Surface Transportation 2025 Annual Review & Outlook
Gaining traction
US truckload rates ticking up ahead of expected demand return
By William B . Cassidy
A look back : The US truckload market in 2024 continued to bounce along the bottom of an exceptionally long three-year downcycle in freight demand , with spot rates only starting to move upward in the third quarter . Contract rates flattened and inched upward in turn , with replacement rates in existing contracts starting to climb by October , according to DAT Freight & Analytics . But truckload capacity remained abundant despite deep cuts by large carriers and the exit of at least 35,000 smaller trucking companies since 2022 . The large carriers in the Journal of Commerce Truckload Capacity Index group cut their internal capacity back to 2014 levels . However , there were still more than 93,000 carrier operating authorities on the books in October 2024 than there were in December 2019 . With their volumes depressed , truckload carriers continued to diversify their fleets in search of new business , using dedicated and brokerage arms to augment lagging over-the-road revenue . Knight-Swift Transportation Holdings , the largest US truckload provider , continued its drive into the less-than-truckload ( LTL ) market , acquiring regional carrier Dependable Highway Express and buying more LTL terminals while also absorbing truckload carrier US Xpress Enterprises . But there was more than enough capacity in terms of trucks and drivers to haul available freight in 2024 ; if anything , there was a “ freight shortage ” that was still present late in the year .
A look ahead : Truckload carriers are optimistic about 2025 , but they ’ ve been optimistic before , including in late 2022 and 2023 . Expectations for stronger demand , most likely in mid- to late 2025 , were shaping up late last year , as spot rates began
US truckload costs still stuck in neutral in late 2024
US long-haul truckload producer price index ( PPI )
210
200 150 190
180 174
170 L Jan 2023 Jul Jan 2024
Jul
TL PPI
Notes : US BLS producer price indices are based on selling prices for trucking services
Source : US Bureau of Labor Statistics data , JOC analysis
Large truckload carriers cut their internal capacity back to 2014 levels last year . Shutterstock . com
Oct , 2024
© 2024 S & P Global
The big picture : Truckload spot market rates began to slowly rise in the second half of 2024 , putting upward pressure on contract rates . Truckload demand increased seasonally late in the year , but overall was flat , with US manufacturing still in the doldrums . Capacity remained loose , despite cuts . Despite uncertainty , freight demand is expected to climb over the course of 2025 , pushing spot and contract rates up by the year ’ s end .
to inch upward year over year , drawing contract rates behind them . But those expectations were built on uncertain economic sands . Much depends on how deeply and quickly the Federal Reserve continues to cut interest rates , and whether those cuts boost home buying and construction and US manufacturing orders and output . The impact of potential tax cuts and tariffs from the incoming Trump administration add to uncertainty . Many trucking executives expect a further round of capacity exits as smaller to mid-sized firms begin to crack under the combined pressure of low rates and higher operating costs . They ’ re betting that more trucking companies will abandon the business , tightening capacity and helping them raise rates . But many small companies have withstood almost three years of falling volumes and rate pressure in a downcycle . As of October , average truckload selling prices , as measured by the US Bureau of Labor Statistics producer price index , had declined year over year in 21 of the previous 22 months . How many carriers are likely to fold now ?
The next inflection : Pronouncements of an end to the “ freight recession ,” have been issued several times , only to founder on the rocks of overcapacity and manufacturing contraction . Even months of rising US imports couldn ’ t reverse the truckload market in 2024 . As US manufacturing recovers , truckload capacity will tighten , likely in a steady fashion , pushing up truckload rates upward faster in the second half . But how markets will react in 2025 is far from clear .
email : bill . cassidy @ spglobal . com
64 Journal of Commerce | January 6 , 2025 www . joc . com