Overview
Although the jobs report was eagerly awaited as usual, it was a development Thursday night that eclipsed all the economic news of the week, at least for the freight sector.
A strike of workers at East/Gulf Coast container terminals lasted just three days – at least for now – following a tentative deal on wages and a further agreement to bargain on other outstanding issues, which could prove to be more difficult.
In economic news, rumors of the labor market’s demise apparently are greatly exaggerated as payroll employment saw its largest seasonally adjusted increase since January and the unemployment rate declined slightly. The manufacturing is seeing no such strength as a key indicator of the sector’s health shows continued weakness.
Port Strike
As widely expected, workers represented by the International Longshoremen’s Association (ILA) on October 1 struck container and roll-on/roll-off terminals at U.S. East and Gulf Coast ports from Texas to Maine. What was not expected, though, was a quick resolution of the strike, at least temporarily.
On Thursday evening, the ILA and United States Maritime Alliance (USMX), which represents terminal operators at the East/Gulf Coast ports, released a joint statement that they had reached a tentative agreement on wages and that work will resume immediately. The tentative agreement reportedly entails a 62% increase in wages phased in over the next six years.
ILA and USMX further agreed to extend the master contract until January 15, 2025, and to return to the bargaining table to table to negotiate “all other outstanding issues.” Perhaps the thorniest of those outstanding issues is automation, which management seeks as needed for efficiency and the union sees as an existential threat to jobs.
Pushing off the deadline for a deal until January, therefore, might only delay the pain that would have occurred with a prolonged strike now, although a work stoppage at least would occur during a time when the ports are substantially less busy.
Employment situation
The U.S. added 254,000 payroll jobs, seasonally adjusted, in September, according to the preliminary estimate released by the Bureau of Labor Statistics. The m/m increase was the largest since January.
BLS also revised earlier estimates of July and August employment upward by a net of 72,000 jobs. After hitting a recent high of 4.3% in July, the unemployment rate eased for a second straight month to 4.1%. The labor participation rate held at 62.7%.
The only major sector of the economy not to see job growth m/m was manufacturing, which was down 7,000 jobs due mostly to cuts in motor vehicles and parts employment.
Most industries within transportation and warehousing, including trucking, saw little change m/m, but warehousing and storage employment fell by 11,000 payroll jobs. BLS also revised preliminaryJuly and August estimates for warehousing downward by a net of 10,200 jobs.
Trucking employment
For-hire trucking employment declined by just 700 jobs, seasonally adjusted, in September, according to preliminary BLS figures. BLS also revised July and August estimates higher by a net of 800 jobs. Trucking employment in September was higher than August 2023 – the month following Yellow Corporation’s exit – by just 500 jobs but otherwise was the lowest since November 2021.
More granular data on trucking jobs lags a month. General freight truckload payroll employment in August eased by 400 jobs. The current estimate is just barely above the level in June but otherwise is the lowest since September 2022. Employment is still 4.1% higher than in February 2020, however.
LTL jobs were down by 1,000 in August but posted their first y/y increase (1%) for the first time since January 2023. The positive y/y comparison is solely a function of Yellow’s absence from the comparable 2023 data. LTL has added just 2,400 jobs since then. Owing to Yellow’s exit, LTL employment is 8.1% lower than it was in February 2020.
The long-distance specialized segment continued to see recovery as employment has not fallen m/m in any month this year. Payroll jobs were up 1% y/y for the first positive comparison since July 2023. Employment is still 3.7% below February 2020 levels, although that is the closest long-distance specialized has been to recovery to pre-pandemic levels since June of last year.
Truck spot metrics
Total broker-posted spot rates in the Truckstop system ticked up a fraction of a cent during the week ended September 27 (week 39) as rates for each of the principal equipment types moved much as they usually do during comparable weeks.
Dry van and flatbed rates moved higher as they had done during week 39 in the past four years. Refrigerated spot rates fell as they almost always do during the week.
The total broker-posted rate increased just over a half cent after declining close to 3 cents during the previous week. Rates were nearly 5% below the same below the same 2023 week – the weakest y/y comparison in 17 weeks – and more than 10% below the five-year average. Spot rates excluding a calculated fuel surcharge were still higher y/y for each of the principal equipment types, but the comparisons were narrower than they have been in recent weeks. The current week (week 40) usually sees lower spot rates week over week in each equipment type.
The only inkling of a market impact from Hurricane Helene was a sharper increase in spot load volume for dry van and refrigerated in the Southeast than in other regions. For more on week 39 spot metrics for truck freight,
visit https://freight.ftrintel.com/spotmarketinsights.
Rail traffic
For the week ended September 28, North American rail traffic was basically in line with prior-year levels at in increase of just 0.3% y/y, according to Association of American Railroads data. Both carload and intermodal traffic underperformed recent trends. Carload volume was down 3.6% y/y while intermodal traffic was up 4.2%.
Five of the 10 high-level AAR carload commodity groups showed y/y declines with the biggest losses experienced by nonmetallic minerals, down 11.0%; coal, down 9.3%; and metallic ores and metals, down 8.7%.
Although just as many carload commodities saw gains, those increases were smaller than the declines. The commodities with the greatest growth in the most recent week were farm products excluding grain, up 5.5%; grain, up 4.9%; and motor vehicles and parts, up 4.6%.
Although intermodal still showed y/y growth, the gain y/y was barely more than half the four-week average of 7.7%. Not surprisingly, the eastern carriers CSX and Norfolk Southern saw volume declines in a wind-down ahead of the ILA strike. The western carriers, however, continue to see strong y/y growth. The y/y gains in intermodal traffic for UP were similar to what they have experienced in recent weeks, while growth at BNSF was more moderate.
