Industry Update: Truck Transportation Winter 2024
With a few notable exceptions for retail sales, industrial production, and housing starts, recent US macro data, particularly payrolls, wages, headline real GDP and CPI/PPI, has run hotter than expected. As a result, the futures markets are moving toward an out-of-consensus view by BMO economists that March and even May were too early for the Fed to cut rates. Regardless of the timing, any reduction in interest rates as a by-product of sustainably low inflation rather than poor economic conditions will create a positive setup for improving demand-side trucking fundamentals, particularly in significant truck freight-generating sectors such as retail, housing, and manufacturing. From the supply side, although relatively low fuel prices have kept many poorly positioned carriers in the market for longer than expected, other operating costs (insurance, maintenance, etc..) remain high enough and freight rates low enough that net carrier exits should remain a theme for months to come.