GARY FRANTZ, DC VELOCITY
AFTER THREE YEARS OF DECLINING FORTUNES, the trucking markets have reached a level of stability that has many fleets and operators believing that the worst is over and a return to sustained growth, though certainly not robust, may be on the horizon.
Smaller trucking companies and owner-operators have continued to rationalize their fleets or leave the truckload market entirely, draining it of excess capacity. Larger fleets have been maintaining capacity but not adding much in the way of new, the goal being to find a balance that will allow them to operate profitably in today’s environment yet still be ready to respond when significant growth returns. Taken together, these factors have helped demand reach somewhat of an equilibrium with capacity, a sort of “normalcy” in the market not seen since before the pandemic.
On the less-than-truckload (LTL) side of the business, all of the freight that was dumped into the market when Yellow Freight closed its doors has been absorbed—a process that provided a temporary boost to remaining players that kept networks flush and margins relatively intact. As well, virtually all of Yellow’s terminal assets—and much of its rolling stock—have been snapped up by LTL competitors, including Estes Express Lines and XPO, enabling them to grow their networks and add much-needed dock door capacity in key markets.
SHIPPERS REMAIN GUARDED
As the end of 2025’s first quarter approaches, “shippers are still guarded, in a wait-and-see mode,” says Jim Fields, chief operating officer with LTL carrier Pitt Ohio, which also boosted its network with the purchase of some former Yellow assets in addition to completing two acquisitions last year. Nevertheless, while “freight is a bit light right now, we are optimistic that we will see a moderate uptick in LTL volumes, especially in the second half of this year,” he notes.
“We are focused on how we prepare ourselves as we come out of [the freight downturn] and aggressively pursue growth opportunities,” Fields adds. “We’ve been working for three years to create capacity in our facilities, add yard space, and recruit and retain the best drivers available.” The primary challenge, he believes, will be “managing through the transition from a slow time to a more robust economy. We have to plan a certain amount of capacity for growth and [for] bringing on new business with a purpose, in a measured approach that fits our network and provides superior value to the client.”
At LTL carrier A. Duie Pyle, which runs an LTL fleet of some 1,900 tractors and 3,300 trailers serving primarily the Northeast U.S., it’s a similar story. “We are cautiously optimistic things are improving from a freight demand perspective,” observes Frank Granieri, Pyle’s chief operating officer for supply chain solutions, adding “we continue to add capacity in all of our services and business units.” In addition to its 32-terminal LTL network, Pyle operates some 18 warehouses with 4.4 million square feet of space, with 50 dedicated contract customers.
Granieri characterizes the LTL market as “steady as she goes. With all the consolidation that has occurred over the years, LTL companies have been pretty disciplined in how they are going to market with their pricing.” He also senses that LTL providers, Pyle included, have gotten better at “understanding the cost of space on a truck over time” and become better at managing how to control those costs and optimize capacity with the highest-margin freight.
Yet the industry still faces headwinds, Granieri says. Among those are cargo theft and fraud, the continued uptick in truck parts and maintenance labor costs, rising health-care costs, and liability insurance premiums that have gone through the roof, driven by “nuclear” verdicts from truck accidents. “It’s an industrywide issue,” he says.
RETHINKING DELIVERY PRACTICES
Despite the headwinds, Webb Estes, president and chief operating officer at family-owned LTL carrier Estes Express Lines, says there is a general sense of optimism from customers. In many cases, forecasts and projections from shippers signal at least a steady level of freight through the spring, with moderate growth accelerating in the second half of the year.
Although the carrier’s 20,000 customers have numerous priorities, one consistent focus for Estes is on “meeting the customer where they are and letting them know we can meet their needs,” Webb Estes says. “No. 1 for our team is the continual reliability of our service and making sure [the customer] gets a great experience,” he notes.
Part of meeting that objective has been investing in capacity to build out its network. Estes was among the most aggressive to do that over the past two years, spending some $490 million to acquire 37 former Yellow Freight properties and take back 15 Estes-owned terminals that Yellow was leasing.
As the industry approaches more normal cyclical patterns, Webb Estes sees a renewed interest among customers in optimizing inventories and re-engaging in just-in-time (JIT) delivery practices, versus the “just in case” inventory surge and hold practices of the pandemic.
“There have been some interesting discussions,” he shares. “The pandemic reminded shippers that having a little extra buffer was a good thing.” But it came with a cost, in warehouse expense, inventory carrying costs, and product obsolescence. Adjusting supply chains to rein in those costs is bringing skinny inventories, multiple smaller shipments, and JIT delivery back to the forefront—which LTL excels at.
Yet that strategy will have to be balanced with the impact of the Trump administration’s tariff policies—which are affecting a wide swath of goods across many industries from America’s top trading partners. That’s driving shippers to consider pulling orders ahead, looking at forward stocking, and keeping more inventory, Webb Estes says.
However it plays out, he is confident his company has the assets, network, people, and agility to meet the market. “Sometimes the biggest challenge is what is staring you in the face,” Estes quips. “I don’t know where the balance is [between just-in-time and just-in-case stocking practices], but what we are preparing for is making sure we have the capacity and [ensuring that] we deliver a service that provides a great customer experience in either scenario. You have to manage the business in a way that’s consistently in rhythm, is optimized every day, yet is flexible and agile.”
NO PICNIC
The most volatile segment of the trucking market traditionally has been for-hire, irregular-route truckload freight. It’s also a market where there are literally hundreds of thousands of small operators running one to five trucks who are out there competing for loads every day. For these providers, the last several years have been no picnic. Spot rates have remained depressed and stubbornly bounced along the bottom. Contract truckload capacity has been lucky to win renewals at the same pricing.
