Trucking Industry Trends and Forecasts

From scarcity to glut. It’s a dynamic increasingly impacting supply chain sectors still adjusting to the supply-and-demand rollercoaster of the past few years. In light of today’s persistently depressed freight trends, the pandemic-induced ecommerce surge and scramble for capacity may seem a distant memory to some — especially those within the trucking industry.

Just ask the thousands impacted by LTL giant Yellow Corp.’s July decision to cease operations or those feeling the pain of Convoy’s recent and abrupt announcement that it’s also closing up shop.

In his memo to employees, Convoy CEO Dan Lewis cited converging factors that led to a “perfect storm” that shuttered the Seattle trucking startup: “In short, we are in the middle of a massive freight recession and a contraction in the capital markets. This combination ultimately crushed our progress at the same time that it was crushing our logical strategic acquirer – it was the perfect storm.”

Although some say the “trucking bubble has burst,” others say there may be hope on the horizon. Here, we’ll take a look at what experts are saying about the current state of the industry — as well as predictions regarding future trucking trends.

American Transportation Research Institute’s Annual Survey

On Oct 14, the American Transportation Research Institute (ATRI), the trucking industry’s not-for-profit research organization, released its 19th annual Top Industry Issues report, identifying the “leading industry concerns.”

According to the announcement, this year’s list includes the economy, truck parking, fuel prices, the driver shortage, driver compensation, and for the first time, zero-emission vehicles.

“In a year full of challenges including high inflation, rising operating costs, and declining freight demand, the state of the nation’s Economy was the number one concern,” the ATRI said. “The lack of available Truck Parking achieved its highest rank to date on the overall list, coming in second. Last year’s number one issue, Fuel Prices, was ranked third this year. Rounding out the top five this year were the Driver Shortage and Driver Compensation.”

The ATRI said that a “number of aggressive mandates and timelines for transitioning the nation’s vehicle fleet to low- or zero-emission vehicles” led to the issue making the top-10 list for the first time: “Zero-Emission Vehicles were ranked 10th overall and 7th among motor carrier respondents.”

“ATRI’s list thoroughly and accurately reflects the challenges we’ve faced this year,” said American Trucking Associations (ATA) Chairman Dan Van Alstine, Ruan Transportation Management Systems President and COO. “Costs were up and demand was down, all while we worked to navigate a number of workforce and regulatory issues. Thankfully, ATRI’s analysis doesn’t just tell us what the issues are, it spells out a number of data-driven strategies that the industry can pursue to address them.”

The complete results of the annual survey were released as part of 2023 American Trucking Associations’ Management Conference and Exhibition. The full report can be found on ATRI’s website.

ACT’s Trucking Industry Forecast for 2023

According to ACT Research’s recently released Trucking Industry Forecast for 2023, during 2022, the US trucking industry experienced the “late-cycle phase” of the classic truckload cycle, which led to the “bottoming phase” that occurred earlier this year. The firm says that although the “rebalancing process” continued through last month, “significant progress has been made.”

The research firm defines the classic truckload cycle as:

Early Cycle: Demand Recovery & Undersupply

Mid Cycle: Tight conditions, demand growth, supply response

Late Cycle: Demand slows, supply ramps, market balance lessens

Cycle Bottoming: Demand declines & capacity growth slows

When it comes to trucking industry trends, ACT Research says there’s a contraction of for-hire capacity: “The capacity contraction in the for-hire sector is beginning to coil the proverbial spring for better market conditions, but this improving outlook could be spoiled if fleet expansions continues ahead of industry need.”

Additionally, for-hire volume may be reaching an inflection point: “The ACT Volume Index notably jumped 12.3 points in August to 54.4 seasonally adjusted (SA), from 42.1 in July. While an encouraging signal, the increase may not be indicative of a market turning point just yet. …we wouldn’t suggest this means the freight downturn is over, but it is a considerable ‘green shoot’ that suggests the retail inventory destock is playing out.”

As far as predicting what the future may hold for the trucking industry, ACT Research says it’s unlikely that industry capacity will “broadly tighten” until private fleets stop growing, which may happen over the next few months: “Though the freight market is still near the bottom of the cycle, the first step in getting out of a hole is to stop digging. In our view, new truck orders the next few months will be pivotal to setting the market tone for 2024.”

For more details on the trucking industry forecast for 2023, see ACT’s freight & transportation forecast.

FTR’s Trucking Conditions Index (TCI)

Although ACT Research was able to identify a few glimmers of hope within their findings, the latest Trucking Conditions Index (TCI) from FTR wasn’t so rosy. FTR says its TCI “tracks the changes representing five major conditions in the U.S. full-load truck market,” which include:

According to FTR, August data — which was the most recent — revealed that the TCI “plunged deeper into negative territory” that month.

“FTR’s Trucking Conditions Index fell to -12.54 in August from the July reading of -5.34 due to sharply higher diesel prices and weaker freight volume,” the intelligence firm said. “August’s TCI implies the toughest overall market conditions for carriers since April 2020, although surges in fuel prices tend to hurt small operations disproportionately as they are less likely to benefit from fuel surcharges. With fuel costs stabilizing for now, the outlook is for improved conditions, but FTR does not expect the TCI to turn consistently positive until late 2024.”

“Market conditions for trucking companies look solidly negative through the first quarter of next year as we forecast no significant strengthening of capacity utilization or freight rates, and freight demand is stagnant,” said Avery Vise, FTR’s vice president of trucking. “A major question is whether consumer spending will remain as strong as it has been in the face of inflation, higher financing costs, and the resumption of debt service of student loan payments. Freight demand is more likely to trail our forecast than to exceed it, so any near-term improvements in market conditions for carriers would likely come from a sharp drop in driver capacity. Small carriers continue to exit the market in high numbers, but aside from the LTL sector, larger carriers so far have absorbed much of that capacity. Diesel price volatility and the lack of any near-term strength in spot rates could accelerate carrier failures and tighten capacity.”