Coronavirus containment efforts have brought the US economy to a standstill. US GDP decreased by 4.8% in the first quarter- showing the largest decline since the banking crisis in 2008. Unemployment rates in the US continue to skyrocket. Twenty-six million new workers applied for unemployment from mid-March to mid-April.
The shrinking economy has had a negative effect on consumer confidence which influences consumer spending. Consumer confidence in April was down to 86.9 this is down from March’s revised index of 118.8. On a more positive note, consumer expectations that the economy will be better in 6 months rose slightly from 86.8 in March to 93.8 in April. An independent University of Michigan survey showed similar results. Declining confidence numbers paired with increasing expectations have not been seen since indexes began in the 1950s. How these sentiments will impact consumer spending with the economy coming back online has yet to be seen. Some states are beginning to reopen which should have a positive effect on consumer spending. The re-openings currently involve mostly service type businesses, but as more retail and manufacturing businesses open, the positive impact on freight should increase.
Last week, the outbound tender volume Index reached the lowest non-holiday level in three years. Outbound tender volume peaked on 03/28/20 at 19.25% but has since fallen by 85%. The outbound tender volume index measures nationwide freight capacity, which has fallen dramatically in the past month.
Shipping cargo volumes were down as well. Coronavirus has had a major impact on cargo shipping from Asia with an expected decline of 20% in May through June and beyond.
Diesel prices continue to decline. Diesel prices (US Highway) for the week ending 04/27/20 averaged $2.437 per gallon a drop of .732 cents from one year ago.
Coronavirus impacts are still playing out in the freight market. While essential purchase volume increases seen in March have declined in April, states starting to come back online should boost volumes in May. This trend should continue through the second quarter as factories and retail stores reopen and employees return to work.