2024 Transportation Industry Mid-Year Market Update

An open deck trailer carries a large piece of agricultural equipment.

It's hard to believe that we're halfway to the finish line of 2024, isn't it? 

Back in January, my base case economic prediction was that the U.S. growth would slow to a potential recession in mid-2024.

I also thought capacity would continue to exit and that carriers wouldn’t go lower with rates due to continued operating cost inflation, with the result being a slow and steady tick up of spot rates off the bottom starting around Q3 2024. 

Six months later, I'm afraid the market hasn't shown many signs of stirring from its long slump. It's still too early to rule out my prediction (Q3 and Q4 are still ahead of us, after all,) but to quote everyone's favorite all-knowing toy: "Outlook not so good."

Why? The demand for freight remains muted at best and downright sluggish at worst. Inflation is at a 23-year high, with no indication that the Federal Reserve plans to reduce key interest rates. Freight rates remain a thorn in the side of shippers and trucking companies alike. 

If you're feeling frustrated, well, I'm right there with you. I'm tempted to hang up my crystal ball for good, despite a few of my predictions for the first half of 2024 ringing true.

Change is coming — just a bit slower than we'd like. We're running this race for endurance, not speed. 

In this article, I’ll recap the year-to-date from a market perspective and provide an overview of how things stand today.

You'll walk away with the information necessary to prepare your supply chains for what's to come and enter 2025 with confidence. Let's get started!

2024 Year-to-Date Transportation Market Recap

If you're reading this, it's likely not news to you that the transportation industry is in a historic freight recession as measured by the length of time. 

Few could have imagined that, when freight volumes and rates began to trend downward in early Q3 of 2022, we would still be wanting for demand two years later. 

Yet here we are: In late May, the American Trucking Associations’ (ATA’s) For-Hire Truck Tonnage Index, which measures the overall tonnage of freight available in the U.S. trucking market, reported a slight increase of 0.4 percent in May on an easy comp. The index fell in thirteen of the last 15 months on a year-over-year basis. 

The transportation industry has always been a weather vane for the U.S. economy as a whole, and this continued down-cycle during this spring shipping season reflects the slow-down we're seeing nationwide. 

In my predictions for 2024, I expected the economy to slow by mid-year, and it has — albeit not quite to a true recession.

In the first quarter of 2024, the real gross domestic product (GDP) was 1.3 percent, a drop from the end of 2023. Consumers are rightfully fed up with sky-high prices and have slowed their spending accordingly. 

The seasonal cycle has returned closer to normal (or as close to normal as can be expected in this economic climate). 

Truck capacity did exit the market in the first half of 2024, as I suggested it might, but it didn't happen at an especially accelerated rate. Still, capacity remains an issue, one that I suspect influenced the bid season earlier this year. 

In my first round of 2024 predictions, I anticipated an incredibly active bid season between December 2023 and May 2024. The season did start out strong, but it ended much more quickly than I expected. 

Multiple semi trucks parked.

Why was this busy bid season cut short? It's hard to say for certain, but I wouldn't be surprised to learn that carriers struggled to haul freight they'd been awarded at the rates they'd agreed upon, and that shippers pulled back on bid activity because they were not achieving the desired results.

My original prediction for freight rates in 2024 was that we would not see any meaningful movement until Q3 at the earliest, and I stand by it. 

Though my confidence is slightly shaken by the overall sluggishness of the economy, I truly believe that something has got to give, and soon. The uptick in spot rates we've seen as of late are a small but promising glimmer of hope that we may see rates improve this fall and winter.  

Finally, "inflation" may as well be Merriam-Webster's next Word of the Year, thanks to its unwelcome shadow over the first half of 2024.

While inflation cooled slightly in May, previous inflation reports were hotter than expected due to increased consumer credit usage.

So, how do all these factors shape the current state of the transportation industry — and how will they influence things moving forward?

Transportation Industry Temp Check: The Four Major Freight Market Factors 

Like every industry, transportation is cyclical, with highs and lows indicative of macro-scale trends. 

In a perfect world, the market would be in balance. But we live in a free-market system, not a perfect world — which means the cost of freight is a pendulum that swings at a rate dictated by four main factors: 

By examining and analyzing these four factors as they stand in our current market, we can make better, more informed predictions for the remainder of the year. 

Several trucks travel on a divided highway.

Supply

Heading into the second half of 2024, supply is down overall.

Supply is a difficult metric to measure when things are in a downswing. In the past, we've tracked the volume of drivers entering the market by following rising Department of Transportation (DOT) registrations, but it's much harder to track exits, which happen with little to no documentation. 

Still, we're not totally in the dark: I often look to our competitors on the publicly traded side of the market as an imperfect litmus test.

