Shipper freight spending jumps 32.1% in Q3 on 0.5% more volume, U.S. Bank index shows

Shippers paid far more to move roughly the same amount of freight last quarter. The U.S. Bank Freight Payment Index for the third quarter, released Oct. 29, shows shipper spending up 32.1% from a year earlier, the biggest annual jump since 2021, while shipment volumes rose just 0.5%.

Spending was up 5.2% from the second quarter, against a 0.4% quarterly gain in shipments, according to U.S. Bank. The index tracks actual payments for domestic truckload and less-than-truckload freight.

Where the money went

Every region saw spending rise. The Southwest led at 51.6% year over year, even though its shipments fell 2.6% over the same period. The Southeast was up 32.7%, the West 31.1%, the Northeast 25.4% and the Midwest 25.3%, per the bank's regional table.

U.S. Bank pointed to tighter carrier capacity, stronger carrier pricing power and high diesel. The report put the national diesel average at $6.53 a gallon on Sept. 21, according to Truck News' summary of the index. In the Southwest, the report said enforcement actions cut the number of drivers hauling domestic loads.

Truck News, summarizing the same report, said DAT spot rates excluding fuel averaged $3.11 a mile in the quarter, up 43.3% from a year earlier, and contract rates excluding fuel averaged $3.25 a mile, up 26.8%. Fuel averaged 79 cents a mile, up 71.7%.

American Trucking Associations chief economist Bob Costello said "outlays are rising much faster than freight volumes," in the bank's release.

What it means for carriers

This is a supply story, not a demand story. U.S. Bank's own read is that volumes barely moved, so the pricing power carriers hold comes from fewer trucks and higher operating costs. That helps carriers with contract freight repricing now, but fuel is eating a large share of the increase. At 79 cents a mile in the bank's figures, it is a bigger line item than a year ago.

The index also notes that manufacturing growth leaned on AI-related production, defense and commercial aircraft, and that housing starts fell 3.9% from the second quarter. Broad industrial demand is not what is lifting rates.

What shippers and brokers should watch

Shippers with fresh bids should expect carriers to hold firm, since spending rose even where volumes fell. Brokers face squeezed margins when spot costs climb faster than contract rates, though in this report contract rates rose 6% on the quarter and spot rates 3%, per Truck News.

The report said it could not confirm whether cross-border enforcement helped lift Southwest rates without more data. Watch the next index, due after year-end, and the Nov. 10 EIA Short-Term Energy Outlook for the diesel direction.

Sources: U.S. Bank Freight Payment Index, Truck News.