What Trucking Mileage Data Says About the State of the Supply Chain

Date: Thursday, February 16, 2023
Source: Sourcing Journal

There have been many questions about whether the supply chain will get back to normal this year, but if mileage numbers are any indication, the trucking industry is picking up the pace—perhaps signaling that a rebound is on the way.

According to data from fleet management technology provider Motive, truck utilization is up 11 percent compared to January 2022. As U.S. port congestion is expected to clear later this year thanks to lower cargo demand, and lead times further stabilize, the uptick in trucking mileage suggests that product is getting out on the road instead of remaining at a standstill.

Motive’s freight weekly mileage index, a metric the company uses to calculate distance traveled for trucks using its solution, has hovered around 0.9 in January 2023, up from 0.8 12 months ago. The numbers are still down from January 2021, when the index was listed at 1.0.

Also favoring the trucking side, diesel fuel prices have declined by 15 percent since November, Motive pointed out. The fuel decline is contributing to lower inflation, with the U.S. Consumer Price Index (CPI) dipping again to 6.4 percent year over year in January.

Motive unveiled the data in its inaugural Monthly Economic Report, illustrating the supply chain and economic trends observed across its platform. The company says its fleet management technology is embedded into more than 20 percent of for-hire trucks in North America, offering a representative view of the over-the-road supply chain.

Formerly known as KeepTruckin, Motive uses an estimated 500,000 vehicles to serve more than 120,000 customers from small businesses to Fortune 500 enterprises in sectors including transportation and logistics, distribution, oil and gas, construction and agriculture.

While Motive says it sees overall increases in freight activity, the company is not seeing a corresponding rebound in the retail sector following the holidays. In fact, the firm suggested in its report that the slowly recovering retail sector is in a “wait and see” period—documenting a 20 percent decline in retail activity year-over-year.

The company calculated this traffic via its own retail visits index, which dipped from 0.89 to kick off January as the holiday season closed, before dropping to 0.86. To start 2022, the metric reached approximately 0.97 before dipping to 0.95, illustrating that store visits haven’t kept up to last year’s post-holiday period.

Slowing retail activity appears to align with the sluggish growth seen during the 2022 holiday season—a byproduct of the sagging consumer demand amid the current macroeconomic uncertainty. The National Retail Federation (NRF) estimated sales during November and December grew 5.3 percent year over year to $936.3 billion, below projections of 6 percent to 8 percent growth.

In its inaugural report, Motive highlighted two major factors driving the disconnect between supply chain health and retail recovery.

The company cited the delayed buildup of holiday retail visits against 2021 numbers, which came in earlier after being pulled forward by holiday promotions. Additionally, as retailers had too much inventory on hand ahead of the holiday, they didn’t invest in as much newer product as consumer demand softened, the reported noted.

Retail’s recovery is also being constrained by a tight labor market, where unemployment is the lowest it’s been since 1969, creating challenges in hiring truck drivers, construction workers and field service workers.

“Retailers have been battling the impact of years-long supply chain impacts followed by weak consumer demand,” said the Motive report. “Inflation is improving, but it’s still high and the economy is unsteady. Continued health in the supply chain should help stabilize some pockets of the economy, but top retailers are being cautious, which may be the new normal. With little confidence in the near-term outlook, retailers are hesitant to increase inventory. Buyers, meanwhile, are in ‘wait and see’ mode knowing that there will be fewer supply chain risks than in years prior.”

Motive’s fleet management technology aims to improve the trucking industry’s safety, productivity and profitability. One of its chief features is an AI dashcam that detects unsafe driving behavior and helps operators reduce accidents.

The San Francisco-based company also recently launched an automated operations platform that combines its hardware with its AI software to enhance asset tracking, compliance and driver safety.

Motive also offers a corporate card allowing fleet managers the ability to track fleet operations.

In May 2022, the firm closed a $150 million Series F funding round co-led by Insight Partners and Kleiner Perkins, which raised its total valuation to a then-$2.85 billion. At the time, the company said it would use the funds to invest in more AI, expand the company’s product suite into expense management and grow its enterprise capabilities.

Slowing demand may be better for supply chain movement but not for the overall health of companies in the logistics space like Motive. Like many companies over the past year, Motive laid off 237 workers in December—roughly 6 percent of its workforce—amid operating cost constraints and demand issues. In a letter to employees announcing the layoffs, co-founder and CEO Shoaib Makani specifically noted that the “cost of capital has increased, and demand is contracting.”


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