Optimism about an economic lift at the beginning of 2025 has given way to the reality that the longest freight slump in memory has extended into a third year, reports Today’s Trucking.
According to Bob Costello, chief economist for the American Trucking Associations, while an economic recession isn’t expected, any uptick fleets experience in the coming quarters will likely be from an accelerated reduction in industrywide capacity.
Meanwhile, he says the pace of trucking fleet failures is likely to accelerate.
“Any recovery in trucking is not going to come from the demand side,” Costello said during a presentation at ATA’s Management Conference & Exhibition in San Diego. “If freight levels do not improve much and costs remain high, we will see an acceleration of failures.”
The manufacturing sector, so critical to trucking’s health, has contracted for seven consecutive months, according to the Institute for Supply Management. That includes an estimated 42,000 factory jobs lost over the past four months.
Thus far, U.S. consumers have felt only a minimal impact from tariffs, but Costello expects that to change. Estimates are that half of imports entering the United States are semi-finished products used in the manufacturing process, and could be subject to a tariff.
Using baseball as an analogy, Costello said, “we are only in the bottom of the second or third inning” on the potential impact of tariffs for trucking and the larger economy.
“It is taking a long time, but I am more convinced than ever that supply is coming out,” Costello said of trucking’s capacity glut.
That applies in particular to truckload fleets, whose costs are rising while freight demand and rates remain depressed. It also applies to the less-than-truckload sector, with key metrics like average weight per shipment continuing to underperform. This has left more fleets on the brink of failure, said Costello.
Full article here.