Transportation Market Report (October 2024)

Truckload

As October progressed, the freight market began stabilizing after the summer peak, setting the stage for the upcoming holiday shipping season. Freight demand steadily increased as businesses prepared to meet heightened consumer demand, particularly in industries that rely on high inventory turnover.

Regional Demand Tightening Due to Hurricane Disruptions

In addition to the typical seasonal rise, certain regions experienced heightened demand due to disruptions caused by recent hurricanes, Helene and Milton. While these disruptions had a notable impact on some regions, the trucking industry was able to absorb these challenges without significant delays or capacity shortages.

This resilience, combined with a slower-than-expected impact from other disruptions like the ILA port strike, highlighted the excess capacity still present in the market. The Midwest and West Coast saw further tightening of capacity as holiday-related shipping activity ramped up, but overall, the industry demonstrated its ability to manage these regional challenges without material disruption.

Outbound Tender Rejection Rates

Throughout October, tender rejection rates remained above 5%, highlighting the industry’s capacity to balance contracted and spot freight as demand increased.

Spot rates rose accordingly, reflecting the seasonal surge in holiday shipments. Shippers should remain prepared for fluctuations in availability and costs in high-demand areas, but overall, the market has shown considerable resilience amid recent challenges.

Fuel

Diesel Prices Rise in October Due to Global and Domestic Pressures

Diesel prices in the U.S. experienced a modest increase in October, with the national average reaching $3.57 per gallon. This uptick is due to a combination of global and domestic factors. Ongoing Middle East conflicts have caused immediate market disruptions, while refinery maintenance delays and fluctuating crude oil prices have added upward pressure. Global and regional supply chain disruptions are also putting strain on the diesel market, keeping prices elevated despite broader market trends.

OPEC+ Adjusts Production Strategy Amid Evolving Demand Projections

OPEC+’s evolving strategy is reflected as it announced production adjustments aimed at moderating supply and stabilizing prices. Earlier in the year, OPEC+ lowered its price target to $84 per barrel and had relaxed some production cuts beginning in Q3. However, in a recent report, OPEC revised its 2024 oil demand growth forecast downward for the fourth consecutive month, projecting a rise of 1.82 million barrels per day, reduced from its previous estimate of 1.93 million bpd.

This revision reflects differing forecasts about global demand growth, particularly regarding China’s demand and the global shift to cleaner fuels. Despite these adjustments, OPEC’s projections remain among the highest in the industry, signaling its cautious optimism about demand growth while acknowledging potential headwinds through 2025.

LTL

Yellow’s Closure: A Year Later

The one-year anniversary of Yellow’s closure continues to shape the LTL market, with pricing discipline persisting across the sector. Former Yellow terminals are gradually reopening, now under new ownership, with 160 terminals purchased so far. Around 100 additional terminals remain available, either owned or leased, awaiting acquisition. These changes highlight the significant capacity shifts that have shaped the market following Yellow’s exit.

Knight-Swift’s Strategic Expansion

Knight-Swift has made strategic moves to expand its network, most recently through the acquisition of Dependable Highway Express. This deal extends its coverage in California, Arizona, and Nevada. However, to achieve comprehensive national coverage, Knight-Swift still requires a Northeast-based carrier, which remains a priority for completing its coast-to-coast service footprint.

NMFC Changes: Key Dates and Implications

Upcoming changes to the National Motor Freight Classification (NMFC) have also been announced.

Critical Dates:

??Docket Issue Date – January 30, 2025

This will be the first chance to review proposed changes to Docket 2025-1.

??FCDC Public Meeting – March 4, 2025

This is the hearing to review the proposed changes.

??Supplement Effective Date – Saturday, July 19, 2025

This is the date when approved changes from Docket 2025-1 become effective. These changes will impact documentation requirements for pallet weights and dimensions, making it crucial for shippers to stay informed and compliant to avoid operational setbacks.

Intermodal

October’s intermodal activity reflects a mix of disruptions and improvements, highlighting ongoing challenges while demonstrating how infrastructure investments are helping to expand capacity and resilience across the network.

Rising Demand for California Intermodal Freight Strains Rail Capacity

Intermodal freight from California continued to surge, with a 40% rise in inland point intermodal (IPI) shipments in the third quarter, which put pressure on railroads to reposition railcars and locomotives to handle the demand.

Adding to the strain, rail operations across the U.S. and Canada experienced delays due to a recent rail strike in Canada and three hurricanes that disrupted freight flows in the Southeastern U.S. These issues compounded in early October, when a short-lived longshore strike halted operations at U.S. ports from Maine to Texas, leading to additional backlogs and delays for intermodal shipments linked to these ports.

CSX Expands Baltimore Port Capacity

CSX Transportation expanded capacity with new double-stacked intermodal service from the Port of Baltimore. This service is the result of the Howard Street Tunnel Project, a $466 million infrastructure upgrade that raised tunnel and bridge clearances and lowered track levels between Baltimore and Philadelphia.

With these changes, the port can now move significantly more container freight by rail, boosting overall capacity by about one-third and making it a stronger intermodal hub on the East Coast.

New Cross-Border Service to Link Mexico & U.S. Southeast - Dec. 1

Canadian Pacific Kansas City (CPKC) and CSX Transportation will launch a new cross-border rail service starting December 1. This route will connect Mexico to the Southeastern U.S. and is set to transport a variety of goods, including intermodal freight from Schneider National and automotive shipments.

The new service will provide more options for shippers moving freight across North America, especially those affected by capacity issues along other major rail corridors.

Contributors

Thanks to this month's contributors:

Mike Beckwith - Vice President, Brokerage

[email protected]

Dan Burke - Senior Manager, Strategic Capacity & Pricing

[email protected]

Amber Miller - Vice President, LTL

[email protected]

Jeremy Eliades - Capacity Manager

[email protected]

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