Trucking and Intermodal Industry: Navigating Demand and Capacity Challenges
In recent months, the trucking industry has seen a complex interplay of demand and capacity dynamics. A recent FreightWaves article points to slipping truckload demand that obscures the exit of freight capacity from the market, partially due to seasonal norms. Despite a 2% year-over-year decline in the national Outbound Tender Volume Index (OTVI), a primary measure of volume noted by SONAR, tender rejection rates and spot rates have increased, suggesting a capacity-driven tightening trend. Analysts anticipate these rates could rise further as demand strengthens in the traditionally busier months starting in March.
Read also: Freight Volumes Plummet in December, Triggering Rate Increases
Meanwhile, the intermodal sector has enjoyed one of its strongest years on record. Data from the Association of American Railroads confirmed that 2024 was the third-strongest year for intermodal volume in history, with December 2024 marking the highest December intermodal volume ever recorded. This growth is largely fueled by robust consumer spending and import activity, as shippers leverage intermodal solutions despite challenges in rail service quality. The shift has been compounded by trans-Pacfic shipping dynamics, where carriers, such as Chinese operator Cosco, have benefitted from strategic routing decisions like avoiding the Red Sea and capitalizing on increased routing efficiencies and resulting profit gains.
Within the less-than-truckload (LTL) carrier market, Roadrunner has followed suit with its industry peers, announcing a General Rate Increase (GRI) of 6.9%, its first since 2021. Similar announcements were made by competitors, including ABF Freight, FedEx Freight, Saia, and Old Dominion Freight Lines, indicating a broader trend in cost adjustments across the sector.
In consumer packaged goods (CPG), manufacturers face new challenges as they seek growth beyond price increases. The increased use of GLP-1 drugs, shown to influence buying behaviors like a reduction in grocery expenditure by 5.5%, poses additional hurdles for brands aiming to expand volume, particularly in indulgence categories. With Goldman Sachs predicting a rise in GLP-1 use to encompass 13% of the U.S. population in five years, CPG industries are focusing on innovative strategies to maintain growth despite shifting consumer behavior.
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