Transportation Industry 2023 Mid-Year Market Update

2023 has been an interesting year in many respects. I mean, can you believe Aaron Rodgers won’t be a Packer this season? Strange times. Sad times. 

This is especially true in the transportation industry where local, national and global trucking markets have faced unique constraints. 

Before the year began, I published an article forecasting what I believed 2023 would hold for the U.S. transportation marketplace. Though at that time, I’d be the first to admit, my “crystal ball” (so to speak) looked a bit hazy. 

As the chief financial officer of a multinational trucking company, Anderson Trucking Service (ATS), I oversee, manage and ensure financial stoutness across our businesses. To do so, I spend a lot of time analyzing trends within the transportation industry as well as within the U.S. and global economies. 

My 2023 forecast article outlined two major factors that, up to that point, were impacting the U.S. transportation supply chain — pronounced economic uncertainty and the aging fleet of trucks. 

As I write this (more than seven months later), the U.S. economy lingers in uncertainty, overshadowed by a recession that, to this point, hasn’t come. The transportation industry — trucking companies, third-party stakeholders, drivers, etc. — often experiences the effects of a downturn before other industries and the public. As such, we can serve as one of many barometers for the U.S. economy. 

At this moment, transportation companies are feeling the pinch. I expect this to continue through the year and into 2024

So, what’s currently happening in our space and how will this impact yours? 

In this article, I’ll do my best to summarize 2023 from a transportation perspective, provide insights into how transportation is fairing and offer advice on what your business can do to remain efficient and profitable to finish the year. 

For simplicity, you’ll find my thoughts separated into the following buckets:

Feel free to skip around, but don’t miss the conclusion; there’s a free tool linked there to help you create the best-possible shipping schedule. 

Year-to-Date Transportation Industry Recap

The transportation industry is currently in a freight recession. This much is clear. There simply aren’t as many loads in the market as there were in the 18-24 months that preceded 2023. 

This down-cycle is leaving the largest impression on the dry van sector (freight volumes and, by extension, spot/contract rates are significantly lower than they were in 2022). 

As evidenced by major industry indexes, freight volumes and rates across the board have been sloping southward since early Q3 in 2022

The American Trucking Associations’ (ATA’s) For-Hire Truck Tonnage Index, for example, measures the overall tonnage of freight available in the U.S. trucking market. This index has reported depressed numbers for nearly twelve months, with the exception of June 2023 (where tonnage increased 2.1 percent from May).’s Total Market Demand Index (MDI), reflects a similar trend; the number of available trucks significantly outpaces the total available loads in the dry van space. This is evident, on a lesser scale, within U.S. flatbed markets. 

Don’t get me wrong: The transportation industry is cyclical. Freight volumes (market demand) and available capacity (market supply) ebb and flow on a relatively predictable cadence. 

That said, several factors including the Fed’s ongoing battle with inflation, progressive increases in consumer credit usage and a hard pivot in the flow of consumer spending (away from durable goods and toward services/experiences) have made 2023 uniquely challenging for logistics companies. Let’s talk about how. 


The State of Transportation: Overviewing Four Major Indicators

Transportation, like every industry, is complex. Striking homeostasis among its many stakeholders and influencing factors is difficult and rarely achieved on a macro scale. 

As is the case in any free-market system, the supply of, demand for and cost of providing transportation services impacts the final price of procuring them. These things rarely stay in balance.

Sometimes, spot and contract rates rest at steady, affordable levels when market demand is lower, capacity is easy to find and expenses like truck maintenance or insurance don’t break the bank. 


The opposite can also be true — this was the case starting in mid-2020 and continuing until early/mid-2022 when rates skyrocketed. 

Here’s what you need to know about where demand, supply, trucking expenses and freight rates currently sit. . . 

Transportation Industry Market Demand

The freight demand transportation companies have gotten used to over the past 24 months has fallen substantially this year. In fact, even the reliable volume bumps — spurred by seasonal and quarter-end shipping in various industries — didn’t arrive in Q1 and Q2 of 2023. 

On the open-deck side of our industry, energy, infrastructure, agriculture and construction have kept demand (relatively) strong. These sectors aren’t driven as heavily by individual spending patterns, making them less vulnerable to shifts there. Investments in innovation and progress have kept these industries moving. 

