State of Logistics 2024: Truckload

The days of favorable market conditions for truckload (TL) shippers “are numbered,” says Avery Vise, FTR’s vice president of trucking. But when is the $403 billion truckload market expected to return to somewhat normal market conditions?

“By the first quarter of 2025 we expect a steady, but incremental tightening of the truck market to yield a modestly tougher environment for shippers,” says Vise. “However, we don’t see anything like 2021 or 2018 on the horizon.”

Other analysts agree. “The general consensus is that the truckload market has bottomed out,” says Mike Regan, co-founder of freight payment provider TranzAct.

On recent earnings calls from TL giants such as Knight-Swift, J.B. Hunt, and Werner, their message is pretty direct: Carriers are basically saying that they’re not going to commit more capacity to the spot market until the contract market rebounds. “They’re not going to lock in capacity at contract prices at current levels that do not deliver reasonable profits,” says Regan.

What does this mean for shippers? Regan says that if you’re thinking about conducting a TL sourcing event, move fast. That’s because if there’s any type of economic rebound—and that is not unreasonable to expect—truckload rates are likely to skyrocket.

“Our recommendation is simple,” Regan said. “If you plan on conducting a truckload bid in 2024, you should have already done so by June 1.”

The Bureau of Labor Statistics’ Producer Price Index for truckload, which has lingered at a near standstill for almost a year, was negative 4.4% year over year in April, the last month for which statistics are available.

At Knight-Swift, the nation’s largest TL carrier, volumes were under pressure in the first quarter as some business was lost due to challenging rate negotiations, according to a recent research note from Cowen.

Morgan Stanley dry van truckload freight index

Incremental truckload demand divided by incremental truckload supply

As a result, Knight-Swift’s tractor count was expected to fall slightly in the second quarter before stabilizing in the third quarter. Knight-Swift’s average revenue per tractor fell 1.6% in the first quarter. Knight is expected to post a mid-90s operating ratio in the third quarter.

That would be a pleasant turnaround for Knight, which lost $10.7 million in the fourth quarter of 2023. It posted a net loss of $2.6 million in the first quarter of this year. Brad Stewart, Knight-Swift’s treasurer and senior vice president of investor relations, said on a recent earnings call that TL conditions continue to be soft throughout the sector.

Landstar, the nation’s 3rd-largest TL carrier, reported a 13% drop in loads in the first quarter. It expected to improve to between a 5% to 9% drop in the second quarter. Landstar officials sounded cautiously optimistic on industrial end markets (EVs, wind, data centers), but consumer durables have been a soft spot for the carrier.

At Werner Enterprises, the nation’s 6th-largest TL carrier, operating income fell 71% in the first quarter year over year to $15.6 million. But Werner grew average revenue per truck in its dedicated segment, net of fuel surcharge, by 1.3% year over year, according to an earnings announcement. “Despite a highly competitive environment and isolated fleet losses, pipeline opportunities remain healthy and client retention remains strong,” Werner said in a statement.