Industry Update: Truck Transportation Spring 2024
Beyond the unofficial 2nd anniversary of the current freight and profit downcycle, signs of an imminent more than seasonal upturn are few and far between, although it stands to reason that this cycle would be deeper and last longer than usual after the mother-of-all upcycles. Like all worse-than-normal hangovers, this downturn was caused by combining excess amounts of different things – an unprecedented amount of new capacity overshooting a reversal in available freight. One of those alone would be enough to trigger an industry profit recession. As such, the way out of the fog will require improvements in both the freight cycle and the capacity situation. Any sustainable turnaround in freight growth will have to wait for the Fed, where BMO economists have lowered their call for cuts now totaling 50 basis points this year, starting with 25 in September and another 25 penciled in for December. In the meantime, some of the larger for-hire carriers have shifted excess capacity to the spot market, which could accelerate the forced exit of capacity held by weaker operators.