The US trucking industry experienced the late-cycle phase of the classic truckload cycle in 2022, leading us into the bottoming phase in early 2023. In October 2024, the rebalancing process continues slowly, though progress has been made.
As we look ahead to 2025, the North American trucking industry is poised to navigate a complex landscape shaped by economic transitions, regulatory changes, and evolving market dynamics. These are some of the key factors influencing the industry, including freight demand, equipment production, and macroeconomic trends, as well as emerging challenges and opportunities.
How confident should your business be in ACT's forecasting for 2025?
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 - October 2024
Economic Overview
As we move into 2025, the U.S. economy is expected to experience a modest deceleration, with GDP growth projected to slow in 2024. This reflects the cumulative impact of tighter monetary policy and more cautious consumer spending. While inflationary pressures are gradually easing, the lingering effects of high interest rates continue to weigh on business investment and residential construction. Despite these headwinds, consumer spending remains resilient, albeit at a slower pace, which should provide a stable foundation for freight demand through the year. The economic environment in 2025 is not expected to shift dramatically, but it will present challenges for industries reliant on rapid growth.
Transportation Still Tough for For-Hire Fleets
In 2025, the transportation sector is expected to face continued challenges, with freight growth slowing. The ACT Freight Composite Index reflects this cooling, driven by softer demand and ongoing supply chain adjustments. While truckload spot rates have shown modest gains, capacity rebalancing remains a work in progress. The slower pace of economic growth and lingering overcapacity in certain segments will keep upward pressure on rates muted. However, as inventories normalize and consumer demand stabilizes, the sector should see gradual improvements toward the end of the year.
- Slower Freight Growth:
Freight growth is projected to slow in 2025, following the stronger increase in 2024. This moderation is driven by softer consumer demand and ongoing adjustments within supply chains. While economic activity continues, it’s expected at a slower pace, reducing the urgency for freight movement across industries. Retailers and manufacturers are balancing their inventory levels after pandemic-era disruptions, leading to a more measured freight environment. - Capacity Rebalancing in Progress:
Overcapacity remains a key issue in the transportation sector, particularly within the truckload market. Despite some signs of improvement, capacity rebalancing is still a work in progress, with fleet operators continuing to right-size operations. Private fleets have increasingly absorbed more freight, shifting volumes away from the spot market and prolonging the rate recovery. This dynamic will keep spot rates under pressure until a clearer equilibrium between supply and demand emerges. - Modest Spot Rate Gains:
Truckload spot rates have shown modest gains heading into 2025, but upward pressure on rates remains limited due to lingering overcapacity and gradual economic growth. Fleets are exercising caution in expanding capacity until the market fully stabilizes. However, as inventories normalize and consumer demand starts to show signs of recovery, a more favorable environment for rate increases could develop by the latter part of 2025. This would be especially true for sectors like retail and e-commerce, where replenishment cycles could boost freight demand.
Class 8 Trucks: Inventory Overhang and Demand Shifts
Class 8 truck production is forecasted to decline in 2025. This reduction is largely driven by elevated inventory levels from the previous year, coupled with softer demand as fleet operators pause expansion plans amid economic uncertainty. Although vocational vehicle orders continue to support segments of the market, the overall Class 8 environment remains pressured by overcapacity in the for-hire market. As fleets work through excess inventory and regulatory pressures mount, production levels are expected to stabilize, but growth will remain limited through the year.
Medium-Duty Vehicles (Classes 5-7): Steady but Slower Growth
The medium-duty truck market is expected to experience a sharp contraction in 2025, with production forecasted to decline compared to 2024. This significant drop reflects ongoing inventory challenges, as well as a more cautious approach from fleet operators amid economic uncertainty. Supply chain disruptions, particularly in body-builder capacity, continue to affect the market's ability to meet demand. As the year progresses, production levels are expected to remain under pressure, with only a gradual recovery anticipated toward the latter half of 2025.
Trailers: Gradual Recovery Expected
Trailer production is projected to decrease in 2025, reflecting the broader cooling in the transportation sector. Although demand for replacement trailers remains steady in some areas, overall order activity has slowed as fleet operators delay investments amidst economic headwinds. Persistent overcapacity is likely to continue suppressing production throughout the year. Nonetheless, conditions may gradually improve in the second half of 2025, as market dynamics begin to stabilize.
Regulatory and Market Drivers
The implementation of the CARB Clean Truck Regulation in five states will continue to shape market behavior, particularly in the early part of the year. Additionally, the ongoing shift towards zero-emission vehicles (ZEVs) will gain momentum as fleets explore options for battery-electric and hydrogen fuel cell trucks. The development of charging infrastructure and regulatory incentives will be critical in driving adoption beyond pilot programs.
For more details on the trucking industry forecast for 2025, see ACT's freight & transportation forecast.