In doing so, we can see that their driver and capacity counts have all come down. Does it mean we're in the midst of an exodus from the industry? Definitely not — but it does seem to align with capacity trending down across the board.

We can also examine the spot market as a means of sussing out supply trends. In the past six months, we've seen contract rates bottom out and spot rates start to rise a bit. 

This suggests we could reasonably expect spot-rate increases in the latter half of 2024. It won't be a return to, say, the freight market of 2021, but it's certainly a start. 

Demand

Let's just rip the Band-Aid off: Freight demand is not any better now than it was at the start of 2024. 

Trust me, I'm as sick of saying it as you are of hearing it. 

Now, to be fair, I didn't anticipate a major increase in demand in the first half of 2024 anyway, so the market is living up to expectations in that sense. 

April 2024 data from Cass, a freight payments platform, showed freight demand remained at a cycle low — the lowest since January, typically the slowest month of the year due to severe winter storms across the upper U.S. 

Empty dry van and reefer trailers in a parking lot.

In my previous market updates, I've spoken about the consumer shift from goods to services and experiences (like travel) in our post-COVID world.

The industry anticipated that manufacturers and wholesalers would keep their inventories down during this time, which remains true. In addition to low inventory levels, industrial production and manufacturing are both down in the U.S. thanks to — you guessed it — our old friend inflation. 

Investment in these sectors is low due to high interest rates and lack of consumer demand, so there isn't a ton of new funds flowing into either.

Between this lack of investment and manufacturers, retailers and wholesalers keeping their inventories low, there's just not a lot of freight activity in the U.S. right now. 

Transportation Industry Costs

As supply and demand linger at the bottom of what the market can bear, drivers and trucking companies have also had to contend with rising expenses.

When I last gave an industry forecast, the cost of trucking equipment and maintenance was going up. Unfortunately, that's still true. 

Costs are up in the transportation industry as we head into the latter half of 2024. Inflation isn't just frustrating the White House and the Fed — it's frustrating trucking companies and drivers, too.

With inflation as high as it is, everything costs more, from the trucks themselves to the labor of maintenance technicians.

On the bright side, fuel costs are expected to be largely stable for the remainder of the year. When fuel costs change, it will most likely be due to a global event, such as the ongoing conflicts in Israel, Palestine, and Ukraine, rather than seasonality or policy. 

Freight Rates in 2024

Finally, some good news: Spot rates are up slightly on the truckload side of the transportation industry.

My prediction going into 2024 was that rates had bottomed out in 2023 and would start to rise again starting in Q3 2024. Currently, we're seeing rates ticking up.

Due to the mounting pressures of low supply, low demand, and high costs, many public transportation companies have reported that they cannot weather another rate decrease.

Shareholders are unhappy with the decline in profitability, forcing companies to exercise their power of choice over what freight they accept and at what rates.

Shippers are likewise unhappy with the general state of the transportation industry this year.

This will be the long-awaited inflection point at which we'll see rates rise. Progress toward a more balanced market will be incremental, but there will be progress. 

An ATS truck tractor and dry van trailer at a loading dock.

Set Your Business Up For Success

The transportation industry has faced a challenging first half of 2024. With low freight demand, high costs, and rates bouncing along the bottom, shippers and trucking companies alike have felt the economic crunch.

Yet despite these hurdles, there are reasons to hope for improvement as we look towards the latter half of the year. The hot job market could help stave off a recession, and inflation is slowly but steadily expected to cool off.

As we await relief both as a nation and as an industry, the key to navigating the remainder of 2024 lies in preparation and adaptability. Strategic agility will be critical as the market continues to offer both surprises and disappointments on its journey to balance. 

For shippers, this will mean striving to make your freight as appealing as possible to carriers and drivers. 

Our free, downloadable guide on how to Find a Truck Faster can help you position your freight in a way that sets your business up for success. 

This comprehensive tool provides actionable next steps for making your freight the type carriers want to haul, which in turn will make it easier for you to find coverage and protect your supply chain from slowdowns. 

By understanding the economic factors affecting the freight market and taking strategic steps to prepare, industry professionals can set themselves up for a successful end to 2024 — no matter what the next few months throw our way.

Tags: Insider, Freight Brokerage, Flatbed Shipping, Dry Van Shipping, Seasonality, Market Update

Paul Pfeiffer

Written by Paul Pfeiffer

Paul has spent nearly two decades in the transportation industry with roles in finance, operations, business transformation and risk management for companies with offerings in specialized flatbed, vans, brokerage, less-than-truckload (LTL), bulk, leasing, international and intermodal operations. He joined ATS in 2014 and serves as the chief financial officer.

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