The dry van marketplace, which is very reliant on business from sectors like food/beverage, retail/general merchandise and manufacturing is another story. Dry van carriers around our nation have seen demand for their services dwindle for two discernible reasons

  1. U.S. consumers have stopped buying durable goods with the same velocity they were in 2020, 2021 and 2022. 
  2. Retailers, wholesalers and manufacturers have slowed inventory replenishment cycles to match this change in buying patterns.

Together, these realities have stunted the demand for dry van capacity across the U.S., delivering it to pre-pandemic levels once more. 

Transportation Industry Market Supply

Year over year, the number of transportation providers in the U.S. is trending up. Over the past several years (starting in 2020), our industry has received a remarkable influx of US DOT registrations, increasing the pool of for-hire carriers by 33.3 percent between December 2019 and July 2023. Here are those numbers:

  • 12/27/2019: 811,695 registered, for-hire carriers
  • 12/18/2020: 865,548 registered, for-hire carriers
  • 12/31/2021: 996,892 registered, for-hire carriers
  • 12/20/2022: 1,075,947 registered, for-hire carriers
  • 06/30/2023: 1,082,183 registered, for-hire carriers

The vast majority of these new registrants are owner-operators, running their own trucking company and bearing the highs and lows of doing so. Of these new carriers, more entered the dry van business between 2019 and 2023 than joined the open-deck industry — further displacing load-to-truck ratios in the dry van space. 

The Price of Providing Transportation Services

Trucking companies have a mix of unavoidable fixed expenses. These are the cost of doing business in our industry. Over the past few years, these expenses have risen due to supply chain congestion, pandemic shutdowns, increased competition and a number of other factors. 

Here’s how they’re fairing so far in 2023. 

Fuel Prices

Across the board, the price of a gallon of diesel fuel has been relatively steady this year, with a decrease in some places. While, at one time, there was news of a looming U.S. diesel shortage, our national diesel supply chain has self-corrected enough to level off over the past six months. As I write this, however, we are starting to see another rise in diesel prices.


Maintenance, Labor and Parts

The cost of maintaining semi-trucks and equipment was on an upward spiral for all of 2021 and most of 2022. Though slightly lower, these costs remain above pre-pandemic levels as this supply chain continues to unclog. 

Equipment Purchase Prices

At this point, the price of buying a new semi-truck is still increasing, though not as rapidly as it was through 2022 and to begin the year. Since manufacturers failed to meet the industry’s baseline replacement volumes for two consecutive years (2020, 2021), these price hikes were to be expected. On the flip side, used semi-truck prices have been falling this year. Though it’s difficult to speculate, this is likely due to an influx of used equipment (as drivers exit the market or return to fleets). 

Driver Pay

Paying truck drivers fairly for their efforts and time has always been the duty and core concentration of trucking companies. In 2023, pay has declined for most truck drivers. This is true for company drivers who are paid on a per-mile basis and even more so for independent contractors who make a percentage on each load.

Insurance Prices

Insurance is central to running a trucking company. Spurred by the increasing frequency of nuclear verdicts in the trucking industry, insurance costs have been on the rise for several years. These costs remain elevated. I expect this to continue for the foreseeable future. 

The Cost of Procuring Transportation Services

To this point, 2023 has been the site of slowing demand for truck capacity in most industries, relatively steady supply (as total US DOT registrations increase and drivers remain in the market) and rising expenses for trucking companies to manage. 

Together, these factors lay fertile ground for rate instability. That’s exactly what we’ve experienced. As I previously stated, freight rates in all markets have been lower this year. I believe we are near the bottom on pricing, with spot rates at their lowest and contract rates near it. 

Looking Ahead: What to Expect to Round Out 2023

It’s safe to say the “bargaining power” has shifted away from transportation companies and into the hands of shippers. The three years that preceded 2023 were fruitful for trucking businesses; rates were high, drivers were making money and loads were everywhere. 

This is no longer the case. Today, market demand remains depressed, leaving trucking companies no choice but to stretch their resources and “weather the storm.” 

Now, I have the opportunity to lean into what experience has taught me and make some predictions. While these are by no means guarantees, here’s what I think transportation (and the U.S. economy) will deal with in the coming months:

  1. Freight demand will remain low
  2. The transportation industry will lose capacity
  3. Freight rates will stay depressed 
  4. A national recession could ensue in 2024

1. Freight Demand Will Remain Low

In 2023, many of the familiar demand influxes brought by Q1 and Q2 failed to arrive. The next large push should be in the retail industry as businesses gear up for the holidays. To this point, however, it does not appear retail companies are ramping up their inventory levels — recognizing the fall in consumer demand. 

