Freight spending now highest in history of U.S. Bank Freight Payment Index™
Truck driver and capacity shortages – and rising fuel prices – cause spending to jump more than 10% in the second quarter.
Minneapolis, MN – July 21, 2021 – Truck freight spending in the U.S. increased at record levels in the second quarter of 2021, according to the Q2 2021 U.S. Bank Freight Payment Index. Spending jumped 10.1% over the first quarter levels, bringing the total measure to the highest recording in the history of the index. A quarterly analysis of national shipments and spending launched in 2017, the index utilizes data going back to 2010.
While still below pre-pandemic levels, the number of truck freight shipments also increased significantly in the second quarter, up 4.4% from the first quarter. The improvements in shipments are a result of strong truck freight demand as key economic activity, like construction and retail, continued to rebound in the first half of the year.
“We are seeing a continued rise in demand for freight shipments and this is expected to only increase as the economy continues to recover and retailers work to replenish their inventories,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “At the same time, the industry is facing one of the largest supply crunches in history, driven in large part by a major truck driver shortage. This shortage, along with rising fuel prices, is causing considerable spending increases for shippers.”
In addition to the 10.1% increase during the second quarter, the U.S. Bank National Spend Index rose 44% year-over-year. Additionally, each of the five regions saw double-digit growth in spend, including two (Southeast and West) which exceeded 50% increases versus last year.
“The jump in the spend index reflects just how tight truck capacity is right now,” said Bob Costello, senior vice president and chief economist for the American Trucking Associations. “With demand for trucking services high and shippers still needing to meet their timetables, they’re paying more to move product. As we continue to work through structural challenges like driver shortages, we expect the spend index to remain elevated.”
In addition to the 4.4% increase in shipments during the second quarter, the U.S. Bank National Shipments Index rose 6.8% year-over-year. The shipments index remains below peak pre-pandemic levels. Three of the five regions (Southeast, Southwest and West) saw growth in shipments versus 2020, while the remaining two (Northeast and Midwest) contracted just slightly.
While each region improved compared to the first quarter of 2021, the new regional indexes highlight how different geographic areas and industries are emerging from the pandemic at different paces. The regional data was, however, consistent in that all regions experienced strong spending growth.
- Northeast: Freight shipments rose 1.5% in the second quarter but were down 1.6% from a year earlier. Spending on freight shipping in the Northeast surged 14.6% in the second quarter. It was the largest quarterly gain among regions and was primarily due to rising shipments and higher rates.
- Southeast: Freight shipments increased 5.8% in the second quarter to the second-highest level on record for the region. Volumes are boosted by solid manufacturing activity growth in the region, along with home construction and home improvement activity. Spending on freight shipping jumped 9% in the second quarter to reach the highest level on record for the region. Like other regions, fuel price increases contributed to this spending, with diesel prices in the Southeast up 10% for the quarter.
- Southwest: Freight shipments rose 6.5% in the second quarter, improved in part by increased truck-supported trade with Mexico. Spending in the Southwest was up 9.8% in the second quarter, again being propelled by higher rates and fuel surcharges.
- West: Freight shipments rose 7.1% in the second quarter, supported by solid retail sales, strong port volumes and robust home construction. Regional spending on freight shipping was up 13.9% in the second quarter, which underscores the capacity shortages in West region. The West was also one of two regions (along with the Southeast) to register a greater than 50% year-over-year jump in spend.
- Midwest: Freight shipments rose 2.5% in the second quarter but were down 2.1% from a year earlier. A major factor for the decline was continued auto production constraints due to microchip and other supply chain input shortages. Spending on freight shipping in the Midwest was up 7.9% in the second quarter, and 32.1% higher than the same quarter in 2020, as the region experienced a 10% rise in diesel prices.
To see the full report including in-depth regional data, visit the U.S. Bank Freight Payment Index website.
For more than 20 years, organizations have turned to U.S. Bank Freight Payment for the service, reliability, and security that only a bank can provide. The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment. The business processed $31.4 billion in 2020 for some of the world’s largest corporations and government agencies.
SOURCE: U.S. Bank