Freight Market Forecast for 2024 - Truckload Freight Outlook

Posted On 13th March 2024

Forecasts are normally made by those who believe the world will just keep bumping along, as the real things that impact prices and businesses’ operating environments are largely unpredictable and certainly unforecastable – such as Covid, political machinations, reversals of long-term political policies due to quirks of national politics, sparks that turn into wars, etc. As Nicolas Taleb said, roughly, “we live in Extremistan, but people think and act like we live in Mediocristan.

John Kenneth Galbraith, the former US ambassador to India in the early 60s and an esteemed Harvard economist, quipped that “The only function of economic forecasting was to make astrology look respectable.” Warren Buffet said of forecasting that “forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”

So I will present below both the “if things bump along” forecast and also the possibilities a Black Swan will hit our trucking markets / supply chain environment – a good businessman should be ready for both to the extent they possibly can.

What is the Outlook for Freight in 2024

Trucking Industry in 2024

The demand side of the economy, according to the consensus of economists, is supposed to stay strong in 2024 and some major banks have recently reversed their forecasts from a slowdown and a recession in the 3rd and 4th quarters to a continued economic expansion. The Federal Reserve is supposed to ease monetary conditions and thus decrease short-term interest rates.

However, the contrarian in me would point out that though inflation has halved from its highs it is quite sticky, and that trucking fleet buyers will likely continue to have to borrow at high rates to finance their fleets and also have to buy them with more cash as the banks prefer to buy short term US Treasury Bonds/Bills at 5.5% interest than finance your business at 7.5% to 9.5% even.

Also, fuel prices are obviously highly variable and subject to all kinds of shocks, and war, and instability, and that volatility means fleet owners need to assume an overall higher price for fuel across the board.

Further, the driver shortage is likely to get worse, with anti-immigration measures and border tightening likely to continue no matter who is in the White House, and so drivers are likely to cost more. Second, factory labor costs will also cost more with less immigration. Less immigration means fewer people to make things in the USA, and fewer people to buy things in the USA.

GDP is suffering and the USA will “age” like Japan and Europe without immigration; immigration from an economic standpoint is the lifeblood of our economy and the only reason we did not stagnate like Europe and Japan did. Politicians need to fix this problem.

Because of the impact of higher inflation from driver wages, fuel prices, and interest rates and their downstream effects, FreightRun expects freight rates to go higher in 2024 even if the economy slows down – stagflation is a real possibility.

Of course, we should expect the unexpected and as owners of fleets or brokerages, also have the resources set aside to brace for the impact of dramatic changes – for good or bad – should either a demand-side disaster strike again (like Covid) or a huge demand side boost (like World War).

We must remain lean yes but keep our ability to scale larger but also maintain on the side formidable cash reserves to weather our companies, our employees, and ourselves through bad times as well. Get resilient if you are not already, and buckle up, because change is coming, we just don’t know what it will be.

How Is the Trucking Industry Doing Now

The trucking industry now is doing OK - depending on where you look.

On the carrier side, they are obtaining enough money for their services in most markets to economically operate their businesses at acceptable margins for the competitive business they are in.

On the 3PL and freight brokerage side, the drop in revenues has dropped the price of the stocks of the giants like CH Robinson as it also dropped their prices, but the 3PLs continue to try to innovate in certain corners of the market.

Older, legacy giant 3PLs have become the lumbering giants, and slowly their market offerings and technology offerings have become less unique as smaller, nimbler newer 4 pls and beat them in terms of service and technology since they have effectively deployed lower cost computing systems but with more support from real people.

However, the old 3PLs keep the support of the large trucking companies, who have rewarded the legacy 3PLs for their volume with significantly larger discounts in pricing than the new startups; this serves to stifle innovation in the 3PL industry in general, and continues to handicap the Carrier’s own direct sales force’s ability to penetrate their local markets.

Why Is the Trucking Industry Slow - Freight Shortage

There are less goods moving but at greater prices – so the volume of the freight isn’t particularly pressing especially incoming from the Ports ie import volume. Supply chains are resilient though, and capital innovative, so expect more and more goods to ship to the consumers who want them. Though a bit less freight is moving, the US consumer seems to have plenty of money and our bet is that producers will be clever enough, despite the challenges in their costs, of getting a product of some kind to them.

Trucking Prices - When Will Trucking Rates Go Back Up

Rates are down a bit from the highs but trucking rates are a bit like Grain Prices, farmers never think they are high enough. However, the trucker is facing some unique challenges:

  • fuel price volatility,
  • a broken insurance market,
  • volatility in demand and supply.

Also, a largely broken Spot Market, that TransCore/DAT has not been able to fix, with fraudulent double brokering and trucker and broker identity theft running rampant and the government not able to help or not willing to help the industry much.

Trucking rates will continue to go up along with Trucking Costs. Though the costs to get into the trucking industry have increased, it is still a relatively easy industry to get into, which means we will continue to have an influx of new truckers and trucks.

The industry will continue to operate at a slight profitability, which is the case of all such businesses that are easy to enter. The same for brokerages. Without huge technological breakthroughs, they will continue to operate at marginally profitable levels.

Trucking Industry Trends in 2024

As noted above, increased costs and a long-term increase in revenue as well. We believe the fraud and mess in the Spot Market may decrease with TransCore/Load Boards being more careful about who they let join their boards.

Prepare for disruption - have resources set aside for a rainy day. We may see either a drop in demand where you need to park your trucks for a few months, so you will need capital set aside for that. Or we may see a boom in demand and you will need to expand rapidly, you need capital set aside for that so you can execute an expansion then quickly. Good luck either way.