Narrator [00:00:04]:

Welcome to Supply Chain Now, the voice of global supply chain. Supply Chain Now focuses on the best in the business for our worldwide audience, the people, the technologies, the best practices, and today's critical issues, the challenges and opportunities. Stay tuned to hear from those making global business happen right here on Supply Chain Now.

Scott W. Luton [00:00:32]:

Hey, good morning, good afternoon, good evening, wherever you may be. Scott Luton and Tandreia Bellamy here with you live on Supply Chain Now. Welcome to today's livestream. Hey, hey, Tandreia, how you doing today?

Tandreia Bellamy [00:00:43]:

Great Scott. Just happy to be here.

Scott W. Luton [00:00:46]:

We are happy you are here as well. We've got an incredible show teed up, and we may just talk about some football prognostications. We'll see if those nine are signed up. That key talent we were talking about pre show, huh?

Tandreia Bellamy [00:00:58]:

Okay, let's do it.

Scott W. Luton [00:01:00]:

Hey, all year, it's always football season here. But hey, folks, on this episode, we're going to be sharing key insights from one of the leading transportation industry resources, the US Bank Freight Payment Index for Q2 2024. We're also going to be gaining key takeaways from the index and all the data there within, including what's going on out in the marketplace from, I'll count them, three business leaders, all with their finger on the pulse of industry. All right, so, Tandreia, you know this. We've talked about this. One of our longest running series here comes to you. Every quarter, US Bank is one of the leading financial institutions involved in powering the transportation industry forward. Now, as I mentioned, each quarter, the US Bank Freight Payment Index offers compelling insights based on the data.

Scott W. Luton [00:01:47]:

Tons of data truckload by the container load that's processed through US Banks. $42 billion worth of transactions it handled in 2023 alone. And that's one of the biggest reasons why US Bank is such a great resource for this information that many business leaders can leverage out in the marketplace. Kind of roll it up into their decision making processes, especially as we're trying to get a sense of what's going on. Tandreia, that is a ton of data to glean some powerful insights from, huh?

Tandreia Bellamy [00:02:16]:

It is, because it's the way it's handled and the way it's gathered. It is fact. This is what was spent. This is where it was spent. And it's excellent resource because you don't have to worry about any prognostication this occurred. And they present it in a way that is very easy to digest.

Scott W. Luton [00:02:38]:

That is right. All right, Tandreia, we ready to dive in?

Tandreia Bellamy [00:02:42]:

Absolutely. Let's go.

Scott W. Luton [00:02:43]:

Scott, you're always ready, my friend? All right, so I want to welcome in our featured guests here today, starting with Bobby Holland, director, freight business analytics at US Bank, and longtime friend, industry dynamo Lee Klaskow, senior analyst, transportation and logistics at Bloomberg Intelligence and host of Talking Transports podcast. Hey. Hey, Bobby. Great to see you again. How you doing?

Bobby Holland [00:03:08]:

Good to see everybody this morning.

Scott W. Luton [00:03:10]:

You as well. Back by proper demand, Bobby Holland. And he's joined by the Caped Crusader, Lee Klaskow. Lee, how you doing?

Lee Klaskow [00:03:18]:

I'm doing well, thanks. My cape’s in the dry cleaner, I guess, but I'm doing well.

Scott W. Luton [00:03:24]:

I love it. LogisticsLee, LogisticsLee. We got a lot to get into here today. All right. So, Tandreia, we were talking pre-show. Before we get into all about the domestic freight industry and what's been going on and offering our folks some powerful takeaways, I want to ask each of y'all, what's one of the coolest things you've done this summer? Okay. And, Lee, I'm a stick with you.

Scott W. Luton [00:03:45]:

I've been doing my homework on. You've been here, there, and everywhere. What's one of the cool thing, coolest things you've done all summer, Lee?

Lee Klaskow [00:03:51]:

Well, I got two cool things. One, I got up close with a puffin in Iceland, which was pretty cool to see those little birds. And two, the last two times we've played golf, I've shot, like 10, 11 strokes below my handicap. So for a golfer, that's a hack. That is a quite an exciting accomplishment for myself. I do say so.

Scott W. Luton [00:04:12]:

Well done. So next time, we expect you to say you played golf with the puffins in Iceland. That'd be nice, but Iceland is so cool, man. I'm very jealous. Bobby, ask me. Tough to top. What's been one of your highlights this summer?

Bobby Holland [00:04:25]:

I can't top that. However, the coolest thing I've done so far this summer took a trip to Montreal a few months ago. That was fun. Got to, basically Europe on the budget. But the coolest thing yet to come for me this summer is I get to visit my kids and grandkids next month in Denver, Colorado.

Scott W. Luton [00:04:44]:

Wonderful, wonderful. You might can time it with a Broncos game out there. Who knows? We'll have to compare notes about Montreal. Between that and Toronto, I've heard wonderful things. I'm jealous of both of y'all's travel. Tandreia, speaking of travel, between what Lee and Bobby's talked about, I've been tracking you as well. You've had some wonderful trips this summer. What's been one of your highlights though.

Tandreia Bellamy [00:05:04]:

One of the coolest things is I was actually on Mount Etna about a week before it started erupting. I have lava rock that I, you know, got for my nieces. But to be dormant and now to see the havoc is reckoned was amazing.

Scott W. Luton [00:05:22]:

Wow, okay, that sounds dangerous. Tandreia, I've got a whole new profound respect for you and your action travel, I'll call it, huh?

Tandreia Bellamy [00:05:31]:

It was great. Had a volcanologist that was there explaining what was going on, so he would have given us some warning.

Scott W. Luton [00:05:37]:

Okay, volcanologist. And we're going to dive in more to that after today's show. Okay, so Bobby, this is what we want to start with, right? We go back. I think we've been doing this together probably almost five years now. Love your quarterly insights and perspective, especially how data driven, right. That you bring it to us here today. We've had a lot of feedback from our global audience. I want to start with a little sneak peek from you on some of what folks can expect from the second quarter.

