Closing status of 2024 US Flows

According to the Bureau of Economic Analysis, December demand — measured by Personal Consumption Expenditures — increased 0.7 percent compared to November. This was almost twice the rate of increased personal income (0.4 percent) continuing a steady — supply-chain-friendly– ascent in real (inflation-adjusted) consumption that started in mid-2021. See first chart below.

In response to this sustained demand (sustainable is a different issue), US productivity continued to climb. The real US Gross Domestic Product increased 2.3 percent in the fourth quarter of 2024. See second chart below. According to the BEA, “The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributor to the increase was health care. Within goods, the leading contributors to the increase were recreational goods and vehicles as well as motor vehicles and parts.” Employment continues to be what has been considered healthy since the 2008 Great Recession (here and here and here). Real average earnings are at or above pre-pandemic trends.

Connecting demand to supply continues to demonstrate some excess capacity (but less than December 2023 or September 2024 for that matter). Last week Todd Davis at Sonar aggregated the following recent trucking indicators and much more.

  • Spot Rate Trends:
    • December 2024 spot rates peaked due to holiday capacity constraints and shorter hauls, not increased volume.
    • Tender rejection rates rose to 10.16% on Dec. 22, more than double the 2023 Christmas peak of 5.58%.
  • Refrigerated Truckload Market (Reefer):
    • Reefer rates hit seasonal highs in January, driven by protect-from-freeze demand during cold weather.
    • Rejection rates remained above 14% post-Christmas, reflecting tighter capacity than in the dry van market.
  • Dry Van Market:
    • Rejection rates are increasing but remain lower than those in the reefer market, indicating looser capacity.
  • Flatbed Market:
    • Flatbed rates declined throughout late 2024, with recovery unlikely until spring due to seasonal demand lulls.
  • Regional and Seasonal Dynamics:
    • Local freight demand grew by 7% in December, while long-haul shipments dropped nearly 10%, with more freight shifting to intermodal transport.
    • Weather disruptions in January impacted operations, particularly in the Midwest and Southeast.
  • Market Tightness and Outlook:
    • Gradual tightening is evident, with capacity becoming noticeably strained during peak seasons.
    • Spring 2025 could bring capacity challenges if seasonal demand rebounds sharply.

Downstream pull is positive. Upstream push is well-calibrated with pull. There is some turbidity and volatility in the channels between push and pull, but plenty of ability to keep flow going.