Yet the truckload market does appear to be at a turning point. “We have seen smaller carriers exiting the market over the course of the last two years,” observes Jim Filter, executive vice president of transportation and logistics for Schneider, one of the nation’s largest truckload operators. “Larger carriers not so much, but they’re not adding capacity either. We are in a state of equilibrium now,” he notes, adding “the longer [the current market] goes on, the harder it is to flip in the other direction.”
Nevertheless, in his conversations with customers, Filter is encouraged. “Most are planning for growth in 2025. A bright spot: demand for dedicated services. “Customer supply chains have become much tighter and less forgiving. They want more control over capacity and service, more reliability, and more certainty over cost,” he notes. Dedicated has been a consistent growth area for Schneider, Filter says. The company had nearly 7,200 trucks devoted to dedicated customer solutions at the end of 2024, he says. “We expect to grow this segment of our business.”
Filter and other industry executives say that rate increases are needed to sustain the reliable operations shippers expect and to provide the cash for investments in growth. “Spot [rates] start to move first, then it creeps into truckload contracts and eventually intermodal,” he notes. “We’re in the early stages of pricing increases.”
One advantage Filter believes Schneider has is its diversification. Its lineup includes for-hire and dedicated truckload, intermodal, brokerage, and transportation management services along with third-party logistics support and what he believes is some of the best technology in the industry. “If you look at our mix, we are the only public company that does not have a customer [that is] 10% of our portfolio.”
A TURNING POINT FOR RATES?
It’s no secret that over the past three years, the extended decline in freight rates along with stiff inflation has depressed truckload carrier margins. Yet with the 2024 cycle concluded and as carriers move into the new year, “we have more conviction that we are finally moving on from the prolonged down cycle that has weighed on the sector,” said Adam Miller, chief executive officer of Knight-Swift, in the company’s recent earnings conference call.
While 2024 was a difficult year, “it also brought a stabilization in pricing, a return of seasonal patterns, a cooling of cost inflation, and a marketplace that gave more indications of approaching balance in the second half of the year.”
He notes that the company has not been waiting for the next up cycle to prepare the business to produce better margins. It has made strategic acquisitions in both truckload and LTL, and “diligently trimmed costs” to reduce pressure on margins. Miller also cited “sustained efforts to develop technologies that will help our business be more efficient [and allow it to respond] to opportunities and challenges” in the next up cycle.
Moreover, as the market improves and demand tightens, customer needs are likely to become more acute and dynamic. With its scale and diverse service offerings, Miller believes that Knight-Swift is well positioned to benefit from an upturn “particularly because our industry-leading one-way truckload exposure can be arguably the most commoditized service during loose markets but become some of the most valuable capacity we offer in a tighter market.”
A STEADYING MARKET
The volume reset that has occurred since 2023 is mostly done, as shippers have rightsized inventories and adjusted their operations and shipping needs to a post-pandemic market, one that more closely resembles the markets of 2018–19, with more normal capacity-demand dynamics, notes John Vaccaro, president of Bettaway Supply Chain Services.
Bettaway runs a fleet of 125 tractors and 800 53-foot dry van trailers primarily doing just-in-time delivery supporting beverage manufacturers and distributors in addition to operating a nationwide pallet management network and providing warehousing and fulfillment services in the Northeast U.S.
Customers have shifted from pandemic-driven tactics of simply trying to get any truck they can wherever they can at any price they can, to more carefully planned, strategic engagements, Vaccaro says. “Customers want fair rates, reliable capacity, and compliance with their systems, and they want to hold the ground on the rate reductions they’ve gained over the past two years,” he notes.
In response, Bettaway has spent the last year “rightsizing our operations and investing in new staff, tools, and methods to position us for recovery—and growth. It’s survival of the fittest,” he says.
Vaccaro also has noticed a discernible shift among clients to interest in captive in-house fleets (often run by a third-party service provider) and dedicated solutions, instead of constantly playing the spot market. The objective: secure, reliable capacity and predictable cost. Part of that is reflective of most trucking indexes today, “which are telling a story of balance, with increasing rejection rates” of truckload moves that are priced too low.
While in general he feels the industry still has too much capacity, the market does seem to have bottomed out, “with many saying that Q2 or Q3 [2025] will [see] a pivot” to improved rates and stronger demand, he says. “Dedicated is the word of the day,” followed closely by “a laser focus on optimizing the assets you have.
“We are managing with a more deliberate focus on lanes and loads we accept, cutting out the inefficient loads that need double handling, and emphasizing as much one-touch freight as we can,” he says.
TECH HELPING SMALLER CARRIERS
One macro factor that has influenced market capacity has been the development of inexpensive, easy-to-implement and easy-to-use visibility, freight-matching, and costing apps—many of which need only a smartphone to run.
That’s provided the small owner-operator, even the one-truck folks, with data, information, visibility, and customer engagement and management tools that enable them to pick the best, most well-aligned, and most profitable loads for what the truck is hauling today and where, as well as the best, most efficient route to get there.
The result: Small operators are now able to strategically select loads, optimize their operations, and micromanage their costs and margins much like the big players. That’s allowed them to stay at least marginally profitable—and remain in the market longer.
“It’s given small carriers much better visibility into profitable freight,” notes Avery Vise, vice president–trucking at research and economic forecasting firm FTR Transportation Intelligence.
“The market has done the best it can with rightsizing,” he adds. “Carriers have [trimmed] their operations as [much as] they can justify.” The biggest issue for the truckload space, he believes, is the industrial economy, which has been in retraction every month, save one or two, for some two years.
“The industrial side is what drives trucking volumes,” Vise says. “As we look ahead, we see some reason to be hopeful of a recovery [in the industrial sector]. That could be the rising tide that finally lifts all boats.”
Read More
