FREIGHT MARKET TRENDS
commercial driver licenses and En- glish-language proficiency standards for professional drivers. Croke suspects the resulting sensitivity to seasonal trends has helped rates since. “What’s creating the lift is the normal seasonal post-Mother’s Day increase in produce all the way through to July 4, and the World Cup,” Croke said. “So, if capac- ity is exiting, and then you get this little bump in demand, which we always do, it’s maintained the rates that we saw.” Déjà vu Croke views this rate trajectory as mir- roring what was happening before the pan- demic-era freight boom. He also has seen some recent improvements in contract flat- bed and reefer rates based on earlier posi- tive spot trends in December 2025. “The U.S. economy has handled the shock of high gasoline and high diesel prices much better than what people were expecting three months ago,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State Uni- versity. “The consumer has been spend- ing reasonably, it hasn’t pulled back, and one of the reasons that helped was the tax refunds.” Dhawan credited recent changes in the tax law for helping to bolster refunds this year. Consumer spending was further sup- ported by the stock market recovering some earlier losses in the past few months. “Going forward, the spending power of the consumer depends upon the fire- power of their portfolio,” Dhawan said. “The mood, on the other hand, is a sepa- rate issue.” Consumer complications The University of Michigan’s Consumer Sentiment Index reached an all-time low of 44.8 in May. It did, however, report a modest recovery to 48.9 in preliminary June results due to early easing in gasoline prices. The Conference Board Consumer Confidence Index dipped 0.7 points to 93.1 in May. Dhawan noted much of this divide is due to a lack of growth in white-collar jobs. “That is the reason that the consumer sentiment numbers are low, because peo- ple are looking at their future firepower from the wage and income side,” Dha- wan said. Dhawan added that consumers are worried about future job prospects and whether there will be opportunities for their kids and grandkids. This is further complicated by artificial intelligence be- coming more of a threat to entry-level and low-skilled jobs. He suspects corpo- rate hiring, which has been slow as lead- ers invest in AI, will help determine the trajectory of consumer spending. “The Hormuz spat, and what’s going on in Europe, and what’s going to come as … second- and third-round e ects of high oil prices of the last three months could make this corporate sector, that is already a bit gun-shy, more skeptical about adding to their labor force,” Dhawan said.
truckload perspective. They’re going back to a full truckload, which are push- ing those bigger shipments back into the LTL market.” FedEx Freight, which is set to align to a calendar-year reporting schedule, is opti- mistic about the prospects for the freight market, Smith and Witt said. While volume was softer in the most re- cent quarter, the trend line is now revers- ing, the company’s top executive said. Smith told T T in late May that the freight market’s recovery would see bumps in the road. But in the call with analysts, he noted: “We are seeing some pretty good encour- aging signs that demand conditions are beginning to stabilize and even increase across the industry. The leading indica- tors, as you well know, that we watch are the [Institute for Supply Management] manufacturing activity, trends in the truckload spot rates and capacity, and the early signals — the demand is showing positive signs across the industry.” FedEx Freight now expects revenue growth through the rest of 2026 in the range of 4% to 6%, modestly above the ex- pectations provided at its first investor day in April, which Witt said was due in part to the “dynamic fuel environment.” The last average nationwide diesel price before the U.S. and Israel began bombing Iranian targets on Feb. 28 was $3.809 a gallon, according to Department of Energy data. The average reached $5.596 a gallon in the week that started May 18 and was last estimated at $4.832 a gallon June 22. While benchmark crude oil futures prices are now below prewar levels, the diesel supply chain is expected to take longer to readjust. Revenue is also expected to see a boost from a more focused FedEx Freight, whose sales force will now pursue only LTL customers and has been tasked by Smith and the management team with targeting higher-margin verticals. The executives laid out the pillars of that plan of attack during the April inves- tor day. FedEx Freight aims to improve its market share in the small- to medium-size business, grocery, healthcare, data center and energy segments. FedEx Freight has only minimal pene- tration in the $9 billion small- to medium- size business sector of the LTL market, Chief Specialized Services and Commer- cial O cer Mike Lyons said in April, with a high percentage of revenue from large corporate customers. “Basically, we’re doing zero business in the food and beverage marketplace,” Smith told TT in late May. “We feel like that that’s one of the markets that does good — whether the market is good or the market is down — due to the fact that peo- ple are going to eat and people are going to drink.” The company will also benefit from the relatively low level of unbundling of con- tracts inked before the spino . Some 10% of the company’s revenue in- volves bundled contracts and has discounts
averaging between 1%-3%, which Bank of America analyst Ken Hoexter said was sig- nificantly smaller than expected.
