Shifting Dynamics in the LTL Freight Market: Post-Yellow Collapse Trends and Stabilization

The surge in less-than-truckload (LTL) freight, which boosted volumes at several LTL carriers following the collapse of a major competitor last year, is now beginning to recede. This shift is providing a clearer view of the LTL market and its leading companies. The double-digit growth in shipments that some carriers experienced after the market exit in July 2023 is subsiding, aligning expectations with a softer freight economy.

The return to normal freight levels will make year-over-year comparisons more challenging for LTL carriers, who saw significant rises in shipment counts in the months following the exit. These comparisons will now allow carriers to better assess market share, identifying companies that are gaining new business versus those that merely absorbed pre-existing freight.

Although there is some growth in the LTL marketplace, it has not met the high expectations of carriers. A contraction in US manufacturing output is reducing the amount of available LTL freight. Recent third-quarter data from major carriers helps clarify the market distortion caused by the exit of the competitor, highlighting that tighter capacity, rather than increased freight demand, is driving LTL pricing.

In July, LTL rates were up 7.1% year over year, a significant increase compared to a 0.7% rise in January. Despite a two-year downturn, LTL rates in July were only 4.6% below their peak in June 2022. Analysts expect general rate increases of around 5.9% in the coming months. Although some carriers priced more aggressively to fill excess capacity, this trend is now shifting, with carriers focusing on balancing their operations and optimizing efficiency.

One major carrier serves as a reliable indicator of the broader LTL market due to its conservative approach in handling the freight released after the exit. In August, its shipment count dropped 5% year over year, reflecting the continued softness in the economy. The company’s volume has followed typical seasonal patterns in 2024, with a slight decline in the first quarter and a modest rise in the second quarter. Despite absorbing some additional freight, its third-quarter volume dropped by nearly 3%.

Another major carrier took a different approach by acquiring a number of terminals from the bankrupt competitor. This company experienced consistent growth in shipment volume over the summer, although at a slower pace compared to the immediate aftermath of the collapse. In August 2023, its daily shipment count saw a significant year-over-year increase, but the growth rate in August 2024 moderated to 7%, reflecting more stable growth as the company continues to absorb and integrate new business.

Even in a weakened freight economy, this second carrier’s expansion strategy has allowed it to gain market share. Despite the contraction in US manufacturing and a reduction in available LTL freight, the company’s 7% year-over-year increase in shipments indicates it is maintaining momentum and bolstering its position in the market.