Thank you for reading the October edition of the Monthly Truckload Market Update. This is a monthly subscription, published within the first 10 business days of each month, so be sure to subscribe to receive future editions. This newsletter reports on macroeconomic data that directly impacts freight markets, and reviews full truckload rates each month.
I intentionally set out to cover two topics this month: The ILA strike and its impact and the proposed tariff/tax policies of the two presidential candidates and how they might impact the economy and specifically freight markets. The ILA strike was short lived, and since that can has been kicked further down the road, I’m also kicking writing on it further down the road. I won’t complain, as there was no shortage of information to sift through when it comes to Trump tariffs and both candidates' economic policies and proposed tax plans. Before we get there though, I want to still highlight several economic data points and cover freight market callouts as usual.
The recent jobs report was strong. Although wage growth has slowed, it has still kept pace with inflation and placed us above pre pandemic wage growth. As long as it remains strong while inflation continues to cool, the consumer should at least retain what spending power and financial stability they have left at this point, if not improve. I found this particular chart interesting as we are facing continuing layoff news in our industry. I talk a lot about manufacturing in this report, as we know domestic manufacturing drives over 60% of freight movement. I was not surprised to see that job loss in manufacturing was paired with job loss in transportation and warehousing. Also not surprising is that job gains are in service heavy industries that do not contribute as strong to freight movement.
Edward Jones provided a brief summary of the data in their recent market update:
“The labor-market data was perhaps the biggest upside surprise for the markets this past week. The U.S. nonfarm-jobs report for September indicated that not only did jobs added well-exceed expectations, coming in at 254,000 versus forecasts of 150,000, the unemployment rate also ticked lower, from 4.2% to 4.1%. Last month's total jobs added was also revised higher, from 142,000 to 159,000.1 After two months of weaker-than-expected labor reports and downward revisions, this month's data was a welcome shift in tone for markets. In our view, the labor market is likely normalizing after a period of outsized strength in the post-pandemic period. There is more supply of labor, as new entrants come in and workers return to the workforce, and there is marginally less demand for labor, as job openings have trended lower all year.”
Speaking of Manufacturing, the PMI remains bleak.
The S&P Global US Manufacturing PMI was revised higher to 47.3 in September 2024 from a preliminary of 47, but remained the lowest since June 2023. It marked the third consecutive month of contraction, with both output and new orders falling sharply due to weakened demand and political uncertainty. Employment dropped at the fastest pace since 2010 (excluding the pandemic). However, business confidence improved slightly, with optimism around post-election demand recovery. Input cost inflation softened but remained high, and firms raised prices at the fastest pace since April.”
Construction activity can be a significant driver of trucking ton miles, however recent reports have found that activity almost across the board in construction sectors seems to have peaked and is now on the decline. The one exception is actually in construction spending on manufacturing sites, however we know that many of these projects do not correlate to high freight volume producing facilities.
MishTalk who shared the below graph had this commentary to add:
“Every key component of construction has peaked and is rolling over except for manufacturing. The latter is due to misguided attempts by the auto industry to roll out EVs and more importantly free money from the Biden administration for autos, chip manufacturing, solar manufacturing, etc.”
He is correlating the spending for manufacturing to efforts stemming from the current presidential administration to invest in their green initiatives. A little more on this later.
Mortgage rates are beginning to fall after the first Fed rate cut of .5%. Hopefully bolstering the consumers' spirits. However, home prices still remain and likely will remain dramatically elevated from just 3 years ago.
Here is the predicted future path for rate cuts, as Edward Jones sees it.
In our view, a more measured pace of rate cuts is a reasonable approach for the Fed, particularly after it cut rates by an outsized 0.5% in September. Given that the jobs report also indicated that wage growth remains somewhat elevated at 4.0% year-over-year, the Fed likely remains on high alert for inflationary pressures reemerging as well.1 Overall, we continue to see the Fed gradually bringing interest rates down toward the 3.0% - 3.5% range through next year, which should be supportive of both consumer and corporate spending.
Inflation is coming down, interest rates are starting to gradually come down, manufacturing remains sluggish, the labor market has stayed healthy, and most economists are advising there is little chance of a recession in the near future. Jason Miller wrote recently that -
“We are not in a recession, and don't appear to be ready to fall into one. The smooth recession probability series fell to 0.34% in August, and the not seasonally adjusted initial unemployment insurance claims continue to track at the same level we observed in 2017-2019.”
Something we will need to keep an eye on is credit card delinquency rates. If consumers do in fact strengthen their position in 2025 I would expect to see some stalling in this measure. We will check back in January.
Now, How is the freight market doing?
