According to ACT Research, a significant transformation is projected for the freight market by 2025, marking the end of the current freight recession in the for-hire sector. The findings were shared in a comprehensive 58-page freight forecast that combined aggregate spot data provided by DAT with a unique Supply-Demand balance curve. Speaking to FreightWaves, Tim Denoyer, vice president and senior analyst at ACT Research, stated, “Currently, with a significant capacity contraction by for-hire fleets and private fleet insourcing slowing, capacity has finally rebalanced enough for rates to start moving higher.”
The report highlighted that spot rates net of fuel have increased by 7% year-on-year in Q4, and figures from DAT, Cass Information Systems, and fleet financial data indicate modest increases in contract rates. As of November 26, SONAR spot rates net of fuel were up 14.7%, rising from $1.63 to $1.87. The FreightWaves National Truckload Index (Linehaul Only) estimates averages based on retail diesel prices and fuel efficiency metrics. When comparing the fourth quarters of 2023 and 2024, the change in average linehaul rate showed an increase of 8.75%, going from $1.60 to $1.74.
While the outlook appears optimistic, Denoyer warned that the scope of growth in 2025 may not meet all expectations due to the expansion of private fleets over the past two years. He stated, “The market is very close to balance, and in 2025 the combination of normalizing equipment supply and a pre-tariff safety stock build are poised to drive higher for-hire freight demand and rates. The big private fleet expansion of the past two years will likely still leave anyone looking for a boom disappointed, but the for-hire rate recession is finally over.”
In a notable corporate development, Schneider National has announced its acquisition of Cowan Systems for approximately $390 million in cash. This acquisition includes real estate assets valued at around $31 million and is aimed at bolstering Schneider's dedicated fleet, which has already experienced significant growth. Cowan Systems, based in Baltimore, operates with about 1,800 trucks and 7,500 trailers across more than 40 locations in the Eastern and Mid-Atlantic regions. Following this purchase, Schneider's dedicated truckload fleet is set to exceed 70%. According to FreightWaves’ Todd Maiden, “Schneider’s annual dedicated revenue is now close to $2 billion with its consolidated revenue likely moving above $6 billion.” The funding for this acquisition will come from existing cash resources and a new $400 million credit line.
As the year progresses toward the holiday season, market trends suggest a notable increase in trucking capacity as evidenced by the rise in nationwide outbound tender rejection rates. An analysis of the Outbound Tender Reject Index highlighted an increase to 6.41% on November 25, marking a substantial rise from the previous weeks. The current metrics indicate a tendency towards conditions observed in 2019, in contrast to the lower rates seen in the prior two years. Different segments, such as dry van, flatbed, and reefer, saw increases, with reefer rates rising significantly. Additionally, the dry van spot market rates displayed a seasonal uptick, with rates climbing from $2.37 to $2.43 per mile.
Overall, various developments and trends in AI automation within the freight and trucking industries reflect a period of change, with forecasts indicating a more prosperous market environment anticipated in the near future. As companies like Schneider National rapidly expand capabilities and markets readjust toward more traditional holiday patterns, industry stakeholders are closely monitoring these shifts for potential impacts on business practices.
Source: Noah Wire Services