Scott W. Luton [00:06:03]:

2024 Freight Payment Index. What are we going to be diving into, Bobby?

Bobby Holland [00:06:07]:

Okay, so there are a few things we're going to look at. We're going to look at what we saw that might indicate that we're approaching the bottom of the freight market. We're going to find out what might be causing or fueling a shipper spending decrease. They're also going to just look at any other data driven and market driven insights so that we can better understand the domestic freight market. So we're going to look at those three things in various forms.

Scott W. Luton [00:06:31]:

Love it, folks. Context and data driven expertise by the truckload here today. Appreciate that, Bobby, and thanks for being here with us. Lee and Tandria, I want to start with you. Logistics. Lee, great to have you back with us. You've been with us before, always wowing our audience. Tell us, if you would remind the three people out there that don't know about what you do, remind us about your role and your talking transports podcast that's on the move.

Lee Klaskow [00:06:57]:

Sure. So I work for Bloomberg Intelligence. Bloomberg Intelligence is Bloomberg's research arm. We have over 500 analysts and strategists globally, making us one of the biggest research shops around the world. At Bloomberg Intelligence, we cover pretty much all asset classes. So if it's an equity, a fixed income, credit, currencies, and we also provide strategic analysis as well. So what I do for them is I'm their senior analyst. I've been here for 14 years.

Lee Klaskow [00:07:26]:

I cover all modes of transportation. So trucking, rail, marine, shipping free pls. I cover about 20 individual names. Our research is available on the Bloomberg terminal for our subscribers, which I think we have something like 350,000 global subscribers. And you also can find some of our work that goes across Bloomberg.com dot the podcast. It's available where all good podcasts can be found. I'm sure you've heard of all the channels like Spotify and Apple, and it's been fun. I've been doing it for about a little less than a year.

Lee Klaskow [00:07:59]:

We're coming up on our 50th episode. I talked to a lot of C suite executives within the transportation space, within trucking. We've had Werner CEO on, our best CEO on, Schneider's CEO on. So it's been a lot of fun for me. And you know, I would suggest anyone that's interested in not only what's going on in the transports markets, but you know, what might be around the bend. It's a great place to visit.

Scott W. Luton [00:08:25]:

It is. I'm a big fan. Congrats on your upcoming 50th episode, folks. If you've never created podcasts, you may assume that it's pretty easy to knock out four or five dozen podcasts. It is challenging, especially to do it consistently well at an incredible level. So Lee, congrats, big fan. Appreciate you being here. And Tandreia, I don't know about you, we talked about how Bobby and Lee's got, you know, finger on, all three of you have a finger on the pulse.

Scott W. Luton [00:08:51]:

I think Lee's got maybe all ten digits on the pulse of industry is what I heard there. Tandreia.

Tandreia Bellamy [00:08:55]:

Absolutely. He's got it all covered, every angle.

Scott W. Luton [00:08:59]:

That's right. And if you can find it out there somewhere, Lee, we've talked about this before. I loved it when you jumped in the cab of the tractor trailer and tried to back it up amongst all those cones. That is also harder than it may look. So good stuff there. Logistics leap. All right, so Bobby, great to have you back. As I mentioned, you know, for the handful of viewers also, that may, this may be the first time they've tuned in and checked out our, this quarterly conversation we have, if you would share briefly what the US Bank Freight Payment Index is, what it analyzes and kind of how it works.

Scott W. Luton [00:09:30]:

Okay.

Bobby Holland [00:09:31]:

Yeah. The US Bank rate payment index is a quarterly publication. We use a chain based index comparing, you know, quarter over quarter and year over year metrics. We compare on a same store sales approach. So we mathematically balance out each quarter in comparison. So that is more reflective, a reflective projection of the marketplace rather than you know, the US Bank business climate, it's basically, in a nutshell, it, like I said, quarterly and we measure change and that's what we'll talk about.

Scott W. Luton [00:10:06]:

I love it. And in particular, I love the breaking it down in the region by region. That's one of my favorite parts every quarter to kind of see what resonates with me. You know, I'm based in southeast, me and Tandreia both are. And it's kind of cool to compare and contrast what we're seeing locally with, with different regions in the country. A lot of good stuff there. All right, so where are we going next? So, Lee, when you look at big pieces of data that's driven by even bigger pieces of data, like the US Bank Freight Payment Index and plenty of other resources out there, how do you and other industry leaders like yourself use resources like this in your day to day?

Lee Klaskow [00:10:41]:

As an analyst, you know, as an industry analyst and a company analyst, I have to do top down and bottoms up research. So what that means is when I'm doing top down, I start at the economic level where the economy's going, and go down to the industry and then the individual companies, and they also have to do the opposite where you start with the individual companies. What I would say is the US Bank indexes provide you somewhere in between there, so it gives you a good sense of what's going on within the industry. And I can see if that aligns with what we're seeing with the economy and what the individual companies are saying. So I think it's a great place to start when you're looking at the freight transportation markets.

Scott W. Luton [00:11:19]:

Well said, Lee. Well said. And Tandreia, you know, it'd be really nice if all the various data sources out there all pointed to the exact same stanza of the exact same song. But sometimes the data doesn't always agree. But nevertheless, as Lee was talking about, leaning into it and becoming more educated on what some of these smart analysts and troves and troves of data point to, really critical to being a supply chain leader here in 2024 and beyond.

Tandreia Bellamy [00:11:46]:

Absolutely. Some of the insights you gain, some of the correlations that you may not automatically think of are pointed out in the freight payment index, and it really does give you a good foundation, as you're forecasting for your particular company of additional things that you need to look at as well as the hard facts that are presented there.

