Freight Market Stuck in Overcapacity Cycle

The U.S. trucking industry continues to wrestle with an imbalance that shows little sign of correcting before 2027, a stubborn overcapacity that is reshaping the relationship between carriers, shippers, and logistics providers. According to FTR Transportation Intelligence, the industry has entered a prolonged period where shippers retain pricing power, with implications across every segment of the freight economy. For companies that depend on trucking to move their goods, and for third-party logistics partners tasked with finding efficiency in a weak market, the years ahead will be defined not by rapid recovery but by the careful management of cost, service, and supply chain flexibility.

At the 2025 FTR Transportation Conference in Indianapolis, Avery Vise, vice president of trucking at FTR, explained that despite years of weak freight demand, the carrier population has stabilized at a level far above pre-pandemic norms. The Federal Motor Carrier Safety Administration’s own data shows that in August, the number of U.S. truck drivers operating in fleets with one to five trucks remained 39 percent higher than in March 2020. Although that figure has come down from a 62 percent increase reported in July 2022, it still represents a massive shift in market structure. By contrast, the number of drivers employed at large carriers with 101 or more trucks fell slightly—1.1 percent—over the same period.

What this means in practical terms is that the freight market is still saturated with small operators who, for a variety of reasons, are not leaving the industry even in the face of low rates. The long-term shift of drivers away from large carriers into the small-operator segment has introduced both resilience and volatility. Many expected the wave of bankruptcies and closures that struck the market in 2023 and 2024 to thin capacity meaningfully. Yet FTR’s analysis suggests otherwise. Absent an unexpected shock or a major recession, utilization rates are unlikely to improve until at least 2027.

For customers of PNG Logistics, a Lancaster-based logistics service provider with over-the-road capabilities that span less-than-truckload (LTL), full truckload (TL), and expedited services, this environment brings both challenges and opportunities. Shippers can negotiate competitive rates, but they must also navigate a marketplace where service quality, reliability, and technology-driven coordination become essential to preserving margins and meeting delivery commitments. PNG Logistics has been closely monitoring these shifts and advising its customers on strategies to capitalize on favorable pricing while mitigating the risks associated with a fragmented and overextended carrier base.

FTR data indicates that active truck utilization has hovered between 92 and 94 percent since 2024. From a carrier perspective, this leaves little room to raise rates or to dictate terms to shippers. “From a carrier perspective, that means a lot more focus on cutting costs and getting much more productivity out of everything,” Vise explained. In other words, carriers are being pushed to operate leaner while competing fiercely for freight. For logistics providers like PNG, this translates into an environment where careful carrier selection, rigorous performance monitoring, and flexible mode-shifting are crucial.

The implications for freight rates are clear. FTR forecasts a modest 1.5 percent annualized gain in dry van truckload contract rates in 2025, following a 3.1 percent decline in 2024, and a further 1.2 percent rise in 2026. Spot rates are expected to move similarly, inching up 1.3 percent in 2025 and 1.4 percent in 2026. Importantly, these increases lag behind inflation, meaning that real trucking costs for shippers will remain flat or even decline in real terms. PNG has been leveraging this environment to secure advantageous contract terms for its customers, ensuring that cost savings are not achieved at the expense of reliability. For companies shipping domestically, PNG’s LTL solutions continue to provide cost-efficient consolidation options, while the truckload division ensures consistent capacity for larger shipments even as carriers jockey for market share.

Underlying the rate and capacity story is a persistent lack of a demand catalyst. U.S. consumers are still spending, but not at levels strong enough to absorb the excess trucking supply. Growth in 2025 is expected to be weak, with S&P Global Market Intelligence forecasting U.S. GDP expansion of just 1.9 percent, down from 2.8 percent in 2024. Spending on durable goods, in particular, is projected to decline year over year, with much of the 2025 activity frontloaded as households pulled forward purchases of automobiles and appliances ahead of new tariff increases.

