The fourth quarter has opened with abundant US flows. According to Bloomberg,
The Port of Long Beach moved nearly 1 million containers in October, beating a record set just two months ago. The surge was driven in part by importers diverting cargo to Southern California to avoid risk of delays from a labor dispute that shut every major port on the East and Gulf coasts for three days in early October. Other businesses have been bringing in goods to get ahead of the tariff increases promised by President-elect Donald Trump. The Port of Los Angeles, which together with Long Beach account for roughly a third of all U.S. container imports, also beat records set during the pandemic in Q3. Businesses are poised to continue bringing in larger volumes of goods through the end of the year, which is normally a quieter time for the ports. The dockworkers’ dispute is still unresolved and, if there’s no agreement before January 15, there’s a possibility of a second port strike at East and Gulf coast ports early in 2025.
Second half 2024 US rail flows are much more robust than the first half (see chart below and more). Trying to work ahead of the threatened dock-workers strike may well keep volumes higher than most Decembers — and depending on if the strike is avoided or abbreviated, deepen the first quarter 2025 slowdown.
As these rail numbers indicate, intermodal trucking volumes have stayed positive, but long-haul trucking is still supply-heavy and demand-short. According to FreightWaves for the second week in November, “loads moving more than 800 miles, declined by 3.62% w/w.” The broader Cass Freight Index for October (released yesterday) also shows a continuing decline in shipping volumes — partially seasonal and partially reflecting a normalization of freight flows from August 2022 post-pandemic peaks (more). Reefer rates are climbing into the ramp to Thanksgiving, but most other categories have softened (more). DAT Trendlines reports more loads per tractor than last month or last year. But spot rates remain flat or softer.
Last week ACT research set out three key factors for the 2025 transportation sector:
Slower Freight Growth: Freight growth is projected to slow in 2025, driven by softer consumer demand and inventory adjustments across retail and manufacturing. As retailers stabilize their inventories after pandemic disruptions, freight volumes will reflect a more measured environment, with limited urgency in replenishment cycles. Capacity Rebalancing Continues: Overcapacity remains a significant challenge, particularly within the truckload market, where rebalancing efforts are ongoing. While private fleets continue to absorb a larger share of freight volume, diverting it from the spot market, the rate recovery remains prolonged. This dynamic will keep spot rates under pressure, likely delaying a clearer equilibrium until late 2025. Modest Spot Rate Gains: Truckload spot rates have seen gradual increases entering 2025, but upward momentum remains limited by ongoing overcapacity. Fleets are taking a conservative approach to expansion, waiting for further market stabilization. As inventories normalize and consumer demand stabilizes, a more favorable rate environment could emerge by late 2025, with potential demand increases in retail and e-commerce sectors driving freight needs.
Unless complicated by physical or policy impediments, freight outcomes — and most other aspects of supply — are driven by consumer demand. (And — consumer demand can even overcome many physical and policy impediments.) This morning Walmart released very upbeat Third Quarter results and upgraded its FY2025 guidance. This mirrors strong third quarter US GDP outputs (and a significant upside revision to 2023 outcomes). The upper two quintiles (more and more) of US consumers have more cash-on-hand and good cash-flow, which is — so far — translating into sustained pull for goods and services.
