The U.S. truck freight market saw a reversal in the third quarter, with conditions deteriorating and reversing a brief second-quarter improvement, according to a new report by U.S. Bank. Compared to the second quarter, national shipment volumes fell 2.9%, while shipper spending increased 2%, according to the latest U.S. Bank Freight Payment Index.

Read also: US Truck Makers Face Tariff Costs, Shift Sourcing to Mexico

A theme to watch is the ongoing divergence between falling freight volumes and higher freight costs, suggesting that carriers continue to exit the market despite higher rates being paid for freight. The report notes, “There is evidence that capacity continues to leave the industry as shippers had to pay more to move less freight during the three-month period.”

While the quarterly change from the second quarter to the third quarter showed higher rates, when comparing the data to last year, both freight shipments and freight spend indexes fell. Shipments are down 10.7% compared to last year, while freight spend is down 1.7%.

Tariffs, manufacturing and consumer spending weigh down volumes

The report notes that freight volumes continue to be negatively impacted by tariffs, notably in the factory sector. Additionally, the goods economy slowed with housing and consumer spending tightening, creating less demand for freight.

“The freight market faced renewed pressure in the third quarter, with areas key to the trucking industry like manufacturing, construction, and consumer goods spending showing signs of strain,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations, in the release. “Despite a brief rebound in the second quarter, challenges continue to weigh on freight activity.”

Paradoxically, while tariffs are intended to bring more domestic manufacturing back via higher costs, the report notes that the U.S. already has a substantial manufacturing output, just in more complicated and finished goods.

“The United States manufacturing economy ranks as the second-largest globally, accounting for more than 15% of total worldwide manufacturing output. Only Chinas manufacturing base is larger. Almost half of imports are unfinished goods vital for manufacturing, so tariffs are hurting factory output. Most manufacturing indicators show little growth or even a decline, and manufacturing remains a major source of freight for trucking,” the report said.

On the rate side, things were looking a little better

While there were fewer shipments, the rates paid for both contract and spot freight saw improvement. Data from DAT were noted in the U.S. Bank report, showing both spot-market and contract freight rates increased by 3 cents per mile (1.4% and 1.1% respectively) compared to the second quarter.

Source: IndexBox Market Intelligence Platform