How the Industry Sees the Freight Market in 2024
January 29, 2024 •Kevin Baxter
In this space, the freight market outlook for 2024 has been a popular topic - take a look at our detailed blog, our podcast and our video. But InTek is not the only place attempting to project what's to come in the logistics and supply chain space this year. Others in the industry are doing the same, with what may be termed a general consensus in spite of some differences on the margins. Read on for a roundup of various major stakeholders' thoughts on the 2024 freight market.
A common theme in the freight industry has been a sigh of relief that 2023 is over after a rough year. J.B. Hunt saw some positive intermodal signs toward the end of the year, but for their business as a whole, they're taking a wait-and-see approach when it comes to 2024.
President Shelley Simpson on a recent earnings call indicated the environment remains challenging, but there is optimism regarding intermodal volume - which she termed a "leading indicator." However, executives at the company agreed that pricing is still especially uncertain to determine what's to come, as CEO John Roberts said the pricing environment "has too many unknowns today" as the company is in the midst of bid season.
Union Pacific executives see a similarly murky outlook as J.B. Hunt, with CFO Jennifer Hamann saying there's "too much uncertainty" to pinpoint volume expectations for 2024. The Class I Railroad does expect fairly muted traffic for a few reasons: a generally slow economy, lower coal demand, and the loss of an international intermodal contract to a competitor. But also like JB Hunt, UP did see a volume uptick in the fourth quarter, while rates kept income and revenues flat.
President and CEO of C.H. Robinson Dave Bozeman recently said "good riddance" to 2023, while at the same time acknowledging that some of the challenges from last year will likely linger. Bozeman predicts no significant positive movement until at least the second half of the year.
ACT Research sees improved market fundamentals in 2024, setting the stage for freight to move out of recession territory. The market forecaster's Vice President Tim Denoyer points to "changing ocean and inventory dynamics" driving demand - particularly in the intermodal space. He sees intermodal benefiting from a shift to West Coast ports because of issues in the Red Sea and Panama Canal zones, with those benefits trickling down to the truckload market as well. Also noted as a reason for optimism are retail sales, which have turned positive.
While not freight-specific, global trade is certainly freight-related. And the World Bank's latest Global Economic Prospects report sees global trade growing in 2024 at only half the average of the decade before the pandemic - at 2.4%. Less trade growth of course, equates to lower freight volumes - something to watch in the international space for the coming year.
There were a couple of bright sides to the report, as authors indicated the "risk of a global recession has receded" in large part due to the U.S. economy's resilience. And the global economy is "in a better place than it was a year ago." However, the Bank pointed to geopolitical and climate concerns as hazards, as well as sluggish growth in low income countries.
The OOIDA (Owner-Operator Independent Drivers Association) Foundation in its December update maintains a negative market outlook, citing soft demand, low volume, loose capacity, flat rates, and high operating costs. In other words, truck drivers are not seeing an ideal mix of factors - something that's been the case for several months. The foundation indicates "there are still no signs" that the freight market is about to turn upward again at this point, in spite of some mildly positive indicators in the spot market cycle last month.
FTR Transportation Intelligence
Another freight analysis firm, FTR Transportation Intelligence, sees 2024 as a year to "hold on, stay in business and hope for better times in 2025 and beyond" in its State of Freight report. While capacity is tightening due to market exits, Avery Vise, FTR VP for Trucking, says the company "doesn't see much reason" to expect big swings in freight volumes in either a positive or negative direction. They expect any restocking bumps to be only temporary rather than a boost that pulls the freight market forward. In the end, he expects 2024 to be all about capacity changes, not volume.
On the flipside, there are those a bit more optimistic about the freight market, and count Morgan Stanley in that camp. On a recent call, analyst Ravi Shanker said he sees an inventory replenishment period potentially happening quickly, leading to a freight upcycle as soon as the end of the first quarter. He sees pressure to restock after companies right-sized themselves over the past year building as consumer spending only improves.
Shanker said the company believes "shippers will need to start increasing inventory soon if the rate of destocking (driven by consumer spending) keeps up at its current rate." He did however, acknowledge, their first or second quarter turnaround projection is "out of consensus" with most in the industry - something you can see above.
Though we ended on an optimistic projection, the general consensus is clearly less so, with some experts expecting 2024 to be a 2023-esque wash, and others only seeing a conservative uptick coming late in the year. We'll be following with interest what actually occurs as will everyone else.
In the meantime, if you need assistance with intermodal, truckload or other solutions, reach out to us. Just fill in our Request a Quote form and we'll be in touch to talk about how we can help with your unique shipping needs. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.
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