Scott W. Luton [00:12:05]:

Yeah, well said. And, you know, one of my favorite parts that you and Lee both are kind of implying is the conversations that it can help drive you get a group of folks from, from different parts of organization, and you kind of go through it. And it's interesting. It's like having a, sometimes a good old family fight at the Thanksgiving table. If y'all, y'all ever been a part of one of those very passionate people out there across global supply chain. All right, Bobby, pressure zone. There's more than seven key takeaways, but the seven that we picked here today, I think we all would agree, if our listeners and viewers leave this conversation with anything in mind. These seven key takeaways, I think, are amongst the most critical things.

Scott W. Luton [00:12:46]:

So let's start, let's start with national shipments. What are you seeing there when it comes to national shipments and our first key takeaway?

Bobby Holland [00:12:53]:

Well, first off, I like, you know, the way that you guys put it, you know, this is another set of data points. This is our view on the marketplace. So from a national shipments perspective, what we saw in our data was that shipment volumes were down overall. However, for the first time in two years, we saw quarterly gains and improvement in three of the five markets. So this is one of the indications, as we teased out, that might indicate that the freight market might be nearing its bottom. Consider it like, because like I said, we measure velocity. Consider it almost like pulling up on the yoke and slowing the dive, so to speak. This may be an indication of that.

Scott W. Luton [00:13:34]:

I like it. And, Lee, I'm coming to you next. It reminds me, as Bobby shared three to five, you know, Jack Nicholson had a really interesting role in Mars attacks back in the day. And there's a scene where I'm going to paraphrase him, hey, three out of five. And that ain't bad. Yeah, growth out of three out of five regions. We'll take it. Lee, would you, what are you seeing both in this report and in your perspective across national shipments?

Lee Klaskow [00:13:58]:

Well, as an analyst, I only have to be right 51% of the time. So that's, that's even lower of a margin there. But, you know, what I would say is, would echo what Bobby mentioned. And I think what that's driven by is the inventory destocking cycle appears to run its course. So that means retailers and companies inventories are at a decent level where they're going to start buying again. What we're also seeing is a return to seasonal demand. Demand has been so crazy since the pandemic, so we're coming back to a more normal pattern, which bodes really well going into the second half because demand usually kind of picks up after the summer, getting ready for the holidays. So I would echo what the US Bank index is telling us from our vantage point.

Lee Klaskow [00:14:45]:

We'd be as bold to say as we're past the bottom within the freight market. So we're pretty optimistic about the second half.

Scott W. Luton [00:14:51]:

Okay. Love to hear that. Appreciate that logistics, Lee. All right, so Tandreia, when you think of that national shipments landscape, and somewhat Bobby shared and somewhat Lee shared your thoughts.

Tandreia Bellamy [00:15:02]:

You know, one of the really interesting call outs that I saw on the report was that consumer discretionary spend is now getting split or going more for services and experiences than goods. And that's definitely something that from a long term standpoint, we need to keep a, keep an eye on because the discretionary spend is getting away from consumables. It could have a longer impact. Again, just another data point.

Scott W. Luton [00:15:32]:

Well said. And it's tough to put a, it's tough to strap down a service or experience on the back of a truck. So. Good point there, Tandreia. All right, so Bobby, moving from national shipments to national spend for our second key takeaway. What is that?

Bobby Holland [00:15:47]:

Well, this is the other part of that equation. We saw that quarterly spending by shippers fell faster than the shipment volumes in Q2. So we think this decline was likely more to fewer shipments and falling diesel prices than perhaps any freight rate decreases because we've seen that rates are flat to slightly up. But diesel prices, as an example, after a slight increase in mid quarter, it's hovering at 375, roughly a gallon. That's considered very low considering how high it got even a year, year and a half ago.

Scott W. Luton [00:16:27]:

Well said. Well said. And speaking of diesel, the US Energy Information Administration projects continued softening diesel prices throughout third quarter before a big surge, of course, in fourth quarter. All right, so Lee, when it comes to the national spend and some of the trends there, any thoughts?

Lee Klaskow [00:16:45]:

When you said, speaking of diesel, I thought you're going to say I look like Vin Diesel. But anyway, on the rate side, on the spend side, again, echoing what Bobby says, diesel prices are down. We're also seeing spot rates. Spot rates are down around 3% on average this year. Contract truckload rates are down between eight and 9% this year. But from a sequential standpoint, you are seeing spot rates bouncing off the bottom, which gives us a little confidence, per our earlier statement, that we think we're past the bottom and we're in the early, very early stages of a recovery. I don't want people to get too excited because it's going to be a slow recovery, probably a slower recovery than in past cycles.

Scott W. Luton [00:17:28]:

Logistically, I love your optimism. I love your data driven, frank optimism about the second half of the year. Tandreia, when it comes to the national spend, what else stood out to you based on what you saw in the report or what Bobby has shared here today?

Tandreia Bellamy [00:17:42]:

You know, it's just echoing what's been said on the field. Falling fuel prices have got to be a good thing. But if you don't understand the impact of fuel surcharges on revenues, that's where it can get in a trick box. So again, it's understanding all of the data points.

Scott W. Luton [00:17:59]:

That's right. Which is why you got to lean into them and take the time to uncover and frankly, read and talk about what data is pointing to out there, whether it agrees or it disagrees with each other. Okay, five regions we're going to walk through, right? So the first of the first two of the seven key takeaways were kind of at that national level. Right. Now we're going to go region by region and get a key takeaway here. And we're going to start with way out west. And, you know, Bobby, typically we save the west for last. Right.

Scott W. Luton [00:18:29]:

Right. Wild, wild, wild west. But we're going to start there this time. What are you seeing out there in the west?

Bobby Holland [00:18:33]:

Well, we saw that after eight consecutive quarters of declining shipments, we saw that with housing starts and increased sea and land activity, port activity, that they were up 1.5%. Now, again, that sounds minuscule, but considering, you know, it was in double digit decline, you know, for the last couple of quarters, 1.5 again shows that the dive may be slowing dramatically.

