A measure of quarterly freight shipment and spending activity showed big gains in the first quarter of 2018 compared to the same time a year ago, reflecting a stronger economy.
The U.S. Bank Freight Payment Index showed while the level of freight shipments moved 12.6% higher in the first three months of the year, the amount of freight spending was nearly double. The 24.5% increase indicates that driver shortages have become more acute, putting upward pressure on rates as demand grows.
The gauge also recorded 1.4% gains in both shipments and spending for the first quarter of 2018 compared with the final quarter of 2017.
For the index, whose data stretches back to 2010, the 1.4% increase in shipments marked its fifth straight quarterly rise, while the 1.4% upturn in freight spend resulted in its highest-ever first quarter reading.
“Motor carriers of all types are having extreme difficulty finding qualified drivers, which is constraining capacity and pushing driver pay higher,” said American Trucking Associations Chief Economist Bob Costello, who provides expert analysis on the index results. “The capacity situation will likely get even tighter throughout the year as economic growth accelerates and fleets have a difficult time adding trucks to meet that added demand.”
The Midwest was the strongest shipping region in the first quarter, jumping 3% from fourth quarter 2017 due to continued strength in the factory sector. There was a 1.6% rise in shipments in the Southwest. The Southeast and West also saw gains in shipments, but by less than 1% each.
The Northeast has seen the weakest growth numbers in shipments for two quarters running. After no gain in the final quarter of 2017, shipments slumped 0.3% in the first quarter of 2018. One of the factors likely hurting volumes was adverse winter weather, especially late in the first quarter, according to the report. Bad winter storms impacted construction activity and general freight movements for all products.
Spending was mixed across the regions during the first quarter, with the Southeast and Northeast registering declines, while the other regions saw gains. The largest increase was the Midwest at 5.2%.
Overall freight spending has now increased sequentially for seven straight quarters, totaling 31.4%.
The quarterly U.S. Bank Freight Payment Index measures changes in shipment and spend activity based on data from transactions processed through the U.S. Bank Freight Payment system. These transactions are made on behalf of clients across a range of industries, including automotive, manufacturing, food and retail, according to U.S. Bank.