It was a quiet week for trucking economic news, with spot market rates pulling back due to milder weather, shippers continuing to enjoy falling diesel prices, and used truck prices reaching their weakest points since April 2021.
Shippers enjoying lower fuel prices
Conditions improved for shippers in November, according to the latest FTR Shippers Conditions Index (SCI), which came in at a reading of 6.3.
That reflects the most favorable conditions for shippers since last June. Thank lower fuel prices. And don’t get too comfortable.
“Although market conditions for shippers have improved for three straight months, we do not expect the trend to continue beyond early 2024,” said Avery Vise, FTR’s vice-president of trucking.
“The recent strength in the SCI has largely been a function of sharply lower fuel costs. Our forecast remains for a gradual weakening of the SCI toward neutral territory by the end of 2024. Shippers will not see the highly favorable conditions they enjoyed during the first half of 2023, but at worst we expect only mildly unfavorable conditions during a portion of 2025.”
Back to reality for spot market rates
Sharp weather-related increases in U.S. spot market rates pulled back the week ended Jan. 26, as more normal winter weather returned, reports Truckstop and FTR Transportation Intelligence.
Dry van spot rates gave back about half the prior week’s gain, while reefer rates gave back all their previous week’s gain and another 50% on top of that. Flatbed rates rose for the fourth straight week, reaching their highest level since last July.
Truckstop notes that while total rates were down last week, they held up more firmly than is typical for January. Truck postings increased, driving down the Market Demand Index to 65.5, its weakest so far in this young year.
Used truck prices continue to fall
We don’t have Canadian data to compare against this, but in the U.S. the average used Class 8 truck retail price dropped 2.6% in December to US$58,000.
That’s the cheapest price for used iron in the U.S. retail market since April 2021.
“On a year-over-year basis, used retail prices were 28% lower,” said Steve Tam, vice-president at ACT Research. “Our pricing expectations remain steady, with a return to m/m growth toward the end of 2024 as the most likely course.”
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