Freight shipping, spending down in Q1 despite surge in shipments of groceries, health care supplies

Even as demand for shipments of food, medical supplies and household goods soared in the second half of March, U.S. Bank data show that the number of shipments overall and the amount spent by companies that ship goods slowed during the first quarter of the year.

U.S. Bank’s 2020 Freight Payment Index, a quarterly analysis of national shipments and spending, shows that shipments in the first quarter of 2020 fell 1.8% vs. the fourth quarter of 2019, and spending was down 3.7% vs. the previous quarter. 

A notable exception was the Southeast region, where shipments were up 10.5% over Q4 2019, and spending was up 5.5% when compared to the previous quarter.  

Shipment Index 

The U.S. Bank National Shipment Index fell 1.8% in Q1 – a reduced rate of decline from the fourth quarter of 2019, which showed a 4% decrease in shipments over the prior quarter.

According to the American Trucking Associations, trucking operators that move groceries, household goods and medical supplies outperformed the index, while carriers who haul goods for restaurants and auto plants saw their freight dwindle rapidly. The increase in shipments for “essential” goods did not provide enough of a bump to overcome the decline in shipments of other goods.

Shipment Index 

The U.S. Bank National Shipment Index fell 1.8% in Q1 – a reduced rate of decline from the fourth quarter of 2019, which showed a 4% decrease in shipments over the prior quarter.

According to the American Trucking Associations, trucking operators that move groceries, household goods and medical supplies outperformed the index, while carriers who haul goods for restaurants and auto plants saw their freight dwindle rapidly. The increase in shipments for “essential” goods did not provide enough of a bump to overcome the decline in shipments of other goods. 

Spend Index 

Spending by shippers was down 3.7% vs. the previous quarter (after falling 2.7% in Q4 2019).  

Weakness in spending during the first quarter was due to three factors: 

• As COVID-19 cases began to increase in China in late January, shipments into U.S. ports declined significantly – resulting in fewer goods to move and reducing spending. 
• As demand for freight contracted, shippers began to seek lower rates from their carriers.  
• Lower fuel prices, which resulted in reduced fuel surcharges. 

Regional data 

• Southeast: The first quarter of 2020 was particularly strong: shipments were up 10.5%, and spending was up 5.5%. More than any other region, the Southeast regularly experiences surges in demand for household items like food, toilet paper and cleaning supplies in response to hurricanes and other severe storms. As a result, supply chains and trucking operators have more experience with rapid shifts in freight. In addition, the late start to stay-at-home orders in this region may have allowed for increased freight shipping activity.
• Midwest: Shipments were down 2.3%, and spending was down 5.8% in the quarter. Freight in the agriculture sector has been low for the last six quarters due to fewer exports during the trade war with China and a downturn in the factory sector. COVID-19 and the resulting business shutdowns caused many factories in the region to close, hurting motor carriers who haul freight from these factories.
• Northeast: Shipments were down 6.9% and spending was down 8.0% percent in the quarter. Like the Midwest, freight was adversely affected by the shutdown of factories and other businesses. Little freight left the region, hurting freight levels and revenue for carriers.  
• West: The West saw the worst impact among all regions for trucking volumes and spending during the first quarter. Shipments were down 14.5% -- the lowest level in three years – and spending was down 10.4%. A significant part of truck freight in the West is related to international trade with China. Trade was down considerably as a result of continued trade wars and as the Chinese economy shut down to tackle COVID-19. As a result, freight coming into the West Coast ports declined, and trucking volumes were severely impacted. The West also was the first region in the U.S. to directly experience COVID-19 cases, which hurt truck freight.
• Southwest: Shipments were down 4.1%, and spending was down 2.1% in the quarter. The region was likely impacted by the fallout in the West. Falling oil prices had a bigger impact in this region, hurting shippers and carriers that move energy products.

“Although spending and shipments were down, we saw an improvement in some of the numbers from last quarter – likely the result of a strong surge in shipments around food, cleaning and medical supplies, countered by a downturn in other sectors,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “We are working with both our shipper and carrier customers to help them manage cash flows and liquidity, as they navigate these unprecedented circumstances.”  

To see the full report including in-depth regional data, visit the U.S. Bank Freight Payment Index website. 

Written by Kristin Kelly of U.S. Bank. 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 more than $28.8 billion in 2019 for some of the world’s largest corporations and government agencies.