The Journal of Commerce Truckload Capacity Index, which tracks publicly owned carriers, even ticked upward in the second quarter of 2025—the first increase in 11 quarters—indicating that some large fleets are beginning to add trucks in anticipation of eventual volume growth. Still, the consensus from the conference and recent webcasts is that capacity cuts, rather than demand surges, are more likely to drive recovery. Matt Perry of Werner Enterprises highlighted that mid-sized carriers with 200 to 300 trucks are particularly vulnerable. These companies are too large to operate with the flexibility of a small owner-operator yet too small to access the capital and customer base of the mega-carriers. “There are a lot of companies that are one big accident, one customer loss away from not being able to continue,” Perry noted.

Inventory dynamics further complicate the picture. Analysts from Armada Corporate Intelligence point out that retail inventories remain relatively lean, with only about 7 percent of the market overstocked compared with 2019 levels. Retail inventory-to-sales ratios have fallen below long-term averages, raising the risk of stockouts if consumer spending holds. Manufacturing inventories, on the other hand, are elevated, with ISRs 16 percent above their 10-year average. This imbalance suggests that inventory restocking, particularly in retail, could provide a modest boost to trucking in early 2026.

PNG Logistics is positioning its customers to take advantage of these shifts. For shippers in industries at risk of stockouts, PNG’s over-the-road solutions provide the flexibility to accelerate replenishment quickly. By offering both LTL and truckload options, PNG helps companies avoid overcommitting to capacity while ensuring they have access to reliable space when demand surges. For manufacturers carrying higher-than-usual stocks, PNG works to optimize outbound freight flows, aligning shipments with real demand to prevent unnecessary carrying costs.

The challenge for many carriers and shippers alike lies in balancing the need for lean inventories against the uncertainties of tariffs, trade disputes, and global supply chain disruptions. Importers, for example, have been “metering and holding” shipments to align with tariff deadlines. Retailers such as Kirkland have publicly stated that they are deliberately pacing imports to manage exposure to higher duties and to avoid excess stock. Manufacturers, likewise, have accelerated shipments of inputs ahead of tariff increases. PNG’s customers, many of whom face similar pressures, are finding value in the company’s ability to integrate real-time tariff and trade intelligence into transportation planning.

What emerges from all these trends is a picture of a freight economy in transition. For shippers, the silver lining of a prolonged overcapacity environment is that pricing leverage remains on their side. Yet relying solely on low rates is a risky strategy. Service failures, missed deliveries, or capacity shortfalls at the wrong moment can erase cost savings and damage customer relationships. This is where PNG’s role as a logistics partner becomes critical. The company’s investments in technology, its established relationships with carriers across all size tiers, and its expertise in over-the-road freight solutions position it to navigate the uncertainty on behalf of its customers.

For carriers, the coming years will be defined by survival and adaptation. Productivity gains, cost-cutting, and operational discipline are no longer optional. Small carriers, who make up an outsized portion of the market, have shown unexpected resilience, but they remain vulnerable to shocks. Mid-sized fleets may face even greater pressures. The large carriers, while better capitalized, are not immune to the squeeze of low rates and high operating costs.

For logistics providers like PNG Logistics, the mandate is clear: provide customers with stability in an unstable market. That means combining LTL and truckload services into customized solutions, ensuring that shippers can capture rate advantages without exposing themselves to service risk. It means monitoring market trends closely and advising customers on when to lock in contracts and when to shift toward the spot market. It means integrating data on tariffs, inventories, and demand into actionable strategies that reduce risk and maximize value.

The trucking industry may not find equilibrium until 2027, but companies that plan strategically, with the right logistics partners, can not only weather the downturn but emerge stronger. PNG Logistics is committed to ensuring that its customers do just that—leveraging the unique conditions of the market to reduce costs, enhance supply chain resilience, and position themselves for growth when demand inevitably rebounds.