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U.S. Bank Freight Payment Index™ in Q2 Shows Gains, but Hints of Slowing Growth Rate

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Spend and shipment rates up, but tariffs and a driver shortage may
impact shipping going forward

The U.S. Bank Freight Payment Index™ rose in the second quarter,
tracking a strong U.S. economy and marking the fourth consecutive gain
since the first Index was published in July 2017. But, an economist
cautions, a shortage of drivers and recently imposed tariffs threaten to
slow growth in coming months.

Both the shipment and spend indexes continued growing in the second
quarter, though at a slower pace than previous quarters. The National
Shipment Index increased 1.2 percent from the first quarter and 7.8
percent year-over-year to a record high, showing that the level of
freight transportation continues to be strong. The National Spend Index
rose just 0.7 percent from the first quarter, but is up 24.4 percent
from the same period last year.

"The continued rise in the National Spend Index reflects a tight truck
market – perhaps the tightest ever in the post-deregulation era," said
Bob Costello, chief economist for American Trucking Associations. "Motor
carriers have a very difficult time finding enough qualified drivers to
keep their current trucks seated, let alone add additional trucks."

The electronic logging mandate implemented in late 2017 also has
effectively cut trucking capacity, Costello said, as truckers have less
flexibility in splitting their on- and off-duty hours. In addition, the
national average cost of diesel fuel was up 25 percent in the second
quarter, compared with the same period a year ago. Recent tariffs add to
the headwinds, as they could reduce shipment activity going forward.

Regional highlights of the U.S. Bank Freight Payment Index for the
second quarter of 2018 include:

  • Trucking activity in the Southeast was the strongest among the five
    regions in the second quarter, with both the shipment and spend
    indexes hitting record highs. The region is benefitting from strong
    home construction, solid factory output and healthy household
    consumption.
  • In the Midwest, regional indexes were mixed, with shipments up
    slightly from the first quarter, while spending fell marginally. The
    trucking outlook remains good for this region, with one potential
    hiccup – international trade, as motor carriers here depend heavily on
    agriculture-related exports.
  • The Southwest region was the only region to post a decline in
    shipments from the first quarter – the first sequential decline in
    more than two years. Looking ahead, this region could be hurt from
    softer trade volumes from current tariffs, especially with Mexico, as
    more than three-fourths of all truck border crossings with Mexico go
    through this region, according to Costello.

"We launched the U.S. Bank Freight Payment Index last year to provide
high quality, data-rich information that helps our clients make better
decisions when planning and forecasting for their businesses," said John
Hardin, U.S. Bank Global Transportation General Manager. "We are pleased
with the positive reception that the index has had in the marketplace by
highlighting the trucking industry's contribution to the economy both
nationally and regionally."

The quarterly U.S. Bank Freight Payment Index measures quantitative
changes in shipment and spend activity based on data from transactions
processed through U.S.
Bank Freight Payment
. These transactions are made on behalf of
clients across a range of industries, including automotive,
manufacturing, food and retail.

A pioneer in automated freight audit and payment, U.S. Bank Freight
Payment is celebrating its 20th year of facilitating
transactions between shippers and carriers. The business processed more
than $24.5 billion in global freight payments in 2017 for some of the
world's largest corporations and government agencies. For more
information and to subscribe to the Index, visit www.freight.usbank.com.

About U.S. Bank
U.S. Bancorp (NYSE:USB), with 74,000
employees and $461 billion in assets as of June 30, 2018, is the parent
company of U.S. Bank, the fifth-largest commercial bank in the United
States. The Minneapolis-based bank blends its relationship teams,
branches and ATM network with mobile and online tools that allow
customers to bank how, when and where they prefer. U.S. Bank is
committed to serving its millions of retail, business, wealth
management, payment, commercial and corporate, and investment services
customers across the country and around the world as a trusted financial
partner, a commitment recognized by the Ethisphere Institute naming the
bank a 2018
World's Most Ethical Company
. Visit U.S. Bank online
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