ALG Connect | Freight Costs Rise as Truck Capacity Tightens

U.S. shippers paid considerably more to move freight in the third quarter, even as shipment volumes barely grew. Tighter carrier capacity, higher diesel costs and rising truckload rates put pressure on transportation budgets heading into the holiday season.

Freight spending outpaced shipment growth

The U.S. Bank Freight Payment Index showed that shipper spending rose 5.2% from the second quarter and 32.1% from a year earlier. Shipment volumes rose just 0.4% quarter over quarter and 0.5% year over year. Spending increased in every region tracked by the index, while shipment trends varied by region. The 32.1% figure measures aggregate spending across the index. It captures a broader change than the rate increase a shipper might see on any one lane.

Spot and contract rates both moved higher

Truckload data from DAT, published in the U.S. Bank report, showed that both spot and contract rates increased from the second quarter. Contract rates rose more than spot rates over that period, while spot rates posted the larger increase compared with a year earlier.

Source: DAT truckload data published in the U.S. Bank Freight Payment Index. Figures are weighted averages across dry van, refrigerated and flatbed shipments.

Retailers reported pressure on both cost and timing

Amazon’s third-quarter shipping costs rose about 11% year over year as paid units increased 12%. The company cited higher fuel and long-distance trucking rates, while better inventory placement and package consolidation helped offset some of the added expense. Tractor Supply cited higher transportation and fuel costs as contributors to lower gross margins. Carter’s reported a different challenge. Port congestion and limited container availability left inbound inventory below plan.

What to watch through year-end

The third-quarter figures suggest that freight costs can stay under pressure even without a broad rebound in shipments. Through peak season, the key indicators will be diesel prices, whether spot and contract rates continue to climb, and how easily shippers can secure trucks on the lanes they need. For time-sensitive freight, carrier availability on a specific route and pickup date can matter more than what the national average is doing.