As we enter the final quarter of 2024, the North American trucking industry continues to navigate economic shifts and market adjustments. While the economy has shown resilience, the effects of higher interest rates and tightening credit conditions are becoming more apparent. This update provides an outlook for the remainder of 2024, highlighting key trends shaping the industry.
How confident should your business be in ACT's forecasting for 2024?
For 2023, ACT's forecasts for the shipments component of the Cass Freight Index® were 96.9% accurate on average for the 24-month forecast period.
ACT Research’s 2023 forecasts for the Cass Truckload Linehaul Index® were 96.6% accurate on average over the past 24 months, and 98.5% accurate over the past 12 months.
Trucking Industry Trends – November 2024
Economic Overview:
The U.S. economy has continued on a stable trajectory through 2024, with projected GDP growth revised slightly upward to 2.7% year-over-year. Consumer spending has remained robust, helping support broader economic stability even as the impacts of high interest rates begin to moderate growth. Inflationary pressures have eased, prompting the Federal Reserve to cut rates, yet rising Treasury yields are adding pressure on rate-sensitive sectors. Entering Q4, economic activity is expected to soften, with GDP growth slowing into 2025 as inflation control efforts continue.
Freight and Transportation:
Freight demand has maintained moderate resilience throughout 2024, with the ACT Freight Composite Index expected to rise by 3.2% by year-end. However, the pace of freight growth has moderated, impacted by slower consumer spending, inventory adjustments, and persistent overcapacity. While truckload spot rates have seen some recovery since Q3, capacity rebalancing challenges continue to limit significant rate gains in the last quarter of the year.
Key trends shaping the 2024 freight and transportation landscape include:
- Moderation in Freight Demand:
Freight volumes have remained stable but are growing at a slower rate, with the ACT Freight Composite Index expected to increase by 3.2% by the end of 2024. This moderation is linked to softening consumer demand and retailers' efforts to normalize inventories. The pace of demand has steadied, yet with limited potential for robust growth through year-end. - Spot Rate Recovery Lags:
Although truckload spot rates have experienced mild improvements since Q3, they are well below pre-pandemic highs. External disruptions, including weather events and port delays, have led to short-term rate spikes, but a sustained rate recovery is unlikely before 2025 as overcapacity remains a major hurdle. - Ongoing Capacity Rebalancing:
Overcapacity, especially within the for-hire segment, continues to keep upward pressure on rates limited. Private fleets have increasingly absorbed freight volume, diverting business away from the spot market and dampening rate increases. Capacity rebalancing is anticipated to extend into 2025 as fleets adjust to shifting demand.
Class 8 Trucks:
Class 8 truck production has shown significant growth in 2024 bolstered by strong demand in vocational segments. However, production rates are expected to decelerate in Q4 as high inventory levels and easing demand influence market dynamics. A September surge in vocational orders temporarily lifted overall order volumes, yet inventory constraints are expected to temper production gains through the remainder of the year.
Medium-Duty Trucks (Classes 5-7):
The medium-duty market has remained softer in 2024. While demand for vocational medium-duty trucks is steady, production has been constrained by bottlenecks in body-building capacities, impacting delivery schedules. With continued economic uncertainty, fleets are exercising caution, limiting growth expectations through year-end.
Trailers:
Trailer production has continued to struggle, with a decline in output projected for the remainder of 2024. Although demand for specific trailer types, such as refrigerated units, has remained stable, broader order activity has slowed as fleets defer purchases amid economic caution. Persistent overcapacity and ongoing supply chain disruptions are expected to keep recovery gradual, with only minor improvements expected in the final quarter of 2024.