Weakened Auto Sales Stall Freight Spot Market

Spot market van has a new headwind – declining auto sales. I’ve been seeing the slump in rail freight traffic – motor vehicles & parts all year. I believe this is why van loads haven’t continued to rise. Automotive freight generally pays well and mostly moves on a contract basis, but last minute loads are high-paying spot freight. Note that large vehicles and high-end models have done better so automotive profits are mostly intact.

April manufacturing numbers were reported to be strong with high auto production. But auto sales have been a disappointment so far in 2017. At the least, this is a headwind for the van truckload spot market and also impacting van contract as well. From the last week of April to the midpoint of May, spot market van volumes fell by 8.4% and flatbed loads by 11.1%. Meanwhile, trip length shortened and total dollars slipped by 10.2% lower for all segments.

Generally the spot market experiences an uptick in freight from April to May, but it hasn’t happened yet and several major markets are slumping, even while California volume aided by imports and rising numbers of agricultural loads shows recovery. Freight activity remains at subpar levels in auto production markets including Detroit, Louisville, and Kansas City.

Keep in mind this is a very mixed picture. In the SE Region, Charlotte volumes increased 8.6% even as Atlanta volumes declined -2.5%. The freight landscape also showed mixed trends in the two biggest Texas markets with Houston van volumes 5.2% and Dallas volumes -3.0%. Maybe the picture will improve as we get into the last half of the month, at the least, this counter trend bears watching.

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