Personal Consumption Expenditures for March were a bit higher than expected. It is just a blip, but a boisterous blip. This PCE print signals a continued pattern of rather robust demand, including a significant monthly increase in demand for goods (compared to services). The March economy absolutely had spring in its step. See the first chart below for real — inflation adjusted — consumption of food-at-home.
Reinforcing the PCE indicator is first quarter GDP results for real “final sales”, please see the second chart below. The US consumer is buying. Goods (and services) are being delivered to sell.
Following are several insights cherry-picked from a much more expansive report from FreightWaves.
- Despite a seasonal dip during the Easter holiday period, freight demand remained consistent in March, outperforming 2023 levels by an average of about 9.5%, reflecting significant growth.
- National tender rejection rates hovered around 3.5% for most of March, slightly higher than the previous year by approximately 70 bps, with reefer rejection rates being the main reason for the increase.
- Contract rates, while still falling slowly, have decelerated significantly over the past seven months, suggesting a potential upward trend by the end of the year. Carrier active operating authorities continued to contract in March, although at a slower pace, indicating a potential turnaround in the market in the near future.
- Easier year-over-year comparisons and a strong economic foundation have guided double-digit import TEU growth in Q1 of 2024, with bookings and daily TEUs returning from the Lunar New Year holding 10%-12% above 2023 levels.
- Overall U.S. containerized intermodal volume remains significantly higher than the previous year, driven primarily by the international segment, indicating strong import volume and the availability of oceangoing containers in the global marketplace.
What I perceive is a US freight network that still has “excess capacity”, but given persistent demand, carriers are being persistent too… so supply is delivered at what might even be considered deflationary rates.