I don’t expect the retail peak (beginning in mid-October) to hit nearly as hard this year. In fact, you should expect transportation market demand to remain low as consumers spend less. Here are three reasons why:

  1. The Fed will continue to raise interest rates to combat inflation and reduce spending. Although they have been doing this for well over a year now, the U.S. consumer has proven to be resilient in their spending. 
  2. U.S. credit usage (credit card debt) is strikingly high. Rising interest rates increase the cost of this debt, and will likely dissuade future spending. 
  3. The Fed’s freeze on student loan interest ends on September 1. Payments of these loans will resume on October 1. This will leave this segment of U.S. consumers with less to spend on durable goods. 

Together, these factors should keep demand for trucking services — particularly those driven by U.S. consumers — at low points. 


2. The Transportation Industry Will Lose Capacity

Fueled by high expenses and lower rates, I expect a portion of the for-hire capacity to shut down in the U.S. for the foreseeable future. In market conditions like we’re currently experiencing, it’s not uncommon for owner-operators to join larger fleets before leaving the market entirely. 

To date, 2023 has been the site of unprecedented driver turnover and job-hopping practices. As drivers search for the income they realized in 2020-2022, they may leave the industry when it can’t be found. 

3. Freight Rates Will Stay Depressed

As 2023 progresses, I think supply will edge closure to demand in the transportation realm. This won’t be enough to drive rates up significantly but will be a noticeable reshuffle as capacity exits the marketplace. 

In the end, rates will remain at low levels across the spot and contract marketplace. This will create a great opportunity for shippers to claw back the money they paid in 2020-2022. 

4. A National Recession Could Ensue in 2024

Experts have been predicting a recession for over a year now. Up to this point, the U.S. has been able to stave off the economic recession that’s been looming since 2022. That said, eventually, I think we will meet a recessionary period. Most likely, the two consecutive quarters of negative GDP growth (which denote a technical recession) will be Q1 and Q2 of next year. 

Tips For Managing Your Freight Demands Going Forward

Now that we’ve briefly overviewed what transportation has looked like in 2023 and I’ve made some predictions about what’s to come, let’s talk about your business. Your job is to create efficiencies within your company’s transportation supply chain. Thus far, 2023 has probably made your job harder in some ways and easier in others. 

Here are two tips for doing your job to finish the year:

  1. Take advantage of 2023’s rate decreases
  2. Work with stable transportation companies

1. Take Advantage of 2023’s Rate Decreases

We’re in a market where shippers, like you, can realize a significant amount of cost control. Often, they can do so without sacrificing service. As we finish out the year, rates will stay low, giving you further opportunity to shave dollars off your invoices.

Although I’m not advocating you take the lowest rate every time (as this will often lead to performance issues), now might be a good time to talk to your trusted carriers to re-work contracts. 

2. Work With Stable Transportation Companies

Times are tough in transportation right now. Things will only get harrier over the next few months. For this reason, it’s safe to assume many carriers — particularly those who haven’t experienced this kind of market before — will struggle to make ends meet. In the end, this could leave you vulnerable to significant issues if your transportation providers can’t honor their rates or exit the market entirely. 

For this reason, make sure to work with stable, well-resourced transportation providers. As you search for new providers, stress the importance of financial stability and make sure to ask the right questions. Onboarding new transportation providers is difficult, but it’s well worth it if you know they can reliably service your needs at this time. 

Need Help With Planning in 2023? This Will Help

So far, 2023 has been challenging in several ways for transportation companies. Freight rates are lower than they have been in years (especially in the dry van realm) and expenses (insurance, maintenance, labor) remain high. As a recession looms and new trucks are still hard to come by, things aren’t going to get easier throughout this year. Demand, in all likelihood, won’t pick up before 2024 and supply (the number of for-hire carriers/trucks) should decline

So is everything doom and gloom? 

For shippers, this is actually a pretty great time to save some money on your freight rates and gain efficiencies in their supply chains. While working with stable carriers is really important at this time, you should also make sure that your shipping schedule is fully optimized. 

Download this 2023 Freight Shipping Calendar, which outlines which days are the most (and least) expensive to ship freight on this year to ensure you’re moving freight in the most cost-effective way. 

Finally, if you have any questions about ATS and how we’re helping our customers navigate this interesting time, contact us. We’re happy to help you in any way you need.

Tags: 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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