FTR published the below chart, but regardless the data source, it’s clear that the market is relatively stable when it comes to net carrier counts. When you factor in that most seasonal fluctuations over the past year have been brief, with the market quickly reverting to its previous state, it suggests that we’re in a phase of equilibrium. We're essentially waiting for broader macroeconomic forces to push the market into its next growth cycle.
As long as we lack those macroeconomic factors, it appears rates will continue to remain suppressed. Cathy shared this graph in her recent newsletter, highlighting the steady declines in contract rates throughout the year.
Another chart FTR publishes clearly visualizes the lack of macroeconomic stimulus. Note that for most of 2024 we have been below normal rate ranges, or at normal, but never above.
As always, thank you to the team at DAT Freight and Analytics for providing us with updated graphs to check in on truckload spot and contract rates:
Dry van spot rates dipped slightly last month:
Dry van YOY% change: Dry van spot rates had flipped YOY positive last month but we did not see further increases the last couple of weeks. Contract rates are still hovering just below 0%.
Reefer spot and contract rates have continued an overall downward trajectory.
Reefer YOY% change is similar to dry van, where spot rates finally saw YOY positive change but then lost a little bit of that steam. Contract rates remain in negative territory.
Here we go. I want to start this by saying I prepared this section through non-biased research. I am focused on trying to understand economic impacts of policy proposed by two sides, not on trying to influence readers’ political affiliations. That being said, here is a high level summary of my findings.
There’s been much discussion around Trump’s proposed tariffs in the current political climate as we near the election. Because tariffs are so closely related to supply chain and freight markets I wanted to devote part of this issue to discussing this topic.
Throughout my research two things became immediately clear to me:
1: Almost nobody likes the plan to raise tariffs when evaluated as a sole issue. There are a plethora of reasons why people will argue against them, and I will summarize those.
2. Tariffs are an alternative to taxing, tariffs are income for the US government just like income tax. Trump’s tariff proposals are a PART of a more extensive tax policy proposal, and should therefore in my opinion be evaluated as such. So we will compare and contrast the two presidential candidates' tax policy proposals.
Tariffs are a central topic in the current political landscape, with President Trump proposing significant increases as part of his election campaign. His latest proposal includes a 60% tariff on Chinese goods and up to 20% on other imports, aimed at protecting domestic industries. While tariffs can benefit certain industries by redirecting business to domestic producers, they often lead to larger economic costs for consumers and unprotected industries. For example, while tariffs on steel increased domestic production by $2.8 billion, they resulted in $3.4 billion in losses for downstream industries. Economists argue that such policies can hurt consumers by raising prices and may provoke foreign retaliation, further exacerbating economic harm. Despite the debate, both the Trump and Biden administrations have maintained tariffs on Chinese goods, showing that tariffs remain a contentious yet persistent tool in U.S. trade policy.
Trump’s broader campaign policies seem to be crafted to support his tariff strategy by strengthening the U.S. economy and its global standing. For instance, his goal to significantly boost domestic oil production would position the U.S. as a dominant global energy player, leveraging a resource that many other countries depend on. Additionally, his focus on reshoring critical industries, like semiconductors and medical supplies, aims to reduce reliance on foreign countries—many of which have grown increasingly adversarial. These policies are designed to make the U.S. more self-sufficient, ultimately giving it greater leverage in negotiating tariffs and responding to retaliatory trade measures.
The more and more I researched tariffs individually the more I found myself asking, “Okay, but what is the overall impact to the economy?”
Well, the Tax Foundation thankfully has been asking that same question. They have run modeled analysis on both Trump’s and Harris’ overall proposed tax policies. Here is what they found:
Trump Proposed Policy Analysis on Taxes/Tariffs:
Harris' Proposed Policy Analysis on Taxes/Tariffs:
Overall, Trump’s plan has the least impact on GDP, wages and job loss. Overall, Harris’ plan contributes positively to the 10 Year Revenue.
One of the largest differences between these two proposed plans is that Harris’ tax policies rely much heavier on taxing corporations in order to fund her other tax credits. This is the primary reason for her hit on GDP, Wages and Jobs. Her plan aggressively targets corporations who pay wages, employ workers, and stimulate economic growth and activity. Here is an overview of their corporate tax policies:
Donald Trump on Business Taxes:
Kamala Harris on Business Taxes:
Ultimately, it's important to recognize that tariffs will impact businesses and, eventually, consumers. However, this may be balanced by trade-offs like lower income taxes, fewer tax restrictions, and expanded tax credits for many Americans. Additionally, much of the revenue generated from tariffs might need to be returned to those affected. For example, nearly all of the new tariff revenue under the Trump administration was used to bail out farmers and agricultural producers hit by retaliatory tariffs. This raises the question: where does the U.S. government make its money? Trump's broader economic proposal seems focused on increasing U.S. GDP and overall economic activity, which could foster a more stable environment for businesses to grow. In turn, this should generate more domestic income and tax revenue. However, if these efforts fail or take time to materialize, relying on tariffs as an immediate replacement for taxes may not be a sustainable solution for funding government spending.
