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Logistics Market Update: April 2024

April 22, 2024

At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry.

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Demand Levels & Outlook

The market indicates an improving outlook driven by manufacturing sector expansion and increased import-driven freight volumes. Despite a temporary dip post-Easter, freight demand remains resilient, with potential order upticks and positive early April trends. However, there are mixed signals, with the need for close monitoring of the OTRI’s impact on market capacity and pricing. Overall, the industry appears cautiously optimistic about heightened demand levels.

  • Purchasing Managers Index (PMI) for March rose to 50.3%, showing manufacturing sector expansion.

    • Likely heightened freight demand, especially in Less-Than-Truckload markets.

  • New orders surpassed 51.4%, suggesting potential order upticks.

  • Overall outlook for the freight industry is guardedly hopeful, with prospects for heightened demand.

  • Positive signals from PMI and early April demand trends suggest cautious optimism.

Supply, Capacity, and Carrier Operating Costs

The trucking industry faces both opportunities and challenges. Legislative developments such as tax relief aim to boost capacity and efficiency. However, geopolitical tensions disrupt ocean freight, leading to capacity constraints and rate instability. Managing Mexican transportation capacity remains complex, requiring innovative solutions. Infrastructure disruptions underscore the need for resilient supply chains. Meanwhile, surging operating costs squeeze trucking profits, exacerbating financial strain for carriers.

  • The Tax Relief for American Families and Workers Act of 2024 benefits the trucking industry by allowing expensing for new equipment. This provision is expected to increase freight capacity, enhance operational efficiency, and spur innovation.

  • Geopolitical tensions, notably in the Red Sea, lead to vessel rerouting and schedule disruptions. These disruptions cause fluctuations in on-time performance and reliability, contributing to capacity constraints and rate instability in the ocean freight market.

  • Recent infrastructure disruptions, such as the closure of the Port of Baltimore, emphasize the need for resilient supply chains and reliable carrier networks. Strong infrastructure investments and safety measures are essential to safeguard economic activities dependent on efficient logistics operations.

  • Managing Mexican transportation capacity is challenging due to limited visibility of available carriers and regulatory differences. Issues with Electronic Logging Device regulations compound operational complexities for cross-border trade, requiring innovative solutions.

Contract & Spot Market Rate Trends

The market experiences persistent challenges with rates below pre-COVID levels, but signs of improvement emerge, particularly with the upcoming produce season on the West Coast. Anticipation of rate fluctuations exists, especially in lanes like California’s Central Valley to Chicago. While spot rates decline in some segments, flatbed contract rates show slight increases. Contract rates remain stable, but there’s potential for downward movement as shippers aim for lean inventories. Despite a year-over-year decline, positive momentum in spot market rates indicates gradual improvement, albeit with expected fluctuations during the upcoming produce season.

  • Signs of improvement were observed in March, mainly due to upcoming produce runs off the West Coast, though the overall market remains subdued.

  • Anticipation of rate fluctuations as the produce season begins, especially in lanes like California’s Central Valley to Chicago. Spot rates historically elevate in these lanes from spring through July, subject to weather-related delays in harvests.

  • Decline in national van and reefer spot rates, while flatbed Spot rates slightly increased in March. Dry van spot rates declined to $1.55 per mile, and reefer rates decreased to $1.84 per mile. 

  • Indications of gradual improvement in spot market rates despite challenges, with fluctuations expected during the upcoming produce season.