After attending ACT Research's Market Vitals: The Current and Future Health of the Market Seminar 71 on August 21-22, 2024, Brett Lankford from Fetch Freight and Tim Denoyer from ACT Research reflected on the Class 8 market, the role that private fleets have played in the out-of-cycle order volumes, the economic and market conditions, and what it all means for rate recovery and moving out of the bottom of the truckload cycle.
Scroll down to view the full conversation between Brett and Tim.
1. Resilience in Demand, but Stagnation in Freight
Despite the challenges facing the freight industry, demand has proven to be resilient, largely thanks to strong consumer activity. However, the freight market itself has remained stagnant. A key factor contributing to this stagnation is the rapid expansion of private fleets. Private companies have been investing heavily in their own fleets, which has shifted volume away from the spot market. This shift is driven in part by the cost structures of private fleets, which are generally more favorable compared to for-hire operators, allowing them to expand more aggressively.
Another contributing factor is the low prices of used trucks. With the cost of acquiring used trucks decreasing, owner-operators have found it easier to re-enter the market, adding to the capacity and further complicating the supply-demand balance.
2. Truck Orders: Preparing for 2025
The conversation around truck orders reveals that the industry is approaching a pivotal moment. Prices are being set and the order books are about to open for 2025. Industry sentiment, however, remains cautious. This hesitancy could actually prove beneficial for the spot market in 2025, as it signals a potential reduction in manufacturing. A slowdown in production would help stabilize the market by reducing excess capacity.
On the equipment front, inventories are building, and the flow of new orders is starting to slow. Truck manufacturers are reaching a turning point where they will need to ramp down production. This may be tough for suppliers and original equipment manufacturers (OEMs), but it could bring much-needed relief to freight rates. As we hear more from fleets, it’s becoming clear that this production slowdown is on the horizon. This shift is part of the cyclical nature of the freight market, and while it might create short-term challenges for some, it sets the stage for a healthier, more balanced market in 2025.
4. Emissions: A Growing Concern
Another topic that is beginning to resurface is emissions regulation. While progress on emissions has been steady, it remains slow, and the industry is bracing for these regulations to once again become a central part of the freight cycle conversation.
5. A Long Downturn and Market Correction
The freight market, particularly the for-hire segment, has been in a prolonged downturn. However, as the market adjusts, the laws of supply and demand remain in effect. Excess capacity needs to be addressed, and this correction is essential for bringing the industry back into balance. As the supply rationalizes, we can expect to see some relief for carriers and providers, setting up a better environment for growth in the years ahead.
In conclusion, the freight market is navigating a challenging period of stagnation and excess capacity. However, the industry’s resilience, along with strategic adjustments in truck manufacturing and emissions policies, provides hope for a recovery in 2025. Stay tuned as we continue to track these critical trends.
Want to hear the full conversation from Brett and Tim? Check it out below!
Fetch Freight is a rare breed of freight brokerage. They offer the optimized solutions of next-gen technology with the hands-on, nimble service of a family-owned business. No matter what your challenges are, they'll do whatever it takes to deliver. To learn more about Fetch Freight visit their website, www.fetchfreight.com.
Ready to hear more from the ACT Research team? We have an OUTLOOK webinar coming up on October 17th and our next Market Vitals Seminar will be on February 19-20, 2025. Click here to learn more about our events.
