Axle Logistics Monthly Update - January 2024

Key Trends

• National average cost of diesel continued to drop through December and opens the year 15% lower than January 2023.
• Housing starts surprised with a jump of 14.8% month over month.
• Fraud monitoring will remain important as tech continues to become more complex within the transportation sector.

A couple key items come to mind as we close out 2023 - Fraud and Digital Integration.

While technology has transformed the transportation industry in many valuable ways, it has also opened the door to bad actors looking to capitalize on scams. Double brokering, phishing, and identity theft are certainly on the rise and Axle Logistics continues to be on the forefront of carrier vetting and compliance by utilizing industry leading monitoring software and integrations.

Technology continues to add value from an analytical and digital integration perspective. Most shippers find that about 80% of their volume is concentrated on 20% of the lanes in their network. With that, shippers have chosen to use a more structured approach to the spot market by integrating their TMS with transportation providers who are able to provide market competitive rates in seconds through API. By teaming up with suitable providers, shippers can access competitive market rates, streamline efforts, and enhance visibility when responding to and tendering shipments.

Supply Update

Active truck utilization (the number of trucks needed to haul available freight divided by the number of available trucks) did not change in the latest forecast from FTR, remaining at 89% - more than 3 points below the 10-year average. FTR expects utilization to stay at or below the 10-year average through the first quarter of 2025.

For hire trucking added 700 payroll jobs in November, seasonally adjusted. Previously released September and October numbers were revised upward by a total of 2,600 jobs. Trucking employment remained about 1.5% higher y/y and well above pre-pandemic levels.

Demand Update

Total truck loadings continue to show projected growth across the three major equipment types according to FTR (Van, Reefer, Flatbed). However, total loadings are forecast to decline slightly as bulk/dump loadings look weaker in the latest forecast.

Food and paper loadings have a slightly improved forecast for Dry Van in ‘24 - projected up 0.7% y/y, up 0.5% previously.

Stronger forecasted growth in Food loadings also has Refrigerated with an improved forecast - 2.0% growth in ‘24 loadings, up from 1.5%.

Improvements in loadings across all key commodity groups raised the forecast to a smaller decline of 0.3% in loadings, revised from a decline of 0.6% forecast previously.

Rate Update

The end of the year brought its typical surge in Spot rates as capacity across the network decreased due to the holiday season. The National Average Spot Rate for Dry Van increased nearly 5% during the final weeks of 2023, but is expected to drop back down to prior levels as we move into the new year.

Contract rates continued their decline to round out the year, but a double-digit difference in the national averages of Contract vs Spot will continue to place pressure on Contract rates in the near term.

Consumer spending continues to hold steady, and chances of a collapse appear to be lessening. Revenues from retail and food services increased 0.3% m/m in November, despite a 2.9% drop in gas station sales caused by falling prices at the pump. Total consumer spending hit a record level for the third straight month when adjusted for inflation. Core inflation remains stubbornly high, coming in at 4.01% on November 30, 2023.

Manufacturing looks slightly less optimistic as it remains in contraction territory. The Institute for Supply Chain Management’s manufacturing index lately returned a score of 46.7 (anything below a 50 indicates contraction). Excluding automotive, which has experienced a bump tied to the end of the UAW strike, manufacturing output dropped 0.2%. However, in a bright spot the new orders component of the index improved 2.8 points to 48.3.

Housing was a surprise in the latest reading with housing starts jumping 14.8% m/m, seasonally adjusted. This was the strongest month over month gain reported since May ‘23. Sales of existing single-family homes rose 0.9% m/m. This was only the second increase since January ‘22.

Our Team

In 2023, Axle experienced an incredible year of growth and success, prompting us to celebrate in style at our annual Christmas party! It was a joyous occasion, bringing together our dedicated team, partners, and friends to commemorate our achievements.

The party was a testament to the strong bonds within the Axle team and set the stage for an exciting and promising future ahead. Here's to the fantastic year behind us and the even brighter times to come!

#AxleGivesBack

During the holiday season, we partnered with Wesley House and McNabb Center to bring holiday joy to the children in our local community. Gratitude fills our hearts for the incredible team that made this Christmas truly magical, fulfilling the wishlists of 145 children.

Did you know...

The Axle team averaged 1 new customer per hour in 2023. We are looking forward to continued growth in 2024!