Freight Market Update: The summer of spending winds down
Freight Research • Published on September 8, 2022
Our August Freight Market Update analyzes data from multiple sources to inform your decision making and help you better manage your freight. To get fully up to speed on macroeconomic trends and their impact on freight, hear what’s top of mind for Fortune 500 shippers, and learn the best planning tips for the peak season, view our Q3 2022 Freight Market Update webinar.
August 2022 freight market overview
• Both current consumer spending and future expectations are dropping. Combined with continued lower savings, it seems consumers may be past a financial tipping point and we’ll potentially experience a decrease in holiday season demand.
• Mixed signals exist for consumer appetite on large purchases. Rising interest rates and inflationary pressures dampened both current and future expectations of home purchases. However, auto sales increased and production is back to well above historic averages.
• Tender rejection rates and the spot-contract pricing spread reached new lows. Owner-operators and company operators are leaving the market, though it is unclear if this is a temporary response. This means early signals of holiday spending become critical for understanding if the market pushes even lower.
Freight demand by industry
Consumer retail outlook
• Expected spending decreased for all income groups. Reduced expenditures drove lower total spending on goods and services, potentially signifying broader slowdown in consumer purchases.
• Savings rate has hovered near 5% over last few months, indicating lower spending is not translating into increased savings.
• Manufacturing inventories began inching downward. The decline in manufacturing inventory may be the first sign of an overall decline in goods being created in response to inflation and reduced spending.
Food and beverage outlook
• Consumers cut back even more on food and drink: Consumers appear more cautious in their spending, reducing food and beverage purchases, particularly in grocery stores.
• Commodity prices continue their precipitous decline. Despite widespread drought, commodity prices for wheat and corn fell as some global supplies (e.g., Ukraine) began re-entering the market.
• Persistent drought is affecting agricultural centers. With two-thirds of farming still under severe drought, the persistent megadrought implies some pricing pressure on the horizon due to reduced crop yields.
• Current manufacturing perceptions remain mostly negative, although some optimism exists for future conditions.
• Automotive production and sales rebounded slightly, with manufacturing capacity utilization back near historic average.
• Housing demand and interest continue their decline as interest rate hikes continue to cool demand.
Labor, equipment and fuel outlook
• Market conditions finally hit owner-operator supply. Company drivers, office staff and owner-operators employment all saw declines, suggesting capacity is beginning to leave the market.
• Slowing hourly wage growth and high gas prices likely contributed towards the sidelining of some capacity.
• Reductions in tractor orders and trailer production suggest companies are hedging against a longer deflationary period.
More on the Freight Market Update
▶️ Interested in the full freight market insights and trends? Then catch our 25-miute on-demand webinar, supplemented with our source data and commentary in PDF form for easy sharing with your internal teams.
Watch Q3 2022 Freight Market Update.