Scott W. Luton [00:19:01]:

Yep. And speaking of port activity on the west coast ports, you know, they've continued to see increases, kind of what you're pointing to, especially, especially in June 2024. Now, some of that is certainly driven by growing concerns around east and Gulf port labor negotiations between USMX and ILA, which impacts some, what, 85,000 workers at over 100 ports in the east and Gulf areas. We got seeing some hedge in there. The current labor deal expires on September 30, 2024, less than two months away. So the heat is indeed on. But, Lee, whether it's any of that or what you're seeing out west, your thoughts?

Lee Klaskow [00:19:36]:

Yeah. So looking at the port data, that's extremely interesting. You see the surge of growth. Again, we're coming off the volatility following the pandemic, and this is, I think these are more normal numbers. In addition to going forward, you're going to see continued freight get diverted to the west coast ports, not only from the east and the gulf, but also some of the western canadian ports because they're dealing with some labor issues of their own and also dealing with some structural things in their network that they're trying to work through as it relates to maintenance.

Scott W. Luton [00:20:13]:

Yeah, good stuff there, Lee. And, you know, I think I read earlier that despite the increases, they're, they're getting better at throughput. I think the port of LA has been able to take out two and a half days of transit time in June, I think June specifically. So growing while getting better. I think, generally speaking, that's a good thing to do.

Lee Klaskow [00:20:30]:

Yeah, I don't know if I could just add on to your point, a good throughput. Not only that the ports in southern California, but around the world has helped push global liner freights down over the last, I think last three weeks they've been down. So they've kind of peaked mid July and they're down around 8% since their peak. So that's good news for shippers that use liners.

Scott W. Luton [00:20:54]:

We'll take all the good news we can get our hands on. Good stuff there, logistics, Lee. All right, so, Tandreia Bellamy, when you think about what's going on out west, your thoughts?

Tandreia Bellamy [00:21:02]:

The first thing that comes to mind is, of course, what's going on in the labor climate. You know, they stopped talking in June. They haven't been back to the table and don't go back to the table until the beginning of September with a contract that ends the end of September. So that is something that could definitely wreak havoc. And we're going to need that additional throughput if those ports do go out on strike.

Scott W. Luton [00:21:26]:

Excellent point. You're talking about the USMX and LA. Yes, right. Yeah, the Gulf and east coast ports. Good. Excellent point. All right, let's keep moving. Let's move around to the southwest.

Scott W. Luton [00:21:36]:

So Bobby, what's for key takeaway number four? What do we see out there in the southwest?

Bobby Holland [00:21:42]:

The southwest usually tends to outperform the other regions, particularly since the pandemic. However, it was a 13.6% drop in quarterly shipments, and that was the largest drop of the regions and the 6th decline since our data Q 120 20. So again, just a lot of changes in the marketplace. And, you know, to your earlier point, this is why we have the regional perspective, because even though we can talk about the national drivers and impacts, they affect each region a little bit differently. And this is one indication of that where we have gains on the west coast, but now we're seeing a double digit decline on the southwest.

Scott W. Luton [00:22:21]:

Okay. So, Lee, let's talk about the southwest. Let's talk about the southwest for a second. What are you seeing?

Lee Klaskow [00:22:28]:

Honestly, I don't get that granule in the regions like this. So, you know, big fan of southwest food. But outside of that, I don't. I don't really know. I'm sure there's. There has to be something specifically going on there, whether it's a manufacturer that, you know, had shut shop for some reason.

Scott W. Luton [00:22:46]:

But I bet you remember those cargo times from four years ago to now. I bet you could write a book on some of the things you have seen, some of the folks you were spoke to, and some of those experiences, huh?

Lee Klaskow [00:22:57]:

Sure. I mean, you know, ships were out waiting to dock for a couple weeks, and, you know, that really disrupted supply chains, and, you know, that created the run on toilet paper and paper towels during the pandemic, as I'm sure we all painfully remember, and the panic that we had of whether or not we'd have this stuff in our homes. But, yeah, you know, the supply chains have come a long way. There seems to been a number of black swan events that, you know, no one could have predicted, whether it's from either from the pandemic or all the way to what's going on in the Red Sea right now. So there's a lot of uncertainty and unknowns that are facing the supply chain. And, you know, that's the reality of supply chains. Right. You just never know what kind of wrench is going to get thrown into the machine and wreak havoc on throughput.

Lee Klaskow [00:23:45]:

And, you know, we've seen one dislocation after the next over the last four years. So it's been definitely an interesting time to cover the space. You never know when good or bad things are going to happen to supply chains.

Scott W. Luton [00:23:57]:

You're right. And going back to that wrench analogy, you don't know which Stanley wrench is going to be thrown into the mix, but you can expect one on a regular basis. It just goes with the territory. Good stuff there, Lee. And by the way, when you write that book, the logistics. Lee, lowdown. Okay. Or it could be your next, your second podcast.

Scott W. Luton [00:24:14]:

We'll work on that with the copyright lawyers later. Tandreia. Southwest, based on what Bobby shared or what you saw in the data, your thoughts?

Tandreia Bellamy [00:24:23]:

Well, I guess this good news, bad news. Bad news is it was still down, but it was down 1.4% in spending compared to being down 16% last quarter. And cross border trucking still remains strong.

Scott W. Luton [00:24:37]:

Yeah, excellent point. You know, it's remarkable what's going on in Mexico. Your reference in the border and across border traffic. It really is. I'm looking forward. We're launching Lee, speaking of podcast Supply Chain Now in Espanol. Coming soon as we relaunch that in September. It's gonna be exciting.

Scott W. Luton [00:24:52]:

You're gonna work on your Espanol style, man. Andrea, you should take me to task. I've been talking about this for five years. Yes, I am. I'm picking up a book, and I'm gonna be fluent soon. Good stuff. All right, so let's move over. Right along.

Scott W. Luton [00:25:07]:

Let's move over to the Midwest. Uh, always one of my favorite regions to, to dive into. Bobby, what are you seeing?

