Truckload Market Update: 4Q2024
Despite recent challenges like Hurricanes Helene and Milton and a brief port strike, the truckload market has shown strong resilience. While we saw some temporary rate spikes in affected areas, those have since leveled out. With the holiday season approaching, there’s potential for rising freight demand, especially in regions recovering from the storms. Let’s take a closer look at the current landscape and what it means for the busy months ahead.
The truckload market is seeing subtle but positive shifts in rate trends
In September, linehaul rates for national contracts continued to show year-over-year (YoY) declines. Specifically, contract rates for van shipments fell by 2.1%, while refrigerated shipments were down by 3.2% compared to last year. However, van contract rates actually saw steady, month-over-month increases throughout the third quarter, while refrigerated shipments rose in July and August.
This pattern suggests that contract rates may have hit their lowest point, and we could see a gradual increase in rates over the next few quarters. Typically, contract rates tend to follow spot market trends but lag by about two to three months.
One significant positive indicator emerged in the spot market. In August and September, the average DAT 7-day van spot rate showed YoY growth of 2.0% and 2.1%, respectively. For refrigerated freight, the spot rates followed suit, with YoY growth at 2.0% in August and 4.0% in September.
While the spot market shows signs of a recovering freight cycle, sequential growth has been muted; spot rates in August actually saw a small dip, down 2.4%, and September’s rates remained mostly flat.
An important factor here is fuel prices, which are currently lower than last year. In fact, diesel prices have dropped about 18%, which translates to a savings of around $0.16 per mile for spot rates. Because of these savings, the real increase in spot linehaul rates isn’t as noticeable. When we look at van spot rates including fuel costs, August and September actually saw declines of 3.2% and 6.3%, respectively, compared to last year.
The Energy Information Administration (EIA) has lowered its forecast for Brent crude oil prices to an average of $78 per barrel for 2025, based on expectations that global oil demand growth will slow. However, this forecast could change if global demand rises due to higher production levels or if geopolitical tensions in the Middle East escalate and affect oil supplies.
Oversupply remains a persistent issue
One of the most pressing challenges in the truckload market is overcapacity, which continues to suppress rate growth. As demand surged during the previous freight cycle, new carriers flooded the market, leading to an estimated 90,000 additional operating authorities compared to March 2020. Most of these operators are single-truck carriers, and though the market has seen some attrition over the past two years, FTR reports that the rush of new entrants has begun to level off.
Operating costs have also become a significant burden for carriers. Rising expenses for equipment, maintenance and insurance mean that many are running at close to negative margins. During the peak of the last freight cycle, carriers accumulated “rainy-day” funds, which are currently keeping them afloat.
Additionally, some carriers took advantage of low-interest COVID-era SBA loans, which may have provided temporary relief. However, with repayment deadlines approaching, we could see a significant drop in capacity as some of these carriers exit the market.
This strain isn’t limited to carriers. According to the FMCSA, property broker operating authorities have decreased by 8.5% compared to 2023 and are down 15.5% from their 2022 peak. As a result, it’s become even more critical for shippers to form strategic partnerships with brokers who can provide market insights, financial stability and a deep understanding of industry cycles. Working with established brokers is key to navigating this period of low rates and market saturation effectively.
Supply Chain Insight
While capacity is currently plentiful, we can’t ignore the potential for holiday season disruptions. Factors such as severe weather, supply chain bottlenecks or unexpected spikes in demand still pose risks. Developing contingency plans and regularly communicating with your carriers can help you navigate these risks more effectively.
Some indicators signal potential market balance
Freight volumes in the U.S. have shown resilience even amid these challenging conditions. Outbound tender volumes reported by SONAR surpassed 2022 levels this October and are running higher than last year’s figures.
With 4Q underway, tender volumes are expected to follow the usual seasonal uptick, driven by holiday shipping demands. In fact, the SONAR Tender Reject Index — an indicator of carrier capacity — crossed the 5% mark in October, which could suggest a slightly more balanced market. The recent increase in rejections may also be related to temporary capacity displacements due to Hurricane Milton and a three-day port strike.
On the international front, U.S. import volumes surged to a four-year high in 3Q 2024. The Port of Los Angeles, for example, reported a 27% YoY increase in TEU volumes for September, underscoring the strength of peak-season shipments. However, this high point may be a temporary spike, as some analysts believe the peak was front-loaded due to shipping disruptions in the Red Sea and the potential East Coast longshoreman strikes. Tariff policy changes post-election could also impact import volumes in 4Q and early 2025, adding another layer of complexity to the global supply chain.
While the spot rate floor appears to have been reached, economic signals remain mixed. The Institute for Supply Management’s PMI reading for September was 47.2, indicating ongoing contraction in the manufacturing sector. A lack of business investment due to federal monetary policy and election uncertainty appears to have kept the industry cautious. Retail inventories remain stable, with August’s levels aligning with a more “just-in-time” fulfillment strategy by shippers, which may also impact future demand for freight.
Outlook for 2025
As we head into 2025, the freight industry faces both opportunities and ongoing challenges. Although some rate improvement is already visible, overcapacity and rising operating costs will keep pressure on the market. Key economic factors — such as potential reductions in interest rates, disaster recovery spending and an “election-free” year — could gradually lift demand, but the true recovery in both spot and contract rates likely won’t be realized until the latter half of 2025.
Shippers and carriers should continue to monitor capacity changes, remain vigilant in their partnerships, and prepare for a prolonged but steady rebound as the industry emerges from this period of volatility.
About ArcBest Truckload
ArcBest Truckload delivers reliable freight shipping solutions for businesses looking for a dependable full-truckload shipping partner. Our best-in-class truckload brokerage service, MoLo®, backed by our robust asset-based network, ensures customers have the capacity and flexibility to manage their national, regional and cross-border shipments efficiently.