YardDog Market Watch - December 11, 2024

THIS WEEK’S TOP 3
Stats to Know

1) Total intermodal shipping volume rose 9.8% year-over-year in Q3 of 2024

• Continued Growth: This is the fourth consecutive quarter that shows positive year-over-year growth for intermodal shipping volume. And the Intermodal Association of North America (IANA) expects this to continue through the remainder of the year.

• Intermodal Shipping is Gaining Traction: This is mostly due to alignment with cost, capacity, and sustainability company goals. By combining rail for long-distance hauls with trucks for shorter routes, it reduces costs, expands freight capacity, and lowers carbon emissions. It also offers reliable transit schedules and supports driver retention by easing long-haul demands.

• What This Might Mean for IOS: IOS demand near rail terminals and distribution hubs increases, particularly for container storage, trailer parking, and staging could increase. The growing focus on sustainability and cost efficiency boosts the value of well-located IOS properties that support these objectives. IOS properties could play a larger role in streamlining freight flow and minimizing supply chain delays.

2) S&P Global’s U.S. Manufacturing Purchasing Managers' Index (PMI) rose to 49.7 in November — this signals improved demand conditions

• Manufacturing Confidence: The PMI increase following Donald trump’s presidential election win reflects manufacturer’s sentiment of confidence as the PMI numbers neared stabilization. This implies optimism for future growth, despite ongoing challenges.

• Industry Performance: While sectors like food and beverage, electronics, and electrical equipment saw growth, 11 industries experienced a contraction, with notable declines in printing, plastics, and transportation equipment.

• Tariffs and Economic Outlook: While manufacturers remain positive about an incoming business-friendly administration, the threat of tariffs introduces uncertainty.

3) Dry van spot rates in Q4 2024 are tracking 7% higher year-over-year, according to a report by ACT Research

• Freight Market Dynamics: Spot rates have shown year-over-year growth since July, signaling the end of the previous freight cycle and the start of a new one. Contract rates, which typically lag three to four months behind spot rates, are also rising consistently for the first time in three years.

• Shippers and Rate Parity: Shippers still benefit from an 8.7% discount in the spot market compared to contract rates, though this gap is tightening. Replacement contract rate differentials hovering around 0% suggest early signs of a market shift.

• Carrier Challenges: Despite favorable rate trends, carriers faced significant drops in Q3 operating income, indicating lingering challenges. We appear to be in the early days of transitioning out of current freight "limbo" conditions and into a stronger growth cycle.

CHART OF THE WEEK 
Port Cargo Volumes

Supply Chain Dive’s monthly tracker shows total volumes for the top twelve ports in the chart through 2023. For more real-time data, check out their thread at: https://www.supplychaindive.com/news/largest-us-ports-by-volume-month-coast-cargo-trends/693493/.

NOTABLE QUOTES
They said…

“The three key words for U.S. trade in 2025 are ‘uncertainty,’ ‘uncertainty’ and ‘uncertainty,’ and add ‘disruption’.” 
- Mary E. Lovely, Anthony M. Solomon senior fellow at the Peterson Institute for International Economics

“The muted rebound in payrolls in November after October’s hurricanes and strikes implies that the underlying trend has continued to deteriorate.”
- Samuel Tombs, chief US economist at Pantheon Macroeconomics.
This bolsters the case for the Fed to cut rates again.

RUMOR HAS IT
We’ve heard…

• Truck terminals are back in style (or at least seemingly favor)! With most indicators pointing to the freight recession being over, folks appear optimistic about the future of vacant or rundown truck terminals.

Make sure you’re subscribed to the newsletter where we’ll cover these stories and more in future editions!

Please note that these are just rumors we’ve heard in the market. We are not representing any of these claims as true or false, and will cover them in greater detail when more sources and information is available.