “These initiatives have injected a considerable amount of government dollars into the economy, offsetting softness in the freight sector,” Fuller explained.
4. Potential Impact of Increased Tariffs on Chinese Goods
Former U.S. President Donald Trump has proposed imposing an additional 60% tariff on all Chinese goods if re-elected. This raises questions about how shippers will respond. Fuller pondered, “Will shippers pre-run their shipments to avoid these tariffs, or will they wait for the election outcome?”
Strickland suggested that Chinese companies might already be circumventing these tariffs by routing goods through Mexico. “Our data shows a 40% increase in imports from China to Mexico compared to last year,” he said, highlighting Mexico’s growing role as a backdoor for Chinese imports into the U.S.
5. Texas is Emerging as a Major Freight Hub
Over the past two decades, Texas has transformed from a backhaul market to a key player in freight transportation. Fuller reminisced, “Texas used to be a territory from which trucks rarely left. Today, it’s a major freight hub, thanks to the rise of distribution centers and Mexico’s re-emergence as a significant trade partner.”
In 2023, Mexico became the top U.S. trading partner, surpassing Canada and China with $798 billion in trade. This shift has significantly benefitted Laredo, Texas, and Port Houston, making Texas a critical node in the U.S. freight network.
While challenges remain, the freight industry shows signs of moving in the right direction. Spring seasonality, federal infrastructure spending, and evolving trade dynamics are all contributing factors. As we look toward the second half of 2024, there are reasons to be cautiously optimistic about the freight market’s recovery.
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Young Chiu is a seasoned logistics expert with over 15 years of experience in international freight forwarding and supply chain management. As CEO of Dantful International Logistics, Young is dedicated to providing valuable insights and practical advice to businesses navigating the complexities of global shipping.
