This week we were in San Diego for the American Trucking Associations’ (ATA) Management Conference & Exhibition, where an economic update from ATA chief economist is always an eagerly anticipated highlight.
This year’s update gave little reason for hope that demand will drive an industry recovery in the near term. Instead, it will take the continued exodus of capacity that will eventually lead to recovery.
Here’s what else came across our desks this week:
Shippers saw improving conditions in August
FTR’s Shippers Conditions Index rose to 1.3 in August, from a -2.0 reading in July. They have stable fuel price and softer freight rates to thank for their most favorable market conditions since last fall.
“As we suggested last month, the crackdown on truck drivers with inadequate English skills and on foreign nationals holding non-domiciled commercial driver’s licenses will tighten freight capacity to some degree,” said Avery Vise, FTR’s vice-president, trucking.
“However, lots of questions remain over the scope of that impact, and we are adjusting our assumptions only slightly until we see signs of a market impact. For now, we do not see a major shift in the market, but stronger freight demand could trigger a change.”
Freight volumes improve, but could be inventory-building pull-forward
ACT Research’s For-Hire Trucking Index reflected increased freight volumes and reduced capacity in September. Its Volume Index rose 8.8 points marking a 13-month high, thanks largely to inventory-building ahead of tariff implementation.
“Growing consumer pessimism and slowing real income growth as consumers begin to feel the effects of tariffs remain risks to volumes in the short term,” said Carter Vieth, research analyst with ACT.
“In addition to inflationary pressures, the expected payback from numerous freight pull forwards will likely weigh on volumes in the coming months. While the outlook in the near term is choppy for volumes broadly, private fleets beginning to relent market share is positive for for-hire volumes moving forward.”
The Capacity Index rose 2.1 points.
“Capacity continues to contract as current industry financial conditions remain a constraint on investment. The pullback in capital spending, as well as the necessary evil of small fleet failures, will help to tighten capacity further,” Vieth said. “Ongoing uncertainty regarding tariffs and regulations is also likely to keep equipment buying under pressure in the short term.”
The Supply-Demand Balance improved in September thanks to capacity contractions and improved volumes spurred by tariff concerns, ACT reported.
However, Vieth warned: “The supply-demand balance may retrench in the coming months, as we’re likely near the payback period following the demand surge ahead of tariffs. Additionally, goods inflation is expected to pick up in the coming months. Weaker goods demand will be counteracted somewhat by capacity contractions, but strong demand and tight supply is needed for a new freight cycle to take hold.”
Uncertainty and headwinds weigh on Class 8 market expectations
ACT Research reported in its North American Commercial Vehicle Outlook that demand for Class 8 trucks will remain hampered by market conditions, economic uncertainty and tariffs.
“For for-hire carriers, still managing the longest downturn in recent history, initial tariffs in 1H did two things: 1) Temporarily pushed retail sales above replacement levels, stalling a necessary capacity contraction and prolonging a rate recovery; and 2) 1H’s large macro demand pull-forward has elevated the risk of weaker goods demand in 2H, potentially prolonging the path to recovery,” said Ken Vieth, ACT’s president and senior analyst.
“Vocational, like the tractor market, continues to be hampered in the short to medium term by policy fluctuations related to tariffs, federal funds, and emissions regulations. Also, softness in end markets like housing are not helpful. However, secular trends regarding utilities, roads, and data centers remain positive for vocational in the long run.”
Vieth warned of a potential freight air pocket ahead after inventory was built up ahead of tariffs. Combined with slower orders from private fleets and with tariff-related price increases ahead, there’s little reason to expect a spike in Class 8 order activity, he points out.
Spot rates were flat last week, volumes dropped
Truckstop.com and FTR report spot market rates were stable for the week ended Oct. 24.
“Dry van spot rates declined slightly after a slight gain in the prior week. Refrigerated and flatbed spot rates increased, but the gains were marginal. Refrigerated spot rates have risen in four straight weeks, but the size of those increases has fallen steadily,” truckstop.com reported.
“Spot rates for all three equipment types were relatively close to prior-year levels, although dry van spot rates were below comparable 2024 levels for the first time in 11 weeks.”
A sharp drop in loads postings was the largest seen in seven weeks and volumes were down year over year for the first time in 16 weeks. The Market Demand Index reflected that with a drop to 82.7, its lowest level in nine weeks.
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