Weekly Transportation Update: Consumer spending on goods falls sharply in January

Overview

The federal government served up a few more crumbs of January economic indicators this week, and as was the case with other January indicators, winter weather represented a distortion. Weather’s impact on consumer spending on goods is inconclusive, but it clearly affected services spending.

As discussed in recent weeks, manufacturing production and housing starts almost certainly suffered due to the weather in January. Those effects presumably will distort indicators we will start to get soon for February as mild weather last month likely set the stage for a rebound on a m/m basis.

Sales of new homes
Sales of new single-family homes increased 1.5% in January, seasonally adjusted, but that increase followed a downward revision to the preliminary December estimate that was steeper than the January increase. The annualized sales rate was 661,000 new homes in January; the initial December estimate had been 664,000. New home sales in January were up 1.8% y/y – the weakest comparison since March, which was the month before y/y comparisons started turning positive.

The supply of new homes on the market at the current sales rate held steady at 8.3 months. That level is lower than the levels in the second half of 2022, but otherwise it is historically high. The average during 2015 through 2019 was 5.6 months.

Affordability continues to be an issue. The median price of a new sold in January increased 1.8% to $420,700 – about 15% below the record in October 2022 but nearly 27% higher than the median price in February 2020.

For-hire Trucking

Volatility in the data surrounding the for-hire carrier population was evident in February’s figures, which indicated a far smaller decrease in the number of active carriers than what occurred during January, according to FTR’s analysis of Federal Motor Carrier Safety Administration data.

Revocations of authority – defined by FTR as total revocations minus reinstatements – fell sharply to 5,296 in February from 7,631 in January. Meanwhile, the number of newly authorized for-hire firms rose to 4,497, which is the largest number of new carriers since October.

The net decrease in the carrier population, therefore, was 799, which is far smaller than the 3,595 net decrease in January and is the smallest drop in the carrier base since June.

As we noted last month, the data can be quite volatile month to month. One reason is workflow. FMCSA consistently processes the bulk of its revocations on Mondays. The fact that January had five Mondays clearly was a factor in that month’s high number of revocations.

Trucking

For-hire trucking companies’ revenues declined 1.3% in the fourth quarter from the third quarter on a not seasonally adjusted basis, but the decrease was expected given that the third quarter typically is the strongest of the year on an unadjusted basis.

The Census Bureau’s data from the quarterly services survey goes back to 2009, and the only years during that period to see an unadjusted increase in revenues during the fourth quarter were 2014, 2020, and 2021. Revenues in 2023Q4 were down 5.6% y/y, which is an improvement from the -11.1% y/y comparison in the third quarter.

Perhaps more notable than the quarterly change was the 8.5% drop in trucking revenues in 2023 versus 2022. Even with the sharp decrease, trucking revenues in 2023 were the second highest ever.

Trucking revenues have declined only twice y/y since 2009 – in 2016 and 2020 – and in both cases the decrease was less than 1%. Revenues in 2016 were just 0.1% below 2015.

Spot Rates

As was the case in the previous week, total broker-posted spot rates in the Truckstop system rose duriing the week ended February 23 (week 8) because higher flatbed rates more than offset lower dry van and refrigerated rates.

Spot rates for van equipment have declined for five straight weeks while flatbed rates have risen in all but two weeks this year. Flatbed rates are tracking close to their five-year average while van rates are still seeing greater divergence to the downside.

For more on week 8 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.

Rail/Intermodal

The Federal Maritime Commission has published a final rule establishing requirements governing how common carriers and maritime terminal operators bill for demurrage and detention charges. A key provision is that a demurrage or detention invoice must go to either the shipper contracting for transportation or storage of cargo or the consignee receiving the goods. Therefore, parties simply providing transportation would not receive invoices.

The rule, which was mandated by a 2022 federal law reforming ocean shipping practices, clarifies who can be billed and within what timeframe and outlines the process for disputing bills. The rule is effective May 28. It was published in the Federal Register on February 26 and is available at https://www.federalregister.gov/d/2024-02926.