Motive released its first Monthly Economic Report of 2024. December brought a strong finish to retail warehouse visits and diesel prices continued to decline, but the trucking market’s overall contraction persisted.
After three years of impacts from the pandemic and major external forces disrupting the freight market, 2024 may be the first-time carriers will get a sense of what the new normal will look like. Retailers are re-stocking inventories again, potential interest rate cuts could mean better access to capital, and consumer demand could be less volatile if inflation keeps cooling. While we will likely continue to see overall contraction of the freight market, we expect that 2024 will be less volatile, creating more predictability in freight and inventory planning.
Key Takeaways:
- The December holiday shopping season saw the year’s highest levels of trucking visits to warehouses for the top 50 retailers in the U.S., as measured by Motive’s Big Box Retail Index. The index reached its peak at 96 during the first week of December and sustained a level less than 2% below that of 2022. Durable goods such as appliances, electronics, furniture, and other “hard goods” followed a similar pattern in peaking at 93.2, reflecting a 4.6% decrease compared to 2022.
- Various factors contribute to consumer demand, but the rebound in warehouse visits during Q4 suggests that retailers are experiencing increased stability and adjusting their inventories accordingly. While it’s unlikely 2024 will mirror the trends of 2023 exactly, retailers might be gaining confidence in maintaining higher inventory levels, a shift from the destocking emphasis observed throughout much of the previous year.
December saw the highest level of carrier exits in 2023, with an estimated 4,860 trucking companies exiting the market. This represents a 52% increase in closures, compared to the annual average of 3,203 seen throughout 2023.
- New carrier registrations also dropped for the fourth consecutive month, decreasing 4% month over month to 6,503. This latest decline marks an 18% year-over-year drop and a 43% decrease compared to December 2021 when consumer demand was at some of its highest levels. While some of this decline is due to seasonality (as we noted in our December report), the year-end figures unequivocally conclude a challenging time for the trucking industry. However, it is worth noting that pre-pandemic in 2019 there were roughly 16,500 new carrier registrations, while 2023 saw 20.6% more registrations (20,700).
