Slow Recovery in US Truckload and LTL Markets Expected Through 2025

The US truckload demand recovery is projected to stretch into 2025 and possibly 2026, as the market continues to grapple with excess capacity. This sentiment was shared by trucking analysts and economists at the 2024 SMC3 Connections conference. Avery Vise, vice president of trucking at FTR, highlighted that total truckload loadings are expected to grow by just over 2% this year, with a slightly higher increase anticipated next year. Despite the reduction of approximately 36,000 trucking companies since 2022, the market still has about 96,000 more carriers than in February 2020, indicating a slow pace of market correction.

FTR forecasts indicate a 2.1% rise in dry-van truck loadings and a 2.4% increase in refrigerated loadings for the year, while flatbed loads are expected to decline by 0.9%. This moderate growth is overshadowed by a sluggish recovery in truckload spot rates, which remain close to the 2023 baseline. Chris Pickett, COO of Flock Freight, predicts a rise in truckload spot rates by 6% to 8% by the end of September, but Vise and other analysts expect significant rate increases only by 2025.

Economic factors such as high interest rates and inflation continue to affect freight activity. The Federal Reserve has maintained high interest rates due to persistent inflation, impacting inventory costs and construction, thus depressing freight demand. This economic backdrop complicates the truckload market recovery, with analysts projecting a gradual improvement rather than a swift turnaround.

In the LTL market, capacity contracted by about 10% in 2023 following the collapse of Yellow. This has allowed LTL carriers to raise rates and improve profitability despite the lack of new manufacturing or retail demand. The market is expected to grow at a CAGR of 7.3% from 2023 to 2028, driven by the rise in e-commerce, increased outsourcing of logistics services, and a focus on environmental sustainability.

Technological advancements, such as the adoption of telematics, AI-driven logistics solutions, and transportation management systems, are expected to enhance operational efficiencies in the LTL sector. However, regulatory challenges like the ELD mandate, which requires digital logging of driving hours, continue to increase operational costs for carriers.

Overall, the outlook for both truckload and LTL markets is one of cautious optimism. While truckload demand and rates are expected to recover gradually, LTL carriers benefit from increased rates and technological improvements. The industry will need to navigate regulatory and economic challenges to sustain growth.