COLUMBUS, Ind. — The latest release of ACT’s For-Hire Trucking Index, with May data, showed significant improvement in all five diffusion index measures tracked. May’s Volume Index rose from 19.3 in April to 50.2, with capacity also at the neutral 50 mark, and pricing and productivity both in the mid-40 range.
The ACT For-Hire Trucking Index is a monthly survey of for-hire trucking service providers. ACT Research converts responses into diffusion indexes, where the neutral or flat level is 50.
“After the worst reading in survey history in April, the volume index increased 30.9 points in the largest month-over-month increase in survey history in May,” said Tim Denoyer, vice president and senior analyst for ACT Research. “While we’d characterize this as neutral territory, and it may be supported by inventory rebuilding following the draw-down in March and April, it is nonetheless a much more stable volume environment.”
May’s uptick in freight rates could signal the beginning of a return to “normal” for the industry.
“The record 21.2-point recovery in May, also the largest month-over-month increase in survey history, to 43.0 means that despite effectively recovering all the ground lost in April, the pricing index remains in contraction territory,” Denoyer said. “And while still tentative, the trends of a strong rebound in freight volumes as a capacity tightening cycle has begun shows a bottoming process is well under way.”
Denoyer also explored the overall picture for the trucking industry.
“It may be difficult to discern from the chart, but the supply-demand equation rebalanced in May, returning to 50.2, from 26.9 in April, as recovering demand overwhelmed the more modest uptick in supply, and shrinking Class 8 retail sales suggest equipment capacity will continue to tighten, but with sidelined drivers likely coming back, and lenders extending loans, it may be a while before the market really tightens,” he said. “In short, given the magnitude of the economic shock from the pandemic, the road back might be a long one.”
The ACT Freight Forecast provides forecasts for the direction of truck volumes and contract rates quarterly through 2020 with three years of annual forecasts for the truckload, less-than-truckload and intermodal segments of the transportation industry. For the truckload spot market, the report provides forecasts for the next 12 months. In 2019, the average accuracy of the report’s truckload spot rate forecasts was 98%. The ACT Research Freight Forecast uses equipment capacity modeling and the firm’s economics expertise to provide unprecedented visibility for the future of freight rates, helping businesses in transportation and logistics management plan for the future with confidence.