The Bank of America Freight Payment Index has emerged as a critical tool for understanding both the logistics sector and broader economic trends in the United States. This quarterly report, based on actual transaction payment data, tracks changes in domestic freight volumes and expenditures, offering valuable insights for businesses navigating today's complex supply chain environment.
Understanding the Index's Significance
The index serves as a comprehensive economic indicator with several distinctive features:
- It analyzes payment data from over $23 billion in annual global freight payments processed by Bank of America
- The data covers both truckload (TL) and less-than-truckload (LTL) shipments
- Historical data extends back to 2010, allowing for longitudinal analysis
- Figures are seasonally and calendar-adjusted for accuracy
Bobby Holland, Director of Freight Data Solutions at Bank of America, explains: "Our clients across retail, manufacturing and other sectors have consistently requested deeper market insights. By leveraging our extensive payment data, we've created an index that provides both national and regional perspectives to support strategic decision-making."
Key Findings from Recent Reports
Freight Expenditures Reach Decade High
The third quarter saw freight expenditures reach 164.7 on the index, marking an 8.3% quarterly increase and 12.6% annual growth. This represents:
- The largest quarterly increase since Q4 2014
- The highest annual growth since Q3 2011
- A 7.9% year-to-date increase, reversing a 3.2% decline during the same period in 2015-2016
Bob Costello, Chief Economist at the American Trucking Associations, notes: "These expenditure increases reflect tightening capacity in the trucking market. Economic acceleration has created a perfect storm of constrained supply meeting growing demand."
Freight Volumes Show Sustained Growth
The freight volume index reached 133.0 in Q3, with 3.3% quarterly growth and 8.6% annual increase. While the growth rate moderated slightly from Q2's 5.8% increase, this marks the third consecutive quarter with at least 3.3% growth.
Costello identifies four primary drivers of freight volume:
- Consumer spending
- Manufacturing output
- Construction activity (particularly housing)
- Inventory cycle adjustments
"This is the first time since 2014 that all these freight 'baskets' have shown positive performance simultaneously," Costello observed. "Without weather disruptions, Q3 results might have been even stronger."
Regional Variations Highlight Economic Disparities
The report reveals significant regional differences in freight activity:
- Northeast: Led with 10% volume growth, driven by manufacturing improvements and housing starts
- Southeast: Managed only 0.1% growth due to Hurricane Irma disruptions, though expenditures rose nearly 5%
- Midwest: Achieved record 13.3% expenditure growth, benefiting from manufacturing resurgence
Strategic Implications for Businesses
For Logistics Providers
The current market conditions suggest several strategic priorities:
- Optimizing route efficiency to reduce empty miles
- Strengthening carrier relationships to secure capacity
- Investing in digital tools for dynamic pricing and load matching
- Developing regional expertise to capitalize on market variations
For Shippers
Companies relying on freight transportation should consider:
- Advance planning to account for tighter capacity
- Diversifying carrier networks to mitigate risk
- Exploring multimodal solutions to control costs
- Enhancing supply chain visibility to anticipate disruptions
Looking Ahead: Challenges and Opportunities
While the index shows strong economic momentum, several factors warrant attention:
- Persistent capacity constraints in trucking
- Potential weather-related disruptions
- Moderating GDP growth rates
- Rebuilding needs in hurricane-affected regions
The Bank of America Freight Payment Index provides businesses with critical intelligence to navigate these challenges. By monitoring these trends and adapting strategies accordingly, companies can position themselves for success in an evolving logistics landscape.