Trucking conditions continue to improve, according to FTR’s Trucking Conditions Index. That’s largely driven by falling diesel prices, as freight conditions remain tough.
Motive notes there is cautious optimism returning to the market and carriers should be buoyed by a strong holiday shipping season.
Meanwhile, TFI International and Mullen Group both posted Q3 earnings in recent days.
Trucking conditions improved in August
FTR’s Trucking Conditions Index (TCI) climbed in August to -1.39 from its -5.59 July reading. The biggest factor was consistent decreases in diesel prices, according to the industry forecaster.
It predicts the index – meant to provide a reading on trucking’s overall health by tracking five key metrics – will remain mostly negative to neutral through the beginning of next year.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak,” said Avery Vise, FTR’s vice-president of trucking. “Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year.”
‘Cautious optimism’ returning to market: Motive
Motive has noted stagnant freight prices and carrier exits have slowed trucking’s rebound, but it’s calling for moderate growth to return in Q1 2025 and long-term growth trends of 5.7% to follow by the end of next year.
It notes an oversupply of carriers is now gone, restoring the market balance to 2020-type levels.
In September, there were 1,300 carriers that exited the market for the third straight month. New carrier entries, meanwhile, declined by 5.1%.
“The primary reason for this exodus is cash burn, as falling trucking rates during the recession drained reserves,” Motive said in its recently released holiday report.
“While strong consumer demand during the holiday season will drive positive freight growth, we expect a short-term dip in new carrier entries as many wait for the new year to begin operations. In 2025, rising freight rates will likely stabilize the market, with older trucking companies better positioned to stay afloat. Newer operators, particularly in large states like California and Texas, may face higher turnover as rising costs challenge their resilience.”
Canadian carriers post Q3 earnings
TFI International posted its Q3 results last week, generating operating income of $203.3 million (up from $200.6 million y/y, all figures USD) while adjusted net income was flat at $136.6 million.
“Despite soft market conditions, TFI International performed well during quarter, generating more than $350 million of net cash from operating activities and over $270 million of free cash flow, up 26% and 37%, respectively, over the year-ago period,” said Alain Bedard, chairman, president and CEO.
“While business conditions for U.S. LTL are challenging, our logistics segment performed very well, and both our truckload and Canadian LTL operations have remained solid.”
On a call with analysts, Bedard said the company will be choosy when it comes to acquisitions, but expects to invest $200-$300 million into targets next year.
“We have a saying within TFI. ‘You make your money on the buying, never on the selling,’” said Bedard. “Our pipeline is solid. We have lots of opportunities, it’s just that we have to be patient.”
Over at Mullen Group, Q3 revenue climbed 5.6% to $532 million (Mullen reports in Canadian dollars), a new quarterly record. Net income fell 2% to $38.3 million.
“An excellent quarter for our group even though the economy remains in neutral. Acquisitions continue to drive growth, however, I was really pleased with the performance of our business units, where the real difficult work is handled. All of our teams did a great job navigating the difficult market and controlling costs. As a result, we generated record revenues and near record operating profitability,” said senior executive officer, Murray Mullen.
“This is a very frustrating time for anyone involved in the private sector. There is limited growth in most verticals, which is contributing to ultra competitive markets. It is within this backdrop that the Mullen Group stands apart from most of our peers. We have a long history of acquiring good companies at a fair price. Of equal importance is that we have the balance sheet to execute the deal. But we will not lose our discipline just because we can, choosing to only pursue transactions that add value to Mullen Group shareholders. After 75 years in business, we know how to handle difficult and challenging markets.”
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