Truckload tightness boosts FedEx Freight backhauls, revenue By Keiron Greenhalgh Sta Reporter Truckload market tightness as a result of capacity constraints boosted FedEx Freight earnings in the three months that ended May 31, according to company executives. FedEx Freight — the largest less-than- truckload carrier in North America — benefited especially from spillover in backhaul lanes with heavier shipments, the executives said during the company’s fourth-quarter fiscal 2026 earnings call June 25. “We are seeing some of the truckload pricing reach levels that now we are a very good option for that,” Chief Financial O - cer Marshall Witt told analysts and inves- tors. “It is benefiting not only our balance, but it is also benefiting our revenue.” FedEx Freight posted $2.41 billion in revenue in the most recent quarter, a 4.8% increase compared with $2.30 billion in the year-ago period. The three months through May 31 were the Memphis, Tenn.-based carrier’s final quarter as part of FedEx Corp. following its spino from the parent company June 1. The increase in revenue was primarily driven by the favorable impact of fuel sur- charges and higher weight per shipment, although this was partially o set by lower volume and a slight decline in base reve- nue per hundredweight, the company said. The carrier’s weight per shipment averaged 948 pounds, a 3% increase com- pared with 920 pounds in the year-ago period. FedEx Freight, which now trades un- der the FDXF ticker, posted average daily shipments of 86,734 in the most recent quarter, a 5.9% decrease compared with 92,129 a year earlier. Revenue per ship- ment averaged $415.22, an 11.5% in- crease compared with $372.55 in the year-ago period. Capacity in the truckload sector has tightened since the start of 2026 as a result of federal government enforcement initia- tives on non-domiciled commercial driver licenses, the closing of some driving schools and visas for overseas drivers. As a result, FedEx Freight CEO John Smith told analysts: “We have seen some of those [truckload] volumes transition over back to us. The thing about it is, it’s really helping us not only in backhaul, but some of those larger shipments that would normally run as milk runs from a
Freight tonnage slows as tighter capacity drives May market By Connor D. Wolf Sta Reporter Freight tonnage continued to slow in May after a strong start to the year, but tighter capacity helped give the market some lift despite softer volumes. The ATA For-Hire Truck Tonnage Index contracted 2% from the previous month to 114.4. The reading was 0.6% above the number reported in May 2025. The report highlighted that tonnage was up 4.7% during the first three months of the year but slipped 2.9% the past two months. Tonnage during the first five months was up 2% compared with 2025. “Despite the recent decreases, the in- dex increased from year-earlier levels for the sixth straight month,” ATA Chief Economist Bob Costello said, “which is pretty good considering the bulk of freight drivers, like manufacturing and construction, remain lackluster.” Mixed signals The Cass Freight Index reported that shipments increased 3% sequentially to 1.041 from 1.011 but came in 1.2% below the 1.054 reading last year. It was the smallest decline in about 18 months. The report highlighted that many spot indica- tors suggest improving freight demand, with certain sectors seeing growth. The Logistics Managers’ Index, mean- while, decreased 0.4 points from the previ- ous month to 69.5 in May. The report noted that the rate of expansion was down from last month, but this was still the second-fast- est level of growth since March 2022. DAT Freight & Analytics reported truckload spot rates moved higher de- spite freight volumes declining in May. The increase came as several factors dis- rupted the supply of available trucks, in- cluding International Roadcheck week, Memorial Day weekend and ongoing driver enforcement. The DAT Truckload Volume Index fell sequentially across all three equipment types. “May was, on the spot market, a month of records, but largely caused by Road- check week,” said Dean Croke, principal analyst at DAT. “Since then, dry vans and reefer have been relatively flat. So, the story is that we had record gains early in the month, and then we’ve held on to those gains all the way through here into the end of June.” The Department of Transportation tightened regulations on non-domiciled
July 2026, Issue 1 • Transport Topics 22
Made with FlippingBook Ebook Creator