U.S. Bank Freight Payment Index shows Q2 shipment and spend gains

Second quarter freight shipment and spending levels saw strong sequential growth, according to the most recent edition of the U.S. Bank Freight Payment Index, which was recently released by Minneapolis-based U.S. Bank.

This report, which was initially launched in the third quarter of 2017, is comprised of data on freight shipping volumes and spend on both a national and regional basis. The report’s data is based on the actual transaction payment date, highest-volume domestic freight modes of truckload and less-than-truckload and is seasonally- and calendar-adjusted.

Its historical data goes back to 2010, with a base point of 100, and its index point for each subsequent quarter marks that quarter’s volume in relation to the preceding quarter. U.S. Bank Freight Payment processes more than $23 billion in global freight payments for U.S. Bank’s corporate and federal government clients.

The report’s National Shipment Index, at 131.3 (2011=110.1), rose 9.7% over the first quarter after a 9.7% first quarter decline and was down 5.3% annually against an all-time high, marking the fourth consecutive annual decline. While the sequential increase was significant, the report called in a bounce back, following a first quarter that was influenced by weather, trade tensions, and the government shutdown.

“Despite the gains in the second quarter, the underlying economic conditions and freight market suggest this was a rebalancing from the first quarter of the year rather than an improvement in macroeconomic conditions,” the report stated. “More specifically, winter weather, as well as a late April Easter holiday, placed some normally first-quarter freight into the second quarter.”

What’s more, the report pointed out that second quarter shipment gains did not completely offset the decline in the first quarter, and it also noted that second quarter truckload and less-than-truckload shipments slowed annually. Other factors it cited included how retail sales, factory output, and construction activity continued to moderate throughout the quarter, coupled with the business community still uncertain about the trade outlook and the economic impact of increased tariffs.

This has led to many shippers hitting the pause button on expansion and investments, which creates an economic drag, and inventories remaining elevated in the second quarter, with shippers stockpiling goods from China because of the threat of higher tariffs.

“Bloated supply stocks will remain an issue for truck freight growth, as the supply chain draws down that inventory,” the report said.

On the pricing side, the report's National Spend Index, at 201.3, headed up 4.3% from the first quarter and rose 6.4% annually, following a 2.7% annual first quarter increase.

The report said the sequential 4.3% increase more than erased the first quarter’s 3.7% decline, en route to hitting an all-time high.

“Despite softer freight growth and a modest gain in industry capacity, spending remains elevated,” the report said. “This suggests that capacity didn’t soften as much in the second quarter as some had feared.”