5 Key Insights on Trucking Industry Rebalancing: Demand and Capacity Near Equilibrium

Dina Youssef

The trucking industry is showing signs of stabilization as freight demand and capacity gradually move toward equilibrium. Following years of pandemic-induced supply chain disruptions, industry experts note that the imbalance created by surging freight demand and increased driver capacity is beginning to normalize.

Post-Pandemic Adjustments

During the COVID-19 pandemic, consumers shifted their spending from services to goods, triggering a sharp increase in freight demand and rates. This led to a surge in drivers entering the market. However, the subsequent downturn, which began roughly two years ago, left the industry grappling with oversupply and weakened demand.

Carter Vieth, research associate at ACT Research, highlights improving freight demand trends despite ongoing challenges. “The threat of another ILA [dockworkers] strike on January 15 likely caused shippers to pull freight forward, and with tariffs looming post-election, this pull-forward in freight is expected to accelerate,” Vieth explained. ACT Research reported a 7.4-point increase in its volume index for October, rising to 56.9, while the capacity index dropped by 1.1 points to 49.7. These changes pushed the supply-demand balance index to 57.2 points, reflecting a slow but steady rebalancing.

Current Market Dynamics

According to Michael Castagnetto, president of North American Surface Transportation operations at C.H. Robinson, the trucking market remains in a state of “stable, sustained oversupply.” He attributes sluggish growth to factors such as flat industrial production, reduced consumer spending, and fewer housing starts. Despite these challenges, many carriers have managed to endure by leveraging technology and taking advantage of savings accumulated during the pandemic.

“Route guide depth, a key market indicator, has remained flat,” Castagnetto noted. “This suggests that carriers are not in a position to be selective about freight, indicating a lack of tightening in the market.”

Optimism and Challenges Ahead

A recent survey by Truckstop and Bloomberg Intelligence indicates growing optimism among owner-operators and small fleets, with 6% more carriers expecting spot rates to rise over the next three to six months and 7% more anticipating higher volumes. However, 15% of respondents still expect to exit the industry within the next six months.

“An acceleration in carrier exits could speed up the market’s return to equilibrium and create a better rate environment in the coming year,” said Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence.

A Neutral Pricing Environment

Commercial Motor Vehicle Consulting reports that the market has entered a neutral pricing environment, with neither shippers nor carriers holding significant leverage to alter rates. The impact of Yellow Corporation’s closure in July, which shed 34,000 jobs, has been notable. By August, the trucking industry saw approximately 37,000 jobs disappear from the market.

Jacob Faunce, carrier relations manager at E2open, highlighted the influence of first-time drivers entering the market during the pandemic. “While driver capacity has been gradually reducing, retail sales growth and volumes from Asia and South America have kept demand steady,” Faunce said. He anticipates rate improvements in the near future.

The Road to Equilibrium

Dean Croke, principal analyst at DAT Freight & Analytics, described the trucking market’s struggle to align capacity with demand as a “moving target.” High interest rates, shifting consumer habits, and reduced home construction have complicated this process. Despite these hurdles, Croke sees signs of stabilization, such as returning seasonality and slight improvements in rates.

“Capacity continues to exit the market,” Croke explained. “We’ve seen about 7,000 carriers leave each month this year, and by my calculations, only 18% of the carriers that entered since June 2020 are still active—a remarkable shift.”

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