Overview
The week’s most important develop for freight came from outside the economy as a Canadian railroad work stoppage proved to be short-lived due to a government order that railroads end their lockout and that both sides submit to binding arbitration.
Meanwhile, home sales headlined a light week for economic data, and the news was good, certainly considering recent performance. That trend could continue as mortgage rates and the federal funds rate move down as is widely anticipated.
Sales of new and existing homes
In a rare occurrence, sales of both new and existing single-family moved higher in July on a seasonally adjusted basis.
Sales of new homes rose sharply, increasing 10.6% m/m for the largest single-month gain since August 2022. New-home sales were up 5.6% y/y, and the Census Bureau upwardly revised earlier estimates for May and June. The annualized rate of 739,000 new single-family homes sold represents the highest level since May of last year, according to the preliminary figures.
Sales of existing single-family homes did not perform as well as new-home sales in July, but the 1.4% increase was the first m/m gain in five months and only the third increase in the past 17 months.
Existing home sales were down 1.4% y/y. Sales have not been positive y/y since June 2021.
Trucking and parcel revenues
Revenues for the for-hire trucking industry were just 1% higher in the second quarter than they were in Q2 of last year, but it is the first positive y/y comparison since 2022Q4 when revenues were 4.7% higher y/y.
Trucking revenues rose 11.3% q/qin Q2, but that increase does not mean much as the data is not seasonally adjusted. Aside from 2020Q2 for obvious reasons, trucking always sees a sequential gain in Q2 on an unadjusted basis. However, this year’s gain in Q2 at least was stronger than the sluggish 4.2% q/q increase in 2023Q2.
Business formation
Applications for new businesses throughout the U.S. declined 2.1% m/m, seasonally adjusted, in July for the largest decrease in five months. Applications were down 11.5% y/y, which is the largest negative comparison since May 2022.
Within the transportation and warehousing sector, however, business applications rose for the second
straight month, increasing 3.1% after rising 4.8% during June. Applications were down 10.5% y/y for the least negative comparison in five months.
The Census Bureau does not publish more granular data, but trucking likely is one of the principal drivers of changes in applications month to month.
Trucking
Total broker-posted spot rates in the Truckstop system decreased during the week ended August 16 (week 33) as all equipment types saw lower rates week over week.
The decline in spot rates mostly was in line with seasonal expectations as both dry van and flatbed rates typically move lower during week 33. Refrigerated spot rates usually see gains during that week, although at least the decrease was the smallest of all equipment types.
Rates in the current week – week 34 – usually rise as van rates firm ahead of the Labor Day holiday. However, total rates were down in 2022’s week 34, and last year’s gain was marginal.
For more on week 33 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
At 12:01 am on Thursday, August 22, Canadian National and CPKC both instituted a lockout of their Canadian employees, a move that they had made clear would happen if a deal with the Teamster union was not reached before then.
However, just 17 hours after the lockout began, Canada’s Labour Minister Steven Mackinnon stepped in and ordered that the Teamsters and both Class Is enter into final binding arbitration, marking the beginning of the end of the brief rail work stoppage for the Canadian carriers.
CN had requested this type of government intervention last week but was denied that relief at the time on the grounds that the railroads and the union had a “shared responsibility” to reach an agreement on their own. After negotiations reached what MacKinnon termed an impasse, however, he made the decision to step in to maintain “industrial peace.”
It’s unclear how long it will take to get Canadian carriers’ rail service back up and running. Both railroads and the union were scheduled to meet with the Canada Industrial Relations Board (CIRB) on Friday to begin the process of binding arbitration with MacKinnon suggesting that rail services will likely resume in the next couple of days.
