Freight markets remain soft amid private fleet expansion

Freight markets remain soft amid private fleet expansion

The reduction in capacity within the for-hire sector is starting to create potential for improved market conditions, but this positive outlook could be jeopardized...

The latest reporting from ACT Research concludes that it is unlikely that industry capacity will broadly tighten until pressure from capacity growth eases, which ACT says seems unlikely for the next few months.

“We’ve created a proxy for private fleet activity that suggests mid-single-digit growth in freight volumes, helping to explain the difference between the accelerating U.S. economy and declining for-hire volumes,” shared Tim Denoyer, vice president and senior analyst at ACT Research. “Private fleet growth is evident as Class 8 tractor retail sales are on pace to set a record this year, yet for-hire fleets are by and large demonstrating capital discipline.”

While the freight market remains at a low point in its cycle, Denoyer believes that the upcoming new truck orders in the next few months will play a crucial role in determining the market’s direction for 2024. The reduction in capacity within the for-hire sector is starting to create potential for improved market conditions, but this positive outlook could be jeopardized if fleets continue to expand faster than the industry demands, ACT notes.

“We expect industry financial trends to dictate greater capital discipline next year, but further overexpansion is possible as fleets plan for significant emissions regulations looming in the future,” Denoyer concluded.

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