The past several years have been a period of extreme volatility for the trucking industry. During the COVID-19 pandemic, snarled supply chains sent freight rates and the number of trucking companies surging upward. But rates started plunging in 2022, which sent the industry into a long and painful freight recession. While it looks like the industry is finally emerging from this recession, the path to recovery and growth will be a long one.
There’s no question that carriers face a wide range of urgent challenges: overcapacity due to the spike in supply during the pandemic, less predictable freight cycles and a sluggish recovery in freight prices. Although many carriers have built up their cash reserves in recent years — which should help them survive as the industry emerges from the freight recession — they will contend with narrow margins and other financial obstacles for the foreseeable future. Carriers also have to navigate a changing operational landscape, from an industry-wide digital transformation to the management of distributed teams.
The trucking industry will continue its long march out of the freight recession in 2025 — demand is on the rise and rates appear to have bottomed out. However, carriers shouldn’t be expecting a quick turnaround. This means they will have to focus on efficiency, leverage new technologies such as AI-powered automation that will help them manage their fleets more effectively, and consider new forms of workforce management. While a gradual recovery can be frustrating, the strategic decisions carriers make now will have implications for years.
Prediction #1: Carriers will Confront a Slow Recovery
After the trucking boom during the pandemic, freight volumes fell precipitously in late 2022. Beyond the inevitable pullback after rates exploded so quickly, there were structural economic issues that triggered the freight recession. The latest U.S. Bank Freight Payment Index cited a “slowdown in the goods economy, including slowing household consumption of goods, home construction activity, and manufacturing output.” Between the second half of 2023 and the first quarter of this year, shipments dropped an average of 7.4% quarterly.
While the number of new monthly carriers was roughly flat between the middle of 2015 and 2020, this number more than tripled in less than a year after the beginning of the pandemic. This number remained extremely elevated for years, and it’s still above where it was pre-COVID. However, when supply chains normalized and rates collapsed, many of these upstarts were suddenly in a precarious financial position. Over 95% of carriers operate ten or fewer trucks, and these small operations have less of a financial safety net than their larger peers.
Because many carriers saw a huge influx of business during the pandemic, they still have the savings they need to maintain operations as the freight recession finally comes to an end. Now is the time for carriers of all sizes to make strategic investments that will position themselves for long-term growth as their industry recovers.
Prediction #2: Industry Leaders will Focus on Digital Transformation
Although we’re in the middle of the busiest season of the year for carriers, the industry still isn’t seeing significant volume and rate increases. This is yet another reminder that the road out of the freight recession will be long. But this doesn’t mean carriers should resign themselves to slow growth and thin margins — they should instead explore new processes and technologies that will help them operate more efficiently, improve visibility and data management and better adapt to shifting economic conditions and freight cycles.
There are many ways for carriers to streamline fleet management, workflows, communications, and other operations to decrease costs and improve performance. For example, instead of using siloed technology solutions which limit visibility and make processes more disjointed, carriers can implement unified software platforms that facilitate communication, collaboration, and data sharing across the company. These platforms have never been more accessible or powerful than they are now (thanks to AI), which is particularly valuable for the smaller carriers that have limited IT budgets and make up a disproportionate share of the industry.
According to Accenture, trucking lags other industries in the freight and logistics sector in digital maturity. Although carriers have implemented tools such as app-based driver management systems, the proportion of their IT spend dedicated to innovation is below the sector average. At a time when many carriers are sitting on abnormally large cash reserves left over from the pandemic boom, they should be directing these funds toward digital tools and other resources that will help them cut costs and improve productivity over the long run.
Prediction #3: Efficiency will be a Core Priority
With the consequences of the freight recession still clearly visible on carriers’ balance sheets, it has never been more important for carriers to prioritize efficiency. There are many ways carriers can pursue this goal. Beyond the adoption of cloud-native technology for fleet management, communications, and data analysis, carriers should consider strategies that address multiple problems at once — such as inefficient operations and the rising demand for greater sustainability from customers and regulators.
Over the next few years, carriers will confront increasingly strict emissions regulations and growing public pressure to operate more sustainably. Carriers shouldn’t just view these developments as obstacles — they should treat them as opportunities to improve efficiency across the board. For example, by prioritizing route optimization, they can reduce mileage by 15 to 30%. There’s no reason 20 to 35% of trucking miles should be empty. Freight pooling can cut down on waste and reduce carriers’ environmental impact, and this strategy is especially important when there’s a surplus of trucks in the industry.
Too many carriers are still using outdated logistics tools for everything from workflows to fleet management. These tools are often siloed and cumbersome, and they aren’t up to the task of managing modern distributed workforces. As more carriers rely on distributed teams, it’s critical to have a single comprehensive platform for everything from driver dispatch to load management to accounting. AI has a major role to play in everything from automating backend operations to data analysis, which will decrease the size of workforces, improve visibility, and help carriers conduct strategic planning.
With the effects of the freight recession still lingering and a long recovery ahead, carriers need to become leaner and more intelligent about how they manage their fleets. By making pivotal investments in technology and other drivers of efficiency now, carriers will ensure that they’re prepared for whatever the future might bring.
