State of Freight Report Says 2024 Will Be an Unremarkable Year
Trucking’s enduring freight recession, coupled with a significant drop in spot market rates for carriers over the past 18 months, is leading to a tightening of capacity, as per data from the Federal Motor Carrier Safety Administration and FTR Intel, which released its State of Freight report on January 11th.
Nevertheless, despite these challenges, the U.S. economy continues to show resilience, buoyed by ongoing consumer spending. Additionally, diesel prices have decreased and stabilized.
Even amidst reduced freight volumes, many carriers that might have otherwise ceased operations are managing to persevere.
Industry experts foresee 2024 as a year of endurance, urging businesses to stay afloat and hope for better prospects in 2025 and beyond.
Addressing the issue head-on, Avery Vise, Vice President for Trucking at FTR, commented on the current state of affairs. “There’s not much to write home about,” he remarked. “Overall, we saw a 2.5% growth last year, based on the latest GDP data, and this year it will be around 2%. While not stellar, it’s not catastrophic. However, when we consider the goods transport sector within the economy, the outlook is even less optimistic. Last year, we remained stagnant in GDP, and this year we anticipate about 1.2% growth, increasing to a little over 2% in 2025.”
Vise highlighted the sluggishness of the freight environment, stating, “A 1.2% growth doesn’t translate to significant freight volume. It’s a very lethargic freight environment.”
Despite the challenges, the industry is undergoing consolidation, with recent FMCSA data indicating the most substantial net decrease in carriers ever recorded during the fourth quarter of 2023.
Acknowledging the elephant in the room, Vise emphasized, “Capacity is where things will shift in the upcoming year.” He continued, “We don’t foresee significant fluctuations in freight volumes. There’s little to be enthusiastic about in trucking freight for the foreseeable future. We anticipate final data to show minimal change from last year, with a slight decrease expected this year.”
Moreover, Vise and others suggested that the industry might still possess more capacity than necessary, with the FMCSA noting an influx of carriers authorized during the COVID-19 pandemic when rates surged. Despite this surplus, Vise believes there’s potential for further tightening.
Regarding trucking rates, FTR reported a 7% decline in contract rates for freight in 2023, following increases of 13% in 2021 and 7% in 2022. Rates are projected to decrease by 3% in 2024, primarily in the first half of the year.
While the industry may witness a short-term increase in freight as businesses replenish inventory post-holiday season, Vise cautioned that this uptick would be temporary, at best offsetting some immediate weaknesses.
Looking ahead, FTR indicated that active truck utilization is near pre-pandemic levels and is expected to remain stable. However, Vise cautioned against expecting a rapid recovery, projecting a gradual increase in utilization throughout the year, with full recovery to pre-pandemic levels unlikely by year-end.