Recent economic reports point to a continued slow recovery in the freight situation, with the number of rental trucks increasing slightly in the US in July.

For trailer manufacturers, the news is not so promising, with few orders and many cancellations. Industry analysts believe that carriers will likely prioritize purchasing power units given their limited capital spending ahead of costly EPA27 emissions regulations.

The trend towards nearshoring is continuing, says Motive in its latest economic report. Imports from Mexico to the USA are at record levels, and the number of freight forwarders leaving or entering the market is also beginning to stabilize.

Tonnage shows that truck traffic is “slowly” coming around the corner

The number of rental trucks in the United States rose 0.3 percent in July after falling 1.8 percent in June.

“Although July was not a strong month, we continue to see signs that the truck freight market is likely turning around, albeit slowly,” said Bob Costello, ATA chief economist. “Part of the small gain in July was likely due to strong import activity, particularly at West Coast seaports. Good retail sales and a slight increase in factory production compared to last year also helped truck tonnage last month.”

Nevertheless, tonnage fell by 0.9% in July compared to the previous year.

“Pause button” still affects trailer orders

According to preliminary data from FTR, trailer orders rose 26% to 5,961 units in June. However, year-on-year orders were 38% below last year’s monthly average and 64% below last year’s.

According to FTR, cancellations remained high, exceeding 30% for the third month in a row.

“FTR believes that some fleets may prefer capital expenditures on new power units over investments in new trailer equipment, possibly due to lower profitability or changing economic cycles,” argues Dan Moyer, senior commercial vehicle analyst at FTR.

“The impending opening of 2025 order books in a few months, as well as a potential recovery in trucking, could improve market conditions, although such an outcome is far from certain. A recent FTR survey found that dealer trailer inventories were lower year-over-year in the second quarter of 2024, but still well above ideal levels.”

ACT Research reported preliminary orders of 7,200 units. Jennifer McNealy, director of commercial vehicle market research and publications at ACT, said orders were down 26% year to date compared to the same period last year.

“Despite the sequential improvement in orders, the July data continues to confirm our expectations of weaker demand against a backdrop of the increased order velocity of recent years, the continued weak fundamentals of the rental truck market and dealer inventories already filled,” McNealy said. “Nevertheless, it is important to remember that we are in the weakest months of the annual cycle in terms of orders, which at least suggests that there is no catalyst for stronger orders before the fall and the opening of OEMs’ order books for 2025.”

It also assumes that fleets will make their capital expenditure available for the purchase of propulsion units before the EPA27 emissions regulations come into force.

She concluded: “Industry anecdotes suggest that the ‘pause button’ is likely to remain pressed until the end of 2024, although dealers are making progress in adjusting inventory levels. However, cancellations remain high, raising concerns among trailer manufacturers about how long demand will remain subdued and whether the supply chain will be ready to respond if demand does indeed increase.”

Spot prices are falling across the board

Truckstop and FTR Transportation Intelligence reported weaker spot market prices for all equipment types for the week ended August 16. However, the declines were largely in line with seasonal expectations, they added.

Spot prices for dry freight and refrigerated transport have now fallen below year-ago levels and in both cases last week was the largest year-on-year deficit in several months. However, there may be good news on the horizon as a rise in spot prices is typically seen before the Labor Day holiday.

Truckstop’s market demand index fell to 54.2, the weakest since late December.

Motive notes acceleration of nearshoring activities

Motive predicted a stronger holiday shopping season in 2024 in its latest monthly report, while also stating that 2024 will be a record year for Mexican imports into the United States as Mexico establishes itself as the United States’ largest importer through at least 2030.

Motive also forecasts that the truck market will see net growth through November, ending a nearly two-year losing streak.

Trade with Mexico has reached an all-time high. In May, 675,000 trucks transported cargo valued at $32.5 billion from Mexico to the United States. Chinese imports fell 19.9 percent in May compared to the same period last year.

According to Motive, this trend is due to the diversification of American companies’ supply chains, more protectionist trade policies and the nature of imported products.

“We think it is unlikely that this trend will slow regardless of the election outcome,” Motive said in its monthly economic report.

At the same time, the same report noted that the number of new entrants and exits in the U.S. transportation industry is converging as the market begins to recover and approaches net growth.

Net departures fell 53.6% and 74% year-on-year in July, the smallest decline since October 2022. New airline registrations rose 4.5% in July and 3.6% year-on-year.