Despite the noise, well-positioned carriers should be optimistic about freight in 2025
PHOENIX—A little clarity could go a long way. But no matter what happens with tariffs, the freight economy and for-hire capacity are overdue for a shakeup. There are many reasons for well-managed fleets to be optimistic about their 2025 outlook.
“If you take away what’s going on with tariffs, in particular … I would have come out here and told everybody: It’s not going to be great. It’s not going to be the pandemic boom. But we are absolutely moving in the right direction,” Bob Costello, American Trucking Associations chief economist, told for-hire carrier executives March 17 at the Truckload Carriers Association’s annual conference here.
He noted that capacity is leaving the market, and volumes are growing as U.S. consumers move past the post-pandemic desire to spend more on experiences than goods. Costello expects growth in goods spending to outpace experience spending in 2025.
With 13 straight quarters of weakening demand, trucking has been mired in a freight recession as the rest of the U.S. economy has slowly grown. While the trucking industry has faced more significant drops in demand, this freight recession has lasted longer than any this century.
“The trucking industry has been in a world of hurt for some time,” Daniel Murray, SVP of the American Transportation Research Institute, said March 18 during the Truckload Carriers Association’s annual convention here. “If you think the numbers are bad for medium to large fleets, anybody that’s playing the spot market—which is always owner-operators, small fleets—they’ve been taking a bath over the last few years.”
Failing fleets cut capacity as demand rises
The day after Costello spoke to truckload carriers, ATA announced that its For-Hire Truck Tonnage Index jumped 3% in February, the most significant month-to-month increase in several years.
“This outcome fits well with our growing optimism for the truck freight market after a two-year recession,” Costello said March 18. “Some of the gain in February was due to accelerated imports early in the year as shippers rushed to bring products into the U.S. before tariffs hit. Even accounting for this, the first two months of the year were positive, all things considered, indicating that the freight recovery has indeed begun.”
Cash reserves built up during the pandemic boom are dwindling for some ill-prepared smaller fleets on the “cusp of failing,” which could remove capacity from the industry even as freight demand improves, Costello said during Truckload 2025.
“Capacity has been leaving the industry. Now, what’s happened is you haven’t always felt it because demand wasn’t very good. But that’s why I was also getting more optimistic: Just as demand starts to pick up, I’m like, ‘You’re going to start to feel it.’”
And while capacity has been slow to leave the industry, many fleets have been slow to keep up with maintenance and financing payments, Costello said. “So even if the market starts to improve, as I suspect, you could still see some of these folks go under. In fact, I fully anticipate that.”
Small carriers had been making good money on the spot market, and some could have benefited from COVID-era Paycheck Protection Program loans for a while (Costello noted that those are hard to track). “But I honestly think that’s pretty much dried up,” Costello said. “Smaller fleets that are generally just getting all their freight from the spot market … are on the cusp of failing.”
Before the freight downturn, Trailiner Corporation, a refrigerated long-haul carrier with 70 trucks and an additional 75 asset trailers pulled by owner-operators, had 90% of its freight contracted, with the rest coming off the spot market.
“Due to the nature of the marketplace, that has shifted a little bit lower to more like 75/25, which I don’t enjoy,” Amber Edmondson, Trailiner president and chief executive, said during a Truckload 2025 panel focused on small carriers.
She added that since she and some family members bought the fleet from her grandfather in 2018, they have focused on diversifying their contracted customer base and freight mix. “We were heavy in produce—and we still are pretty significantly in that market—but we have tried to find other business out of those same areas that is not as seasonal and is more consistent throughout the year.”
The tough spot market has been a good reminder of how important customer service is for small fleets, according to Adam Blanchard, chief executive of Double Diamond Transport, who moderated the small carrier panel on March 17.
“Talk about no loyalty amongst thieves. They’ll dump you for 25 or 50 bucks—no matter how long you’ve been working with them,” Blanchard said of freight brokers and the spot market. “I would say it’s been a very unforgiving market on the spot side, whereas the customer side has been much better to us.”
In those other examples, the freight dropped more significantly but quicker, and the freight bounced back within a year—like quickly ripping off the Band-Aid. “[In] the period we’ve just gone through, we didn’t even fall 10% but it lasted 27 months. That is just a slow, slow tearing off of the Band-Aid. And it’s why it felt so bad.”
During the previous two significant freight recessions, average rates per mile didn’t fall as much as loads—but this most recent cycle saw rates crater more than volume.
ATRI’s Murray called this prolonged freight recession “death by a thousand needle pricks.”
But Murray said he’s optimistic about trucking’s bounce back thanks to a lot of good signals, such as increased housing starts, and the potential for interest rates to come down, which could also help the slugging housing market. When people build or buy homes, not only does it help construction fleets, but it boosts other trucking operations because every time someone moves, they also buy more appliances, furniture, and other products.
“If we want pricing to go crazy, maybe get five or 10% of the capacity out of the industry,” Murray said. “Well, sure enough, we’re seeing that right now during the bad economy. And we’re seeing this possibility that when the economy turns, there’ll be less capacity, and all of a sudden, pricing will go way, way up for us.”
If those small carriers and owner-operators with aging equipment living off the spot market leave and the economy can withstand tariff uncertainty, this protracted sluggish freight economy could finally be history.
“I think we’re set for a turnaround that will feel good—and very, very quickly in ‘25,” Murray predicted this week.
And for small fleets that have weathered the storm, Brown Dog’s Morin reminded his fellow truckload carriers to focus on their operations and customer value instead of worrying about big carriers.
“Focus on your customer. Don’t focus on the big guys because a lot of those things are out of reach,” Morin said. “They all started small too … Your most valuable piece is customer service. For us, if a customer has a problem, they’re going to pick up the phone and call me directly.”
