Freight economy
Despite 2023’s weak economy, there are signs that next year could see improvements as early as the second quarter. Low freight rates and high diesel prices made a challenging 2023 for trucking, but many experts are predicting rates and tonnage to bounce back in 2024—though the economy may not warm up until the spring or summer months.
The bankruptcy of less-than-truckload carrier Yellow made mainstream news this year, and small carriers left the industry in record numbers. For those that remain, there is potential for a rebound, but they might have to be patient. Contract rates have been beaten up, interest rates are through the roof, used-truck prices are down. Those are four different things that, not one of them is a killer, but all of them combined” caused a challenging landscape for the trucking industry. The good news is that there isn’t any more room to go down.
We are in a stable market at this point. There is still an overcapacity of trucks and trailers, and with “some forecasting only 1% to 1.5% GDP growth over the next year, it will feel much like a recession.’’ Analysts at ACT Research also expect the freight economy to improve in 2024, though demand for freight demand will be soft for the rest of the winter. The research firm predicted that for-hire volume growth will return as overall fleet growth fades, likely in the second quarter of 2024. There is also record inflation to contend with. The Federal Reserve has been raising interest rates to control inflation levels that reached a 40-year high, resulting in conservative business spending. The possibility of interest rates being cut in 2024 could spur businesses and consumers to spend more, increasing freight demand.
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