Trimble Insight 2024: Examining the State of Freight with FreightWaves CEO Craig Fuller

A protracted freight recession has transportation providers examining market capacity and wondering when it will tighten so they can regain pricing power. In a special session at Trimble’s Insight Tech Conference, Craig Fuller, CEO of transportation industry news and analysis firm, FreightWaves, spoke at length on many of the challenges hindering the freight market throughout 2024 and the potential for improvement in 2025. 

The Road to Recovery

While Fuller asserted the US federal government may have prolonged the freight recession with Small Business Administration (SBA) loans to carriers who would have otherwise gone out of business (and maintained excess capacity), he shared encouraging news. 

The freight market has seen increased demand based on high-frequency load tender rejection data and the 2024 freight market has been tracking ahead of 2023, which Fuller regarded as the worst time in what he called the “Great Freight Recession.” Load tender rejections increased in Q2 and Q3 this year, signaling that carriers see better opportunities. FreightWaves’ load tender rejection index has slowly increased since May 2023.

Yet freight rates have been stagnant, and “it still feels pretty sluggish,” said Fuller, who compared the pricing power of transportation providers in 2024 to 2019, which historically was not a good year for motor carriers and freight brokers. Still, “we believe we're in the recovery phase," he said.

Bankruptcies and Market Dynamics

The protracted freight recession, Fuller said, is rooted in the surplus capacity that spilled over from a hot-then-cold freight market during the COVID-19 pandemic. The freight market’s peak expansion period was 2021. New motor carrier registrations with the Federal Motor Carrier Safety Administration increased 28% over pre-COVID levels.

Excess capacity has been leaving the market slower than expected, but carrier bankruptcies have accelerated in 2024. Fuller credits carriers' resiliency during the Great Freight Recession to an infusion of cash from SBA loans during the Trump Administration's Payroll Protection Program (PPP).

FreightWaves filed a Freedom of Information Act request to investigate SBA loans in the industry and discovered that trucking companies received 10% of the $490 billion in federal government PPP loans. On average, trucking companies received $90,000 in loans, the first two years of which were interest-free. Carriers had to begin payments this year, adding to cash flow challenges that Fuller believes triggered the uptick in bankruptcies.

Refrigerated vs. Dry Van

Fuller said freight volumes have been steady in 2024, and specific industry segments with a higher barrier of entry, like refrigerated, are recovering more quickly. Refrigerated carriers are gaining pricing power faster than dry van fleets because of less capacity and changes in consumer behavior.

He said that inflation has created a higher demand for groceries as more people are electing to eat at home rather than dine out. This benefits the for-hire and dedicated truckload segment. Overall, the relationship between contract and spot rates continues to be a key indicator for market recovery. The spread between spot and contract rates has narrowed, indicating the market’s return to equilibrium.

"Today, we're getting back to normalized markets. We're not having the extremes we saw during COVID,” Fuller said, ”but we still have some way to go to recovery."

Imports and Supply Chain

Contrary to earlier predictions that supply chains would become more localized, imports from big-box retailers reached record levels in 2024. These retailers took advantage of a flailing domestic economy in China to acquire cheaper goods. 

"The big box retailers have gone shopping,” he said. However, a higher volume of imports could be a temporary jolt to the freight market since tariffs on China have remained in place since the Trump administration. Fuller said that the Biden administration has not reversed or eased tariffs on Chinese goods and is unlikely to do so this year.

Looking at domestic freight markets, Fuller pointed to recent data showing that Detroit, Houston and McAllen, Texas, have had the highest increase in load activity. Houston’s growth is tied to the energy sector. Detroit is going through a significant reconfiguration from factories converting from producing fuel-powered vehicles to battery electric vehicles. Laredo, Texas, has seen a 250% increase due to a flux in cross-border freight.

Fuller expects freight market conditions will continue improving through the end of 2024 into next year, barring additional port worker labor disputes. Challenges remain from slower-than-expected capacity adjustments, changing consumer behaviors and global economic shifts, but overall, the freight market is recovering. Fuller's insights showed how a shifting dynamic of capacity and freight demand contributes to a slow recovery of pricing power for transportation providers.

Visit our Trimble Insight 2024 event hub to read more. Or, contact our team to learn how Trimble can help your organization adapt to ever-changing market conditions.

This piece was produced in collaboration with Aaron Huff, a former editor of Commercial Carrier Journal and now Chief Content Strategist at Virago Marketing, a full-service marketing agency specializing in transportation and supply chain technology. Huff spent 21 years covering the transportation and logistics industry and since 2021, has been helping companies generate demand and leads using expertly crafted digital strategy, content and execution.

Follow him on LinkedIn or get in touch at aaron@viragomarketing.com.