LTL Industry Overview – Executive Vice President Dave Ross
Recently, I was on a panel re: trucking industry capacity at the Wolfe Conference in NYC, and everyone was citing/blaming “uncertainty” as a problem. “There is so much uncertainty, and until that changes…” I reminded them of how much more certain things were in February 2020 or on Sept 10, 2001. Certainty is an illusion. Certainty for a company does not come from knowing the future but rather from simply having a focus on the business and doing things without being distracted by future worries. The current environment is a big distraction, as people spend more time looking at headlines and chattering about unknowables than figuring out how to run their businesses better. Nobody knows what the economic conditions will be in 12 months.
That being said…underlying freight trends are still soft. The overall freight economy took a turn down in 2022, had a tough 2023, and after failing to get the recovery they hoped for in 2024, carriers started this year again hoping 2025 would be that upturn. Roughly halfway through now, that is definitely not the case.
From speaking to various shippers re: capacity, the summary is basically that TL supply/demand has stayed loose going into the summer. Contract rates should still be up this year, though. Outlook for “the turn” or “the recovery” pushed out again (2026).
Tariffs, tariffs, tariffs! Lots of noise but impact still TBD. Not good for the freight demand outlook (tariffs are taxes, and higher-priced goods means fewer goods moving, all else equal), but it’s also not the end of the world.
Volumes are mixed across modes, with ocean, air, and rail showing a return to growth last year (led by import rebound), while LTL is still down, the ATA truck tonnage is still soft, and the Cass Shipment Index has been negative y/y for the last two years. Manufacturing activity (as measured by the ISM Index) only barely peeked over 50 (expansion) for two months and has been back <50 (contraction) since March. Retail demand appears decent, but when you look at retail sales minus inflation (below), the proxy for retail goods movement was only up 0.6% y/y in May.
Even retail cooling
Tariff actions led to a pull-forward of containerized imports in April (+14% m/m), which then showed a 19% decline in May.
Rail volumes seeing modest growth, but with swings in import activity, recently seeing y/y growth in intermodal carloadings at the Western U.S. rails going negative y/y.
Not the typical spot market recovery – TL rate increases still can’t get legs due to overcapacity
ISM fell again in May.
