Positive signs of a freight market upcycle materializing
It’s not here yet, but indicators of a freight market upcycle are becoming more and more apparent, the OOIDA Foundation said in its November freight market update.
Those signs include equalizing capacity, stabilizing operating costs and rising rates. Volume and demand did remain flat, but that wasn’t enough to deter the Foundation from shifting its future outlook from negative to neutral.
“We’re still waiting to see the Fed’s recent rate cuts actually come into play and for manufacturing orders to pick up, but things are looking up,” the Foundation’s November report said.
The OOIDA Foundation’s Andrew King and Charles Sperry recently detailed the state of the freight market based on industry analysis.
King said he’s not ready to declare an end to any recession but affirmed the signs are there that “we are climbing out of the bottom.”
“It doesn’t necessarily mean we are in the next upcycle, depending on how you define it,” he added. “There are people who are still struggling and not finding the rates that they need. I’m not trying to make light of that whatsoever. From the macroeconomic level, there are some positive things – and still some things we are concerned about.”
An increase in demand is among the notable indicators, as are inventory levels. It is typical to see this type of trend around the holiday season, but a return to a pattern of seasonality is a positive nonetheless.
Conversely, manufacturing remains a major concern.
“It generates about 60% of all for-hire freight, and it’s still kind of going down,” King said. “If we’re going to see a real upcycle begin, we’re going to need to see manufacturing activity come out of its recession. Inflation is also a cause for concern, and that’s why we say it won’t be until quarter two of 2025 that things really start picking back up.”
The Foundation believes that next year could be a fruitful one for the trucking industry.
“There’s so much going on you never know exactly what’s going to happen, but even the sectors that have been negative year-over-year are starting to trend up,” King said. “More things are lining up. We are getting to that point of being very positive. Flatbed, for example, is abnormally high as far as demand goes.”
The Foundation’s freight market update includes analysis of van, flatbed, reefer and trucking markets. A complete breakdown of each market can be found in the full report here. LL