Industry Update: Truck Transportation Fall 2023
Following the best quarterly GDP growth since the 4th quarter of 2021, a growing collection of more recent data points confirms the overall macro slowing that BMO economists forecast over the next year. Nonetheless, BMO’s call for a soft landing with no recession is intact, and most importantly, the increasing likelihood that the Fed Funds rate tightening cycle is over. That said, BMO is also holding to the expectation that any explicit easing by the Fed will have to wait until the 3rd quarter of next year. At the industry level, truck freight rates and, likewise, active truck capacity utilization have stabilized at low levels and are expected to improve very gradually throughout 2024. However, beyond seasonal tightening, any enduring improvement over the next several quarters will not necessarily come from a surge in freight tonnage but rather the rebalancing of freight-carrying capacity from the ongoing exit of marginally viable carriers that poorly timed their entry into the market during the peak freight cycle of the pandemic era.