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The market is showing early signs of recovery after a prolonged downturn. While manufacturing growth remains sluggish, rising tender rejections and tighter capacity hint at a more balanced, carrier-favorable market on the horizon.
Demand Levels & Outlook
Rising Rejections and Tight Capacity Indicate Market Recovery
Tender rejections are rising, and capacity is tightening — signs of positive momentum for carriers. While slow growth in the manufacturing sector tempers broader optimism, a clear shift toward a more balanced market is expected by early 2025. The Outbound Tender Volume Index dropped 2.24% week-over-week and 1.87% year-over-year, while contract load accepted volumes fell by 2.1% week-over-week and 3.89% year-over-year. On a positive note, short-haul volumes have increased slightly, suggesting some stabilization.
Freight growth in Q3 2024 was modest, up just 0.1%. Meanwhile, container imports from China surged to pre-2019 tariff levels as businesses rushed to get ahead of impending tariff hikes, likely leading to higher product prices in the coming months.
Warehousing Investment and Import Trends
Investment in warehouse construction remains high—30% above 2017 levels—but has declined by 20% year-over-year due to rising interest rates and high vacancy rates. October’s import volumes fell by 6% compared to last year as shippers avoided peak surcharges and prepared for tariff hikes. Disruptions on the East Coast, including port strikes and regulatory changes, have impacted logistics. Moreover, new driver regulations could potentially remove 177,000 drivers from the workforce, further straining capacity.
Intermodal Gains Momentum Amid Freight Shifts
Intermodal volumes are gaining momentum over truckload, with long-haul intermodal routes, such as Los Angeles to Chicago, carrying substantial freight. Intermodal volumes grew by 8% year-over-year, while reefer volumes saw slight growth. This shift to intermodal on major routes has helped reduce weekly truckload pressure by 2,200 to 2,500 loads. expansion, while freight volumes remain weak, down 5.2% year-over-year.
Supply, Capacity & Carrier Costs
Deferred Maintenance Challenges for Independent Truckers
Independent truckers are facing rising costs and unsustainable deferred maintenance. With average truck payments nearing $3,000 per month, owner-operators are under significant financial pressure. Maintenance costs have spiked due to deferred upkeep, and overall carrier costs have increased by 15-20% compared to pre-COVID levels. Diesel expenses remain a major budget concern despite some price moderation.
Flatbed Rejections Amid Hurricane Relief
While capacity appears to be stabilizing for larger carriers, flatbed rejection rates remain elevated, partly due to ongoing hurricane relief efforts. New truck orders are down 5.2% year-over-year as fleets cautiously manage their growth. Drivers are also putting in more miles—now averaging 93,000 miles annually—as they work to maximize their assets.
Contract & Spot Market Rate Trends
Spot Rates Surge Beyond Contract Rates
The gap between spot and contract rates continues to narrow as capacity rebalances across different freight modes. Dry van spot rates have increased by $0.04 per mile since October and are expected to rise by another $0.09 by mid-December. At the same time, reefer rates are experiencing a seasonal uptick, peaking around Thanksgiving, while flatbed rates are also following seasonal trends.
The average spot rate has risen to $2.35 per mile, up $0.12 from last year, while the dry van contract rate stands at $2.33 per mile, reducing the spot-contract gap by $0.12 year-over-year. This narrowing gap has shifted carrier priorities toward spot opportunities which offer better profit margins.
Capacity Rebalancing Boosts Spot Rate Increases
Spot rate increases are visible across multiple freight modes and are driven by rebalancing capacity. However, the dry van load-to-truck ratio has dropped to 4.03, reflecting reduced freight volumes. Reefer load-to-truck ratios remain high at 6.61, showing strong demand even with reduced produce volumes.