Bobby Holland [00:25:14]:

Well, the Midwest was one of the two regions that, uh, posted a decline in shipment volumes, and the 6% drop was three times larger than that of the next highest region. Again, uh, it's one of those regions that in cases can be stronger, but again, it was double digits before. So 6% decline, it's an improvement. But is it a distinction without a difference? They're still struggling for a variety of reasons.

Scott W. Luton [00:25:42]:

Midwest. Of course, when you think of the Midwest, a lot of folks think of manufacturing, rightfully so. One of my favorite aspects of global business and the Institute for Supply Management, PMI, that data came out. We always look at it every month. Speaking of great data to go compare and contrast, it showed indeed continued contraction nationally in this vital component of industry, with really a considerable drop from June to July. So I'll call, I'll call it. The manufacturer malaise continues a little bit. Of course, Lee referenced that uncertainty out there.

Scott W. Luton [00:26:09]:

A lot of business leaders, CEO's, CFO's, home buyers, you name, all of us are looking to, when are we going to get some relief with these interest rate cuts? Of course, we've got an election to get passed to. We'll all gain some certainty there as well. But back to that. PMI data from our friends at ISM July numbers showed that new orders, employment and production all were down. And unfortunately, we've seen a variety of layoffs in the manufacturing industry here in recent months as well. Lee, your thoughts? Maybe in a greater manufacturing area or midwest. Your thoughts?

Lee Klaskow [00:26:39]:

Yeah, to your point, the ISM, the manufacturing index has been down 20 over the last 21 months. When I say down, it's been contraction territory, which is below 50. We use the ISM in our analysis as a kind of leading indicator for less than truckload demand. There are a few economic indicators that are out there that are actually leading indicators. And we would say the ism is a great one. Usually it lags LTL demand by a couple of months. So all that being said, we expect LTL demand to be weak in the coming months. You know, you did mention jobless numbers.

Lee Klaskow [00:27:15]:

You know, I'm looking at my notes right now because it came out this morning. You know, jobless, jobless claims were 233,000. It was about 7000 below consensus. So that's good news for the job market. You know, and you mentioned interest rates as well. I guess consensus believes that, you know, we're going to have a cut in September. That seems like a high probability. And again, that's, that's a stimulus for freight demand.

Lee Klaskow [00:27:38]:

So that could be a very positive forward demand. And again, late in the second half. And that's part of our, I would say, optimistic outlook on where we're heading over the next six months.

Scott W. Luton [00:27:51]:

Yeah, good stuff there, Lee. More good news from Lee Klaskow. Tandreia. Before I go to you, I want to add one more note on the jobs front since Lee brought it up, and then this may be going in different direction, opposite direction. The jobless rate amongst recent grads is at its highest level since 2016, with one exception. That was the summer of 2020, which, of course, was impacted by the pandemic. All right, so Tanria, when it comes to the Midwest or the manufacturing industry or some of what Bobby or Lee shared there, your thoughts?

Tandreia Bellamy [00:28:19]:

You know, Scott, you mentioned a whole lot of things that are going on that are adding to a lot of uncertainty. And that's one of the regions of the country that they don't have the same fallbacks that some of the other areas do. If you look at what's going on in the housing market, you're getting a lot of people who are moving out of certain areas and they're moving south. And if you look at some of the housing starts that also supports trucking and freight, it aligns. So unfortunately, there's a lot of things going on in the midwest right now that are negatively impacting their economy.

Scott W. Luton [00:28:56]:

Yeah, well said there, Tandreia. Since last time you joined us, Bobby, I made a visit out to my old stomping grounds in Wichita, Kansas, where I spent two years with Air Force and reconnected with a lot of maintainers that keep fleets flying. And I tell you, salt of the earth people and the sheer talent, I mean, you know, they're unfortunately forgotten about often in terms of, like, the maintainers. That's what keeps global industry and certainly global supply chain moving forward. All right, so that was the Midwest. Now we're going to move up to the northeast. Always an interesting region. Your thoughts there, Bobby.

Bobby Holland [00:29:30]:

As you know, the northeast region is generally the smallest region, but it packs the weight of the larger regions because of the population density. And it's also very retail sensitive. And that's one thing that we saw in this last quarter, was that due to steady spending on consumer goods in this region, it had its first increase in quarterly shipments in two years at 2.7%. Again, a small number, but it's slowing the dive and it's. The spend only dipped by one 10th of a percent and that was the smallest decline of the region. So again, the northeast is punching above its weight for a variety of reasons, but mainly, I think Lee mentioned it earlier about the retail reversal starting in other reports that we saw said similarly. So we're seeing that reflected in the northeast numbers.

Scott W. Luton [00:30:21]:

Yep, excellent point there. And hey, to your point, we got to slow the dive before we stop the dive. Right. So I will take any, any small incremental gains is a good thing. I would just add, of course, housing starts is something we look at all the time. We always track. Given its contributions to the economy and certainly freight activity, it's been a bit of a mix, good and bad, for the northeast. Single family housing start saw a drop in the region as well as, I think in the midwest too.

Scott W. Luton [00:30:47]:

But multifamily starts like apartments showed impressive growth in northeast and the midwest. In fact, in some data shows over 20% growth month over month. And new apartment starts, multifamily starts. So that is good news. Northeast. Lee, up in your neck of the woods, your thoughts, whether region or when it comes to construction markets or you name it.

Lee Klaskow [00:31:10]:

Yeah, I'm working out of our New York office right now, so I'm in the heart of the northeast. You know, I think, you know, whether it's the northeast or the whole nation, I mean, the consumer is really going to be key for the freight recovery. The good news is that inflation has been moderating. It doesn't mean it's going down. It's just not increasing as much as it was. And inflation has had a major impact on people's purchasing power. When you've had as much inflation as we've had in the US, in a country where a lot of listeners might not even remember inflation over 1% or 2%, these are very difficult times and it obviously doesn't impact everyone the same. If you're higher on the income bracket level, it doesn't really impact you one way or another.

