As winter approaches, bringing plunging temperatures across North America, the US trucking freight market is experiencing its own early frost. What should traditionally be the final surge of peak season has instead shown unusual sluggishness, with market indicators pointing to sustained weakness driven by multiple economic factors.
Freight Volume Index: A Divergent Market Landscape
The latest Trucking Volume Index (TVI) report from DAT Freight & Analytics reveals a mixed picture for October's spot market activity, with modest rate improvements overshadowed by persistent demand weakness across most segments.
The DAT TVI, a key measure of US trucking market health standardized against a January 2015 baseline (100), shows varying performance across equipment types:
- Dry Van: TVI at 232, down 3% month-over-month and 11% year-over-year. This sustained decline suggests weakening demand for consumer goods and industrial products, potentially signaling broader economic softening.
- Reefer: TVI at 184, down 2% monthly but up 7% annually. The only segment showing year-over-year growth, likely driven by seasonal agricultural shipments and stable demand for temperature-sensitive goods.
- Flatbed: TVI at 305, down 4% monthly but up 3% annually. Relative stability reflects consistent demand from construction and manufacturing sectors despite broader market headwinds.
Spot Rates: Modest Gains Mask Underlying Weakness
Despite volume declines, national average spot rates showed marginal improvement in October:
- Dry van: $2.07/mile (+$0.02)
- Reefer: $2.48/mile (+$0.04)
- Flatbed: $2.51/mile (+$0.01)
DAT analysts note these remain below October 2023 levels ($2.02, $2.39, and $2.42 respectively), confirming the market's fundamental softness. The paradoxical rate increases amid falling volumes may reflect temporary capacity constraints rather than genuine demand recovery.
Contract Rates: Stability Amid Uncertainty
Contract pricing showed remarkable stability compared to spot market fluctuations:
- Dry van: $2.42/mile (unchanged for three consecutive months)
- Reefer: $2.78/mile (+$0.02)
- Flatbed: $3.09/mile (+$0.03)
This suggests carriers and shippers are maintaining cautious, long-term perspectives despite spot market volatility.
Market Headwinds: Inventory Glut Meets Consumer Pullback
DAT Chief Analyst Ken Adamo identifies two primary challenges:
- Inventory Overhang: Pandemic-era stockpiling has left retailers and manufacturers working through excess inventory rather than placing new orders.
- Consumer Weakness: Inflation and higher interest rates continue eroding purchasing power, particularly for discretionary goods that drive van freight volumes.
"We're seeing the freight market mirror broader economic trends," Adamo notes. "The traditional holiday shipping surge may prove disappointing this year."
Regulatory Disruptions Add Complexity
October's market saw additional volatility from Commercial Driver's License (CDL) policy uncertainties, creating temporary capacity constraints that briefly propped up rates before fading as regulatory clarity emerged.
While these disruptions proved transient, Adamo warns that longer-term driver availability issues could resurface if economic conditions improve without corresponding labor market adjustments.
2025 Outlook: Survival of the Fittest
The analyst paints a sobering picture for the coming year:
- Potential increase in broker and carrier bankruptcies as margins compress
- No immediate signs of traditional seasonal recovery
- Next meaningful improvement opportunity may not arrive until spring 2025
"Many operators simply lack the financial runway to wait out this downturn," Adamo cautions. "We're likely to see further market consolidation before conditions stabilize."
Industry participants face difficult choices between cost optimization, service differentiation, and strategic retreat as the market works through its current imbalance. While cyclical recovery remains inevitable, its timing and strength remain uncertain in today's complex economic environment.