A macro economy showing signs of cracks. Disappointing employment numbers. Sluggish consumer spending and tepid business investment. Inflation that remains stubbornly painful, increasing the costs for just about everything related to running trucks. A key manufacturing index that in July recorded its fifth straight month of contraction.
And then there are the unsettled, on-again off-again tariffs.
Those are not market signals that foreshadow happy times for motor carriers or provide any level of confidence that a meaningful turnaround in freight is on the horizon.
“The tariff situation has put a malaise of uncertainty on the industry,” observes analyst Jason Seidl, TD Cowen’s managing director of industrials–airfreight & surface transportation. “We are in year three of this [freight] downturn. That’s the longest of my career, and I’ve been in logistics and trucking for three decades.”
Will 2025 have a peak season? “That’s questionable,” he says. “A lot of major carriers are removing guidance for the year. Shippers just don’t know about peak season.”
One contributing factor, Seidl notes, was how shippers “pulled forward” large volumes of product last April and May in an attempt to build inventory and beat the initial tariff deadline. “Now they are holding that in warehouses and trailers. That freight is already here, and that will reduce the amount of goods [coming into the U.S.] that travel during peak season.”
He adds that some businesses ordered less or canceled orders altogether. For those shippers, catching up and having sufficient inventory for the peak buying season will be difficult. “You needed to order for peak in July.”
Carter Vieth, research analyst at ACT Research, reached a similar conclusion in ACT’s most recent For-Hire Trucking Index, released July 29. “After surging 7.7% year over year in April, goods spending slowed to 3.7% in May, hinting at the beginning of the post pull-forward decline [in freight volumes].” He noted that the index’s supply-demand balance decreased in June to 44.4 from 46.1 in May. That’s an indication that “as tariffs went into effect, [it] resulted in a looser market balance,” he says, adding “the payback period after multiple pull-forwards in freight is poised to begin. Even with modest pass-through, the inflationary effects of tariffs will lead to more goods demand softness in the months to come.”
UNCERTAINTY AND INCONSISTENCY
The choppiness in the market and the lack of reliable forecasts “is all a function of uncertainty, that’s the headline among everything else,” says Andy Dyer, president of freight auditing/payment and brokerage firm AFS Logistics, which directly manages and pays some $15 billion in transportation spend annually across multiple modes for its customers.
“When I look at my brokerage daily reports, it’s an EKG chart,” he quips. “You have multiple spikes and troughs. You are still generally healthy, but it is a very unsettling and concerning environment.” In terms of a market recovery, he adds, “the reality is at the end of the day, there are no signals of increasing demand. I keep coming back to my standard line: There will be a supply side correction in the near future.”
For AFS, Dyer says the best thing his team can do for shippers “is to bring knowledge into the breach. We have visibility into billions of dollars of freight spend at transactional levels. We can see what is going on where, and why.”
His advice to customers during these turbulent times: “Play the long game. Don’t be reactionary, yet be strategically responsive to the market where it makes sense. Don’t do something so highly aggressive [in chasing low rates] that it puts your core carriers at risk and compromises [access to capacity] next week, month, or quarter. There is still value in being a shipper of choice.”
CHARGING AHEAD
While the truckload sector has seen smaller carriers exiting the market and larger fleets trimming capacity and sharply reining in costs to weather the storm, the less-than-truckload (LTL) market, by comparison, has been relatively stable. That’s a function of a business that has a high barrier to new entrants and has benefited from the closure of a major competitor in recent years that took a big slug of capacity off the market.
“Pricing in the LTL market is in the bend-but-not-break mode,” says TD Cowen’s Seidl. “It’s still up but not as strong as it once was.”
Yet that’s not stopping some carriers from continuing to build toward the future. One example is privately held Estes Express Lines.
“Capacity is fine in the LTL space,” says Webb Estes, president and chief operating officer at the Richmond, Virginia-based LTL carrier. He’s been pleasantly surprised “at how consumers have hung in there.” Even as goods have become more expensive, “consumers are still spending at the levels they did last year,” he says, adding that “we don’t haul inflation, we haul products,” a favorite line he attributes to long-time Estes executive Billy Hupp.
Following the bankruptcy of venerable LTL carrier YRC, Estes went on a buying spree, acquiring 52 former YRC terminals as well as some of its rolling stock. That’s expanded the network to over 300 terminals supporting a fleet of 10,621 tractors and 42,179 trailers, and a team of over 24,300 employees, who handled some 13.7 million LTL shipments last year.
In 2020, Estes had 10,200 dock doors. In 2026, once all the added facilities are refurbished and online, that will grow to over 14,000 doors, Webb Estes notes. Many of the larger facilities are replacing or supplementing smaller terminals in key markets. Purchasing those facilities represented “90% of the spending,” he says, with the remaining investment devoted to renovating the facilities “to get those up to Estes standards and get them operating.”
Estes purposely acquired terminals with more capacity than it needs now. That’s to build for the future, Webb says. “We might have a new 200-door facility, and we start out using only 100 doors to meet current demand. That capacity is now there for growth,” he notes. “You can operate without extra expenses. Moving in and having extra doors does not mean that our costs go through the roof; it just means we have [capacity] ready.”
Among other benefits, the new terminals have allowed Estes to adjust its network and routing practices, he continues. “By having larger facilities in more locations, we can load more ‘directs’ [trailers that go from one terminal to another without an intermediate stop].” That creates a compounding effect “where we can eliminate rehandles and other issues that affect other terminals. It actually makes other terminals down the line more efficient,” he explains.
“LTL is a low-margin, high-volume business,” emphasizes Webb. “Where you can cut out rehandling and leverage larger facilities to drive more efficiency into overall operations, that’s a big deal.”
