After nearly three years of freight market contraction, industry analysts are cautiously signaling potential signs of recovery. At the FreightWaves Festival of Freight (F3), experts highlighted early indicators that the U.S. trucking market may be nearing a turning point—though structural challenges remain.
During the October State of Freight discussion, analysts pointed to improving rate indices, a gradual tightening of capacity, and shifting tender data as evidence that the long freight downturn that began in 2022 could be approaching its end.
Driver Shortages and Policy Impacts
One major factor driving volatility in trucking markets, particularly in Southern California, is the decline in available drivers. Analysts noted that immigration enforcement policies have discouraged many drivers—particularly in the port drayage sector—from remaining active, contributing to local capacity shortages and spot rate spikes in regions such as Los Angeles, Chicago, and Dallas.
Approximately 70%–80% of Southern California’s trucking market relies on immigrant labor, and uncertainty surrounding driver status has caused operational disruptions and even bankruptcies. With fewer drivers on the road, analysts said, capacity erosion could accelerate, creating upward pressure on freight rates in select lanes.
Margins Under Pressure
Even as rates show modest upward movement, many carriers continue to operate at a loss. A recent industry study found that the average trucking company is losing money on every mile driven, with smaller operators particularly affected.
Some of the loss-making capacity is sustained by drivers operating beyond federal Hours of Service limits or running under minimal compliance oversight—though enforcement and fear of penalties are increasingly pushing those operators out of the market.
Capacity Contraction May Set Stage for Rebound
With continued attrition among small fleets and owner-operators, analysts see the groundwork forming for a potential “trucking super cycle” if volumes rise in 2025.
“If we get a meaningful surge in freight demand, this industry may find itself with insufficient capacity to meet it,” said one analyst. “After such a prolonged downturn, carriers and lenders will be cautious about re-entering the market, which could make the recovery sharper but slower to build.”
Manufacturing Headwinds Remain
Despite optimism in some freight segments, data from SONAR’s Outbound Tender Volume Index indicates persistent weakness in U.S. manufacturing. Long-haul freight volumes—often tied to industrial and factory shipments—have dropped sharply, while short-haul distribution linked to retail and e-commerce remains strong.
“The divergence between long-haul and short-haul volumes is one of the most bearish signs for manufacturing we’ve seen in years,” said one industry economist. “Local distribution is healthy, but the industrial side of the economy is still struggling.”
Intermodal Gains Market Share
Intermodal transportation continues to capture share from traditional trucking, buoyed by strong results from rail-integrated carriers and anticipated network efficiencies from potential Class I mergers. Analysts cited the sector’s renewed competitiveness as a structural trend that could reshape over-the-road freight dynamics heading into 2026.
Looking Ahead
Freight market participants expect the gradual tightening of capacity and stabilization of rates to continue through mid-2025, setting the stage for a more balanced—but cautious—recovery. Whether the upturn gains traction will depend on broader macroeconomic conditions, tariff developments, and continued shifts in labor and manufacturing output.