Lee Klaskow [00:31:54]:

But if you're at the low end of the income level, then you're going to feel it a lot more and you're going to be buying a lot. So I think that as inflation moderates and as wages slowly make up for lost ground, that's a good thing. I also, Tandreia mentioned earlier about services, people buying less services. It's interesting that what we're seeing in earnings season, like Airbnb and Uber talk about people using their services less and less demand. You've had a lot of fast food restaurants saying that less demand. So these things, while they're all negative, bad news, maybe the people that during the pandemic weren't going away, pivoted to going away, and now they're pivoting back to normal. And that could mean maybe they're looking to go to the mall and buy a pair of jeans or something like that, or maybe some anti M pretzels with that. But I view that all as.

Lee Klaskow [00:32:54]:

I know it sounds like it's a negative, but actually I view that as a positive for people buying stuff. And I would never bet against the US consumers desires to buy stuff. We always find a way, whether you have the money in the bank or you're going to do it on credit.

Scott W. Luton [00:33:09]:

A lot of good stuff there. And if you eat too many of those M&M pretzels, you're going to be looking for bigger jean sizes. I've been there, done it. Folks. Be careful. But you mentioned consumer spending. Growing numbers of folks are planning out their expenses and doing more homework in light of inflation. Even though it's slowing, we're not quite at that, that 2% that the Fed's looking for.

Scott W. Luton [00:33:28]:

So while the spending has been resilient, still folks are looking for smarter buys and more summer summer deals, even though we're already here in August. Good stuff there. Late. All right, Tandreia, we were just talking. We just talked about a bunch of things there, but it was all tied back to what Bobby was seeing in northeast and what the data shows. Your thoughts?

Tandreia Bellamy [00:33:45]:

I really don't have anything to add. I think you guys have covered it very well.

Scott W. Luton [00:33:49]:

Okay. All right, well, let's talk about this. Annie M's pretzels are. What's that famous great american chocolate chip cookie when you go to the mall? Which one do you have to have?

Lee Klaskow [00:33:59]:

My kids go for the pretzels and I take the daddy tax and take a, take a, take a bite.

Scott W. Luton [00:34:05]:

Oh, I love it. That daddy tax is important. But Bobby, we're going to wrap up the key takeaways in me and Tangeria's neck of the woods. And that's the southeast.

Bobby Holland [00:34:16]:

What you see in this region, strong import activity at the area ports. And this one because it's generally the tourist area, because of the warm weather and summer activity, they're seeing a lot, not only in the experiences area, but consumer demand for goods is one of the things that we think spurred the second highest increase in quarterly shipments and the second lowest decline in quarterly spend for the southeast. Shipments were up 1.8% and spin was up 0.9%, again slowing the dive. One thing that'll be interesting about this region over the next couple of quarters is seeing how the weather down there will have an impact with all the flooding and the hurricane season seasonality. See what that'll do to that, to that area's numbers over the next quarter or two.

Scott W. Luton [00:35:09]:

Well said. And a quick shout out to the nonprofit allenaid.org, which does wonderful work when it comes to what we see on the Gulf coast and east coast ports with hurricane season or what we see year round. But back to the southeast, Bobby, you let off your key takeaway, some of your perspective there on consumer demand, and it is generally healthy in the southeast. Right. It's all /the splurging I would say that folks do is they pack up their cars and head to the beach. Not many expenses are spared. Right. But one thing you don't need when you head to the beach is you don't have to buy furniture.

Scott W. Luton [00:35:41]:

And that's one segment of industry that's shown quite a drop in the first half of 2024 when compared to the first six months of 2023. In fact, folks are spending about 7% less on furniture during that time period, and that certainly impacts southeast and other parts of the country. All right, Lee, man, you've got all kinds of options here, from furniture to travel and beaches to pretzels and cookie talk. Your thoughts here, Lee?

Lee Klaskow [00:36:07]:

What I would say, I'll probably make lemonade out of lemons here. So we mentioned the storms that we've been seeing. You know, while it's obviously terrible and it's devastating to the people impacted, it can have a positive impact for freight demand because first you, you get the people come in, whether it's, you're delivering water, you know, and then you have the rebuilding. So it's the aid that comes in and then it's the rebuilding. And the rebuilding kind of could have a longer tail because I'll tie in furniture. You know, if your, if your couches are underwater, you're going to need new couches. So, you know, hopefully insurance will you got yourself flood insurance. But the net impact can be very positive to freight demand and it'll be interesting to see, you know, what's going on in the spot market these next couple days.

Lee Klaskow [00:36:52]:

As you know, I guess supplies are being brought into the region and people also, you know, they go to the grocery store, right. And it was kind of light hearted talking about toilet paper and paper towel. I mean, people go to the grocery store and buy everything out just because they're, you know, panicking. And so the stores have to restock their inventory so it can have a positive knock on effect for freight demand.

Scott W. Luton [00:37:15]:

Yeah, well said there, Lee. I appreciate that. All right, Tandria, southeast, our neck of the woods or any of those other topics that Bobby and Lee touched on. Your thoughts?

Tandreia Bellamy [00:37:24]:

I think from a southeast standpoint, the growth and the new building is unbelievable. I know everywhere I go something is under construction, whether it's more townhomes, more subdivisions, more office buildings, which I thought was very surprising. And then from a furniture standpoint, Scott, I think that drop from 22 to 23 was really artificial because you had during COVID everybody was at home doing the remodeling, changing our furniture. I know I did and I don't need to do that again. But then you look at all of the new buildings that are going up and people will need to go in if they're going into a new home, new condo, new whatever, more likely they're going to want new furniture as well. So we probably should see that level out.

Scott W. Luton [00:38:13]:

Tandra, excellent point there. More optimism. Second half the year you're projecting some furniture industry gains ahead, right?