STEADY AS SHE GOES
Adam Satterfield, chief financial officer at LTL carrier Old Dominion Freight Line (ODFL), also calls out the performance of the overall economy, which has been exacerbated by the uncertainty around tariffs, as the primary factor holding back shippers and their freight—and dimming trucking’s growth prospects.
“For our customers, they are struggling with ‘Should I try to move ahead and invest in my business or stay on the sidelines’ until some of the uncertainty is cleared up,” he says.
Yet the freight recession hasn’t caused ODFL to dial back its run of investments in its fleet, employees, and terminal network, which will consume $450 million in cap ex this year—for a total of $2 billion over five years. Nevertheless, it’s been a difficult past three years for the freight industry, where ODFL, like many others, “has controlled what we can control and managed our costs very well, particularly this year,” says Satterfield.
Yet one piece of steady feedback that, even in a slack demand market, Satterfield and his team continue to get from customers is a consistent desire for value, which flies in the face of some shippers beating up their carriers for another couple of pennies on the rate.
He believes that sophisticated shippers want a service product from their LTL carrier that’s 1) priced fairly, 2) maintains or improves the customer’s satisfaction with the product and the buying experience, and 3) contributes to the lowest overall total cost to serve.
For ODFL, achieving those objectives has meant an unwavering focus on strategic “steady as she goes” investments in its network; supporting employees with a workplace, tools, and training to perform well; refining and upgrading its technology; and providing a consistent on-time and claims-free service product that Satterfield believes is second to none. “We’ve won the Mastio award [for best service value] 15 years in a row,” he notes.
Despite the economy’s challenges, Satterfield senses an undercurrent of optimism in his customer conversations. “[Most of] our customers are looking at the long term, what their supply chains will need going forward when growth returns,” he notes, adding “capacity today is not at the forefront of their minds.” Surviving the current uncertain policy and economic environment is.
Yet like a pendulum, freight supply and demand swing back and forth. “History shows [at times] we have been a capacity-constrained industry,” which requires planning and preparation well before a capacity crunch hits, Satterfield says. ODFL likes to keep its network at 20% excess capacity so it’s ready for the shift. “We can protect our customers and service their freight through good times and bad, tight, or loose markets, by having the capacity they need and delivering on the service expectation they have of us.”
And while today’s market volumes might be soft and margins under some pressure, the future beckons. “We’re well positioned to capture market share when the upturn occurs, and it will. Service wins at the end of the day,” he says.
LONGING FOR STABILITY
Carriers in both the LTL and truckload markets have examined every expense and squeezed every dollar out of operating costs. They’ve rationalized networks and pared down fleet size to match current demand—with a bit of a buffer for when growth returns. Yet even with the market at “stable to soft” currently, carriers continue to exit the business, particularly smaller operators in truckload.
And while LTL pricing is as fluid as always and some shippers are granting “modest” increases, “the market is not sustainable at the lowest rates [being offered],” observes Kent Williams, executive vice president of sales and marketing at Averitt, which provides LTL, truckload, drayage, warehousing, and other logistics services. “All the big carriers are saying this can’t continue. That doesn’t mean that [shippers] are going out and giving away money, but they recognize that rates do have to increase if they are going to have [long-term] stable, sustainable capacity.”
Like other LTL carriers interviewed for this story, Averitt is continuing to reinvest. LTL is a more stable market than truckload, and while it remains intensely competitive, LTL still enjoys profit margins Williams would characterize as “fair and reasonable.”
And while Averitt has “slowed down” some equipment purchases this year, “we feel we can ramp up pretty quickly. There are build slots available. Safety systems get better every year. It’s worth it to continue to refresh the fleet and deploy trucks with the latest safety and fuel-efficiency performance,” he says.
Moreover, LTL carriers, Williams believes, have a much more accurate handle on actual costs today—and, thus, what levers to pull—than in previous years. Before, the approach to winning business was “we have to match the discount to get the freight,” he recalls.
Now with the help of high-capacity computer processing, real-time data, predictive analytics, and machine learning and AI tools, “carriers are doing a better job [of pricing and costing],” Williams says. “With technology and all the data we have, we are more precise with actual time and costs for moving freight and capacity utilization. It’s much more scientific than it used to be.” Ultimately, that benefits the shipper, he believes.
YOU CAN’T SHRINK TO PROFITABILITY
Avery Vise, vice president of trucking for research firm FTR Transportation Intelligence, uses a rolling capacity-utilization model to get a view into the market (primarily truckload) and determine to what degree available drivers are being seated in available trucks. It addresses the question of how effectively the pool of drivers is being utilized in the market.
The 10-year average, he notes, is 92%. In 2025, “that driver [across modes] has a load 93% of the time when available.” That means the market “has stabilized for now at a level that is not quite enough to create upward pressure on [truckload] freight rates.” He expects some weakness to continue for the next several quarters “based on expectations of a modest impact from tariffs. I don’t see much in the way of upward improvement or stronger freight volumes for dry van truckload [in the near term into next year],” he says.
He notes that the truckload market today still has 89,000 more carriers than in February 2020. In this continuing freight recession, cost containment “has been about all carriers can do. Sizeable [truckload] carriers have pared their fleets down to about as low as they can go.”
Vise believes major truckload carriers cannot continue to downsize without putting themselves in a precarious position. “You can’t shrink to profitability,” he says, rehashing a well-worn phrase in trucking. “They will find themselves in a spiral if they do. If demand recovers, they won’t have the capacity to handle it. Everyone is just trying to [stay] afloat and get by until the upturn.”
