October 12, 2023

Loaded and Rolling: Morgan Stanley sees freight industry move ‘deeper into limbo’


Morgan Stanley report touts positive signs but market ‘deeper into limbo’

(Photo: Jim Allen/FreightWaves)

A Q3 shipper survey by Morgan Stanley suggests the freight industry has moved “deeper into limbo” as completion of an excess inventory purge now leads to uncertainty as there is no immediate need to restock. One trend the report highlighted is how shippers are waiting on more consumer buying intentions before moving goods as excess transportation capacity remains abundant.

FreightWaves’ Todd Maiden wrote, “Shippers registered a slightly lower overall view of the economy this quarter, returning a 4.9 reading on the 20-year-old Morgan Stanley (NYSE: MS) data set where the all-time high is 7.7 and the low is 4.2. A more constructive outlook among retail shippers was reported, with the subgroup registering a 6 rating on the economy, which is just slightly into positive territory.” The survey uses a scale of 1 to 10. 

In the report, Morgan Stanley analyst Ravi Shanker wrote, “Despite the mixed messaging, it is clear that Shippers are continuing to wait before hitting the restock button, even as the inventory situation rapidly improves. Perhaps they are waiting for a final decision on whether consumer spending remains resilient or rolls over, perhaps they are waiting for interest rates to decline, perhaps they are waiting for a new fiscal year and/or new budgets.”

Crete Carrier president sees signs of trucking optimism

(Photo: Jim Allen/FreightWaves)

Nebraska-based truckload carrier Crete believes improved trucking conditions are on the horizon. This comes from recent comments at a conference by Crete Carrier President and COO Tim Aschoff, who cited improving tender lead times from customers as a main factor. “We’re actually seeing our shippers get more normal, back to where they used to be in 2019, so their networks are much healthier,” Aschoff said. 

Crete tender lead times were noted at a normal average of five days for dry van and four days for reefer freight and fluctuate depending on cargo requirements. The FreightWaves SONAR Outbound Tender Lead time (OTLT) across all modes nationwide currently elevated at 3.349 days, but typically averages around 2.8 to three days over the past year pending holidays. 

Regarding truckload contract rate expectations for 2024, Aschoff was bullish, stating while rates could increase between 3% and 5% next year, he believes that is on the low end, as shippers are aware of higher carrier costs but how much they are willing to accept passed onto them remains uncertain. 

Trucking tech startup aifleet raises $14M

(Photo: aifleet)

Austin, Texas-based trucking technology startup aifleet announced the closure of its latest venture funding round of $14 million as it continues to scale its proprietary driver utilization solution. FreightWaves’ Grace Sharkey wrote, “The round was led by Ibex Investors with participation from Obvious Ventures, Gerdau Next, Compound, Cooley and individual investor Tom Williams. The company has raised $35 million since 2021.” According to a recent snapshot from the FMCSA SAFER database, as of Sept. 26, aifleet had 147 power units and drivers. 

Regarding the routing optimization solution, co-founder and CEO Marc El Khoury told FreightWaves, “We put all of this freight into our solution and ask it to draw routes that not only connect lane to lane and then back home but connect based on drivers’ schedules for delivery and the time for the next pickup. … There is no good lane or bad lane or good deadhead or bad deadhead. There is only a focus on what is a good route for the driver to maximize their profitability.”

Compared to other FreightTech solutions providers, aifleet owns and manages its assets, which has allowed it to grow its revenue 4x since starting in 2021. 

El Khoury added, “It’s just so easy to build technology and say trucking companies just don’t know what they’re doing. And so people build technology that way and nobody knows how to utilize it. Who is that helping? We need to know how to operate better than anybody else. … People ask, ‘Is this strategy the best thing to do because it is so hard?’ And our response is, ‘If you want to make a change, you have to go knee-deep,’ and that’s what we are doing.”

FreightWaves SONAR spotlight: Spot market rates lack thrust for takeoff

(Chart: FreightWaves SONAR)

Summary: On Tuesday, the forecast for all-in spot market rates nationwide remained stagnant as labor strike-related disruptions in the automotive sector collided with a market weighed down by excess truckload capacity. The FreightWaves National Truckload Index (NTI) remained flat over the previous seven days at $2.28 per mile all-in after a slight bump to $2.30 per mile on Oct. 3. For the month, the NTI is down 2 cents per mile from $2.30 to $2.28. Removing an estimated fuel surcharge, spot market linehaul rates (NTIL) remained flat at $1.58 per mile for the week. Spot market expectations for the next 28 days remain flat, with spot rates forecast to drop 1 cent per mile all-in to $2.27 per mile by Nov. 7.

The spread between initial reported contracted rates and spot linehaul rates remains historically elevated at 81 cents per mile in favor of contracted loads. Flat spot market and contracted rates continue to fuel this gulf, but upcoming RFP awards from Q3 bids may narrow this gap if shippers are able to extract greater rate concessions from incumbent carriers in spite of trucking entering its traditional peak season. 

Benchmark retail diesel price falls, but Israeli conflict boosts futures (FreightWaves)

40-year-old Montana trucking company, freight brokerage shutters operations (FreightWaves)

How long will used trucks be a buyer’s market? (Commercial Carrier Journal)

FMCSA expects to issue broker final rule in March (Land Line)

Michigan-based Sunset Logistics abruptly ceases operations (FreightWaves)

FMCSA extends protections for under-21 harvest haulers (FreightWaves)

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The second annual F3: Future of Freight Festival will be held in Chattanooga, “The Scenic City,” this November. F3 combines innovation and entertainment — featuring live demos, industry experts discussing freight market trends for 2024, afternoon networking events, and Grammy Award-winning musicians performing in the evenings amidst the cool Appalachian fall weather.

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