Tandreia Bellamy [00:38:20]:

We won't see the decline that we saw, 23 versus 22.

Scott W. Luton [00:38:24]:

Well said. I'm going to try to, as much as I love the furniture industry, I'm going to try not to contribute to that this year, maybe next year, but in loose house looting household, we're going to try to control those dollars. Let's see here. You said on the front end of your response, Tangerine, about the growth and construction expansion. You know, I drove up to Nashville a few weeks ago from Atlanta, drove through Chattanooga and goodness gracious Chattanooga. I think folks are moving in from around the globe to chatting. It's one of the worst traffic I've, and I've seen it in DC, I've seen in Atlanta, I've seen it in Houston. I've seen it in New York and Chattanooga.

Scott W. Luton [00:38:56]:

Watch out, folks. So lots of growth and expansion. All right. A lot of good stuff here. Got one more question for you, Lee, and you've already spoken to this a couple of times, but I definitely want to really spike the football here loud and clear towards the end of our time. We've talked about that the first time since second quarter, 2022 that three of the five regions that Bobby touches on the freight payment index touches on all reported increases in quarterly shipment volumes. That's just one data signal out of many, many. But, Lee, does your data square with what US Bank shows when it comes to the freight market? You've spoken to how optimistic you are that we may have already hit bottom and the second half of your will be stronger.

Scott W. Luton [00:39:36]:

But any additional thoughts you want to kind of wrap up on there?

Lee Klaskow [00:39:40]:

Yeah, you know, I think it lines up with what they're seeing in the second quarter. You know, we're just coming off our earnings season for the second quarter. So, you know, part of my job, I'm not gonna say it's the fun part of my job, but I have to listen to, you know, every earning call of the companies I cover and some of the companies that are related. And, you know, what we're hearing a lot is that tender rejections on trucking for trucking companies are increasing. So that's a good sign. And then what we're also hearing a lot is that seasonal demand is coming back. So, you know, I'd rather look forward than look back. But, like looking forward, I think we're setting up for a much better second half.

Lee Klaskow [00:40:16]:

It's not going to be like the heyday for truckers like we saw during the pandemic, but you're definitely going to see rates moving off this dollar 55, excluding fuel surcharge per mile rate that we've been stuck in. A lot of that has to do with how fast capacity is going to leave, and capacity has been pretty stubborn to leave. And some of that has to. Has to do with the fact that truckers nowadays, because they have a phone, they're able to get freight a lot easier than they were ten years ago. And also during the pandemic, a lot of these small businesses, because that's what trucking companies are. I mean, not everyone is night swift or JB Hunt. A lot of trucking companies are one person, one truck. And they were able to get some of these small business loans during the pandemic that's kept them afloat.

Lee Klaskow [00:41:05]:

And I think that is kind of winding down. So if so, I think you should start to see not a huge acceleration of capacity leaving market, but a continuing cadence of more and more capacity coming out, which, again, terrible for the people that are impacted, but good for the health of the truckload market.

Scott W. Luton [00:41:25]:

Yep. Appreciate that logistics, Lee. All right, so I'm going to get a snapshot. Just a second. I'm going to get Tangeria and Lee to both that. Maybe give us a prediction for what's ahead. Bobby, I want to circle back around to something you shared earlier, and I want to make sure we accentuate, we amplify this out there because we've been doing this a long time. And I love how you welcome other data perspectives, market perspectives, you name it.

Scott W. Luton [00:41:48]:

I think you welcome that feedback, and I think that's what makes these kinds of conversations more valuable, because we welcome agreeing points of view, we welcome disagreeing points of view, and with that, we have a real conversation. So, Bobby, am I getting all that right? Is that the point you were making earlier?

Bobby Holland [00:42:04]:

Yes. As a bank, you know, we, we try to stick to the data. We do work with an economist, so there is some interpretation in there, of course. And then we all, you know, we do our own research as well and add to that commentary. But generally, we, you know, that's why we don't make predictions. There are things that we'll be looking for, you know, to see how it pans out. But we don't say that we're the one stop shop for all things data in this regard. We look at it as, you know, we are another set of data points that our users, our readers can use to make decisions.

Bobby Holland [00:42:38]:

But what we try to do by offering the regional breakdown is to, again, show, one, it's our unique perspective. But number two, again, it helps to show, you know, you can get the national view. But as we've seen through the, throughout the discussions and with Lee's research and Tanjira's commentary as well, that there are different influences as they trickle down and distribute from the national level to the regional level. And that's what we try to put forth, again, to help you make decisions.

Scott W. Luton [00:43:09]:

A variety of layers. And you welcome in feedback. And we welcome in feedback, folks, you're out there, and a large part of our audience is out there in the market making it happen. They see it up close and personal. A lot of things we're talking about. We welcome your feedback, and we'd love to pass that along to Bobby. So let us know. Okay, so it is prediction time not for Bobby, but for Lee and Tangeria for sure.

Scott W. Luton [00:43:32]:

And Lee, I'm going to start with you. When you break out your world class crystal ball what do you see in the months ahead for the freight market?

Lee Klaskow [00:43:41]:

Well, as I've kind of mentioned, you know, we're much more, you know, I would say optimistic about the outlook, and that really relates to all modes of transportation, you know, whether it's a trucking, a truckload less than truckload rails. So what we're expecting LTL demand to continue to be challenging. That's going to be mitigated by strong pricing. Pricing probably in mid to slightly high single digits. You know, the pricing, the LTL space has been very good, and some of that has to do with how consolidated the market is on the truckload side. I think you're going to start seeing, you know, like I've mentioned a bunch of times, a return to seasonality. I'm not going to call it a super peak, but, like, definitely a peak season. And that, along with capacity coming out of the market, should bode well for spot rates, which then should bode well for contractual rates down the road.

