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  • Writer's pictureEvelina.Petrov

Economic Indicators Driving the Truckload Market

Updated: Aug 12, 2022

Supply chain experts rely on a variety of data points to track truckload market activity and create forecasts. These are what we use in Cellex.

Supply Indicators: DOE Diesel Index

Measures: Average price for a gallon of diesel fuel in the


The U.S. truckload market is large and fragmented, and

there is no accurate database that measures the exact

amount of carrier capacity at any given time, so we have

to get creative to measure supply.

Why is the price of diesel so important? Fuel is a huge

part of every trucking company’s business. It accounts for

~30% of carrier's overall operating expenses, and this is

true for owner-operators and national fleets alike.

Fuel prices tend to be much more volatile than other

operating expenses (e.g. driver wages) and can fluctuate

dramatically over the course of a year. This volatility can

have a huge impact on carriers’ profitability.

When diesel prices shoot up faster than spot rates,

carriers cannot recoup all their fuel costs, and it

squeezes into their profits. If, on the other hand, fuel

prices fall faster than spot rates, carriers are more


CELLEX 101 INFO: fuel (diesel) prices are

volatile, and when they rise faster than spot

truckload rates, it cuts into carriers'

profitability and can ultimately drive capacity

out of the market.

Supply IndicatorsTruckload Market: Class 8 Truck Orders

There is a strong correlation between Class 8

truck orders and where we are in the market

capacity cycle.

As truckload rates increase, carriers will

reinvest profits back into their businesses,

buying new trucks to add capacity and/or

replace old ones.

Often times, Class 8 truck orders will continue

to rise long after spot rates have started to

fall. However, there is a several-month delay

between when a carrier places an order and

when a truck enters their fleet with a driver.

Eventually, the new capacity will flood into

the market when rates (and demand) are past their peak, contributing to excess supply and driving rates down lower.

PLEASE CONSIDER THE INFORMATION: carriers will often make long-term capacity

decisions based on short-term rate conditions. When rates are high, they tend to

overshoot, adding excess capacity that will contribute to a deflationary market.

Demand Indicators in the Truckload Market:

* Consumption


How much "stuff"

consumers are

buying consumption, or

consumer spending,

is the monetary

value of goods and services

purchased by U.S. consumers.

When consumption increases, it means we're buying more

"stuff". The more we buy, the more shippers will have to

produce (Industrial Production), and the more shippers

produce, the more freight will need to move (Truckload


The opposite is true when consumption declines.

NOTE: Consumer spending drives production, and

production drives truckload volume. When

consumption is high, there will be more freight volume.

When it's low, there will be less.

*Industrial Production (IP)

Measures: Production levels in the U.S. across manufacturing, mining, electric and gas industries

National production (how much "stuff" we're

making as a country) is a key influencer of

freight volume. This index has a direct impact on

how much freight is moving across the country.

NOTE: When IP is going up, expect

shipment volume to go up. When IP goes

down, it will likely mean less freight will move

(unless we import enough to compensate for

the decline).

Demand Indicators in the Truckload Market:

* Inventory-to-Sales Ratio

Measures: Warehouse inventory compared to sales

The Inventory-to-Sales Ratio measures the number of months of

inventory shippers have on hand in their warehouses compared

to their monthly sales.

(Inventory Value $) ÷ (Sales Value $) = Inventory-to-Sales Ratio

When consumption is high (people are buying lots of

stuff), inventories will usually shrink as products quickly

move out of warehouses to meet consumer demand. To

replenish the inventory, shippers will produce more, driving

up Industrial Production.

When consumption is low (people buy less stuff), or if there is uncertainty in the supply chain companies will stockpile inventory, either as a strategic measure or because people aren't buying it.

NOTE: a high Inventory-to-Sales ratio will act as a brake on production. When consumer demand picks up, companies will work down their inventory first before producing more.

*ATA Truckload Tonnage

Measures: total volume of truckload shipments in the U.S.

American Trucking Associations (ATA) is the largest national trade association for the trucking industry. Every month,they publish a tonnage index based on data from their national membership.

This index gives a snapshot of current truckload shipment volume (i.e. how much "stuff" is moving throughout the country). We use this as an approximation for overall shipper demand for carrier capacity.

NOTE: when truckload volume increases relative to carrier supply, rates increase as shippers compete for capacity. When truckload volume decreases relative to carrier supply, rates fall as carriers compete for freight.

*Cass Truckload Linehaul Index

Measures: Year-over-year change in contract rate activity

In an effort to get more predictable pricing, higher-volume shippers take their forecasted shipping needs out to their carrier network for an annual bid.

In exchange for guaranteed freight volume, carriers agree on a set rate for their capacity, also known as a contract rate or a primary rate.

NOTE: contract rates are heavily

influenced by recent spot market activity,

usually trail behind spot market trends by

three to six months, and are much less


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