Trump:
Outside of a couple key industries (oil and gas being one) I do find myself siding with much commentary out there around the US’ ability to be good at things other than manufacturing. Trump’s statements that seem to relay a desire to make America a great manufacturing powerhouse may be overly optimistic and idealistic at this point. While I agree bringing critical manufacturing back is a good idea (so do most democrats and republicans which is why we have so much investment ongoing in chip plants and semiconductors, etc. here domestically). I think the focus needs to be less on bringing back certain manufacturing and more on what we excel at already.
The U.S. excels in industries that require advanced technology, high-skilled labor, and innovation. Some of the strongest U.S. manufacturing sectors include:
In these sectors, U.S. manufacturing is driven by innovation, intellectual property, and the ability to produce complex, high-tech goods. While not a low-cost manufacturing powerhouse, the U.S. excels where precision, research, and advanced expertise are required. This also aligns well with an evolving workforce of college educated young adults seeking to enter corporate America. And regardless of how we help the economy grow (through tech corporations or through increased manufacturing jobs and output) a growing economy also supports the trades, as growing economies can invest in construction spending and infrastructure development.
Harris:
“Grocery Prices: The candidate says she would work in her first 100 days to help Congress pass a national ban on “price gouging” for food, give the Federal Trade Commission and prosecutors authority to go after companies they determine to have price gouged, support small businesses in the industry, take a closer look at mergers between big grocery companies and “aggressively” investigate price-fixing in meat supply chains specifically (some economists have questioned the idea that price gouging worsened inflation—or that tighter regulations would help). On Wednesday, Harris stood by her idea of a “federal ban on price gouging” to “take on bad actors who exploit emergencies and drive up grocery prices.”
A couple of important callouts as I wrap this up. Neither candidate's policy provides a clear means to an end for reducing the federal deficit. If anything at this time, estimates show they would both increase it, although the amount is very much a guess at best. And -
Perhaps the single biggest policy question facing the next president will be whether to extend the Trump tax cuts of 2017, which substantially changed the federal tax code. That decision could influence what other policy priorities the next president can even consider. "Everything is tiny compared to the expiring 2017 tax cuts," Georgetown law professor David Super, an expert on legislation and policy, told USA TODAY.
And of course how/if their policies are implemented if elected depends on a lot of unknowns, but most notably the party makeup of the House and the Senate.
Both candidates will be spending money, although in different places. While a Trump administration may see more freight movement stemming from increased fracking and domestic manufacturing and government infrastructure spending, a Harris administration may see more freight movement stemming from investments in “green” industries, and new construction and development of affordable housing projects.
Time will tell, but I hope this article was thought provoking. I also highly encourage anyone to explore the taxfoundation.org website to understand more about both candidates proposed tax policies at this time.
Episode 42 with Lina Castañeda, CCO at Tai Software
Brokers took over a notable amount of contracted freight volumes throughout the pandemic and have retained much of it since then. They also dominate low volume or transactional freight lanes for their shipper clients. Brokers manage two customer bases every day - shippers and carriers. They are managing relationships, executing business operations, and evaluating data constantly. Lina is the CCO of one of the most popular brokerage TMS platforms in the industry. On this episode of the podcast, Lina will bring us insights around what is important to brokers, how their attitudes toward technology have shifted, the challenges they face in the evolving freight markets, and more.
Trimble Insight Conference Interviews:
While on site at the Trimble conference we interviewed many great attendees and shared their insights on several special edition episodes on our channels!
JOC Inland Distribution Conference Interviews:
While on site at the JOC conference we interviewed many great attendees and speakers and shared their insights on several special edition episodes on our channels!
Meet Me For Coffee with Samantha Jones seeks to correlate macro-economics to freight markets (just like this Newsletter does) and offers a chance to hear various industry and non-industry experts explain their thoughts on economics and freight markets.
We are also grateful to be sponsored by TAI, an industry leader in TMS technology, but also in bringing educational insights and materials forward for the market. Their recent E-book was created collaboratively with brokers for brokers. It’s this spirit of constant education, curiosity, and information sharing with the goal of helping others improve that make TAI and Meet Me For Coffee a great match.
You can download their free E-book by clicking the image below!
DATCON 2024! We are just two weeks away from DATCON happening right here in my home city of Kansas City on Oct 22-24th!
Please join us, click the image below to register, and save $200 on your registration with code COFFEE200
We are already getting close to Manifest 2025 in Las Vegas!
Manifest Feb 10-12th in Las Vegas! (discount on link!) https://partner.manife.st/MeetMeForCoffee
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