Lee Klaskow [00:44:32]:

On the rail side, it's really kind of like a mixed bag. The rails themselves have gotten a lot better in terms of their overall service levels. And because of that, and if rates start to increase on the trucking side, that could fuel a lot of their intermodal volume. You know, we remain pretty optimistic on intermodal, but, but they're facing some kind of challenges on the fertilizer side. Also on, on the forest product side.

Scott W. Luton [00:44:58]:

That crystal ball is still working really well. Lee Klaskow and one more quick follow up. You're, I think you're a big Jets fan, right? Football fan? No, Giants.

Lee Klaskow [00:45:08]:

Giants.

Scott W. Luton [00:45:09]:

Well, we've talked about the Jets in the past are so quick. Are the Giants going to win more or less than 1010 football games in the 2024 season?

Lee Klaskow [00:45:16]:

Probably less.

Scott W. Luton [00:45:17]:

Okay. All right. We'll have you back.

Lee Klaskow [00:45:19]:

I can't, I can't be optimistic about everything.

Scott W. Luton [00:45:22]:

Well, I really appreciate what you brought to the table here today. All right, so, Tandreia, when you trying to give a sneak peek of what's to come? Lee laid out some things there. Are you equally as optimistic? What do you think? Where do you think the freight market's going?

Tandreia Bellamy [00:45:37]:

I don't know where the freight market is going. I just say to all of the transportation partners, to business leaders out there, that you need to have great communication so that you can develop great contingencies to deal with all of this uncertainty.

Scott W. Luton [00:45:52]:

That's right. That is right. Well said, as always, Tandreia Bellamy. All right, so let's see here. Let's make sure Bobby, folks know how to get in touch with you and folks know how to find the US Bank Freight Payment Index and subscribe to it. How can folks reach out to you, Bobby?

Bobby Holland [00:46:11]:

You can reach out to me my LinkedIn information. bobby.holland@usbank.com for any questions. Otherwise, like I said, LinkedIn is up to date as well and I do check it periodically. And then as far as getting at the publication, as you stated previously, it's free. You basically go to freight.usbank.com. They'll ask for some information because of course we want to know our audience, but it doesn't cost you anything and it gets delivered to your, your email box quarterly.

Scott W. Luton [00:46:41]:

That's right. Good stuff there. It's important to know your audience. I need to learn from your, what you shared there and just check LinkedIn periodically. That probably, probably makes your life a lot easier. Bobby all right. Lee Klaskow, I want to make sure you let us know how folks can connect with you and give us maybe a sneak peek of what's, if you can let us know top secrets of what's to come with talking transports, a podcast.

Lee Klaskow [00:47:06]:

I'm on LinkedIn and I'm also on Twitter at LogisticsLee, so please reach out. I'm also, I just started kind of a new distribution list for folks that are not Bloomberg subscribers, where we give you just a little bit of a taste of what we do. And you can reach out to me on LinkedIn or Twitter if you're interested in signing up for that email, and I can add you to my distribution list. So in terms of, you know, episodes that we're doing, we don't give away who we have. But, you know, every Tuesday we have a new episode. You know, it's, I'm pretty excited about some of the conversations that I've had as of late. You mentioned earlier it's not easy to put on. This is kind of like not part of my day job.

Lee Klaskow [00:47:43]:

So, and that's kind of why I think my hair is thinning. But, you know, we do it like once a week. It's been a lot of fun. And if you're interested in listening to decision makers in the freight markets, whether it's someone in the C suite of or somebody that, you know, that I respect, that follows the market. And we also have like Wall Street analysts come on, too, because part of my job, I don't do buy wholesale recommendations. So it's always, I think, great to bring those people onto the podcast so people maybe could make money in the market as well. Yes, hopefully make money.

Scott W. Luton [00:48:14]:

You're a walking fount of knowledge. In fact, all three of you are, for that matter, but really enjoyed it. We're dropping links where you can connect with Bobby and Lee on LinkedIn. Tandreia, before we wrap that, communication advice is probably one of your key takeaways and challenges to our audience. Would you say? Tandreia?

Tandreia Bellamy [00:48:32]:

Absolutely.

Scott W. Luton [00:48:33]:

Any other reach out advice you'd offer to our audience?

Tandreia Bellamy [00:48:36]:

Tandreia no, LinkedIn is perfect. I'm really active and I'm very responsive, so that's perfect.

Scott W. Luton [00:48:44]:

Wonderful. So reach out to Tandreia and Bobby and Lee, all there via LinkedIn. We want to thank all of our esteemed panel here. Bobby Holland, director, freight business analytics at US Bank thank you, Bobby. Lee Klaskow, senior analyst, transportation and logistics at Bloomberg Intelligence and host of Talking Transports podcast you can get wherever you get your podcast. Thank you, LogisticsLee, thank you.

Lee Klaskow [00:49:10]:

Great to be here.

Scott W. Luton [00:49:11]:

You bet. Tandreia Bellamy, always a pleasure. Enjoy these conversations with you. We'll talk football more and we'll do our in depth roster analysis. How's that sound? Tandreia that sounds great.

Tandreia Bellamy [00:49:21]:

And we got to catch up on the Olympics because, you know, I've been binge watching the Olympics.

Scott W. Luton [00:49:26]:

Oh, it's been awesome. We should have touched on that more. But hey, folks, thanks for being here. Hopefully you've enjoyed this conversation as much as I have. Lots and lots of, I think, actual key takeaways with some follow up opportunities. But with all that said on behalf, the entire team here at Supply Chain Now, Scott Luton, challenge. You do good, give forward, be the change that's needed, and we'll see you next time right back here at Supply Chain Now. Thanks.

Scott W. Luton [00:49:46]:

Goodbye.

Narrator [00:49:50]:

Thanks for being a part of our Supply Chain Now community. Check out all of our programming at SupplyChainNow.com and make sure you subscribe to Supply Chain Now anywhere you listen to podcasts, and follow us on Facebook, LinkedIn, Twitter and Instagram. See you next time on Supply Chain Now.