Overview
Job growth slowed notably in April but was still solid, potentially indicating a firm economy but not one that will continue to drive consumer inflation. Wall Street certainly welcomed the employment data as all key indices rose sharply on Friday.
In the industrial sector, one closely watched indicator weakened in April, but it had not been especially strong in March anyway.
Within freight transportation, the big news was in rail due to a potential strike in Canada and a significant new Surface Transportation Board regulation intended to improve rail service.
Employment situation
The U.S. added 175,000 payroll jobs m/m, seasonally adjusted, in April, according to preliminary data from the Bureau of Labor Statistics. BLS also revised earlier estimates of February and March employment downward by a net of 22,000 jobs. Job growth remains solid, but the April gain was the smallest since October.
The unemployment rate ticked up to 3.9%, matching February for the highest rate since January 2022. The rate is still low relative to history; the average during the period of 2015 through 2019 was 4.4%. The labor participation rate held at 62.7%.
April’s job gains were heavily focused in two sectors – private education and health services (up 95,000) and trade, transportation, and utilities (up 52,000). Most other sectors saw gains of less than 10,000 jobs. Three saw losses – information (down 8,000); professional and business services (down 4,000); and mining and logging (down 3,000).
Trade and transportation/warehousing both contributed to the gains in that broad sector. Retail and wholesale trade employment rose by more than 30,000 jobs while transportation and warehousing jobs were up by nearly 22,000.
Couriers and messengers – less formally, parcel and local delivery – and warehousing and storage contributed equally with increases of 7,600 jobs. Both also saw upward adjustments of prior months’ data. Trucking was one of only two negative contributors within transportation and warehousing, but the decrease was marginal.
Trucking
For-hire trucking employment basically held steady in April after a notable gain in March. Trucking shed 300 jobs m/m, seasonally adjusted, following a downward revision of prior months’ estimates by a net of 800 jobs. The m/m decrease – while tiny – was the first since October.
Trucking has recovered 14,700 jobs, seasonally adjusted, since the exit of 31,600 jobs in August due mostly to Yellow Corporation’s failure. Payroll employment is down 1.3% , or 20,660 jobs, y/y but up by 2.5%, or 37,300 jobs, since the pre-pandemic month of February 2020.
More granular data available only through March shows that general freight truckload – the principal segment where excess capacity has been a worry for carriers – has increased employment on a seasonally adjusted basis slightly over the past couple of months.
General freight truckload employment in March was still 4.8% higher than in February 2020 and down only 1.4%, or 7,700 jobs since May 2023.
LTL in March recovered about half the jobs it shed in February. The sector has recovered a net of just 4,600 jobs, seasonally adjusted, since employment plunged by 27,200 jobs in August.
Spot metrics
The total broker-posted rate in the Truckstop system declined by the most in 11 weeks during the week ended April 26 (week 17) as flatbed spot rates dropped and dry van and refrigerated rates moved in oppositive directions.
Dry van spot rates fell to their lowest level in nearly a year while refrigerated spot rates posted their sharpest gain since mid-January. Both moves were in keeping with seasonal expectations. Flatbed spot rates fell by the most in a week since early February.
The spot market is only a couple of weeks away from a near-certain spike in rates due to the Commercial Vehicle Safety Alliance’s International Roadcheck inspection event, which will sideline significant driver capacity for three days – May 14-16.
For more on week 17 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
Workers at CN and CPKC overwhelmingly voted in favor of a strike due to managements’ refusal to accept what their union considers to be safety-critical rest provisions. If an agreement is not reached between the two Canadian railroads and the Teamsters Canada Rail Conference, a worker stoppage could begin as soon as May 22.
A strike at both Canadian Class Is could have huge impacts on the system. So far in 2024, Canadian railroads have carried nearly 25% of all North American rail traffic, including about 32% of grain, about 50% of petroleum and about 29% of chemicals.
Reciprocal switching rule
The Surface Transportation Board unanimously voted in favor of a reciprocal switching rule that applies to certain shippers whose facilities are only served by one Class I railroad. The rule, which the board adopted on April 30, is available at https://www.stb.gov/proceedings-actions/decisions.
The rule will allow captive shippers to petition the STB for a reciprocal switching agreement in an effort to mitigate poor service levels from the incumbent Class I. In announcing the rule, STB said it considers the rule to be a significant step toward encouraging Class 1 railroads to improve and maintain higher service levels by allowing a competing line to offer better service.
Under the rule, STB will rely on objective performance standards that address reliability in time of arrival, consistency in transit time, and reliability in providing first-mile and last-mile service. However, the board also will consider certain affirmative defenses and the practicability of an agreement.
STB will require all Class I railroads to submit certain service data, which will be generalized and publicly accessible, on an ongoing and standardized basis. Railroads will also be required to provide individualized, machine-readable service data to a customer upon a written request from that customer.
