Industry Update: Truck Transportation Summer 2023
For-hire carriers continue to grapple with the dual challenges of excess capacity and a sideways freight environment. The over-capacity condition continues to move in a healthy direction, with private fleet expansion long in the tooth and the weakest for-hire carriers continuing to leave the market. That said, the rebalancing process has been drawn out longer than prior cycles. Multi-year low freight rates and elevated operating expenses have been partially offset by the cushion of excess profits generated during the post-COVID freight boom and benign fuel prices over the past year. While Darwin continues to work on the capacity issue, a durable improvement in the macro landscape, the freight cycle, and eventually carrier profits will hinge on the pace of the well-telegraphed Fed easing cycle. In that regard, BMO economists have recently raised their forecast for the remainder of this year to cuts totaling 75 basis pointsand another 50 during the 1st quarter before easing into a cadence of 25 per quarter for a total of 200 bps by the end of 2025.