News / US trucking in a 'decline of unprecedented length'

US trucking appears to be on a never-ending road, chasing a recovery that remains elusive.

Predictions of an turnaround, recently fed by signals of tightening capacity and strengthening industrial demand, have been thwarted again, this time by Washington’s trade war that has put businesses in limbo and threatens economic pain.

The US Bank Freight Payment Index, a quarterly report based on $43bn in freight payments, shows decline in the first quarter, compared with both the final three-month period of 2024 and a year ago. Nationwide volume contracted 5.8% from Q4, while spending was down 2.5%. Year-on-year volume was 13.8% lower and spending sank 8.6%.

The broad picture masks considerable regional variations. Volume declined in the south-west, Midwest and south-east regions from the previous quarter, but rose in the west and north-east. An increase of 3.6% marked the biggest gain the north-east has seen in years, whereas the south-west suffered a drop of 21.2% in traffic from Q4, resulting in a 40.1% slump year on year. Freight spending in the south-west, on the other hand, was up 7.6% from Q4 and 6% year on year.

According to the authors of the index, the Midwest faced the strongest headwinds, with both volumes and spending in retreat. Volumes fell 6.9% from the previous quarter and 13.9% year on year, while spending was down 5.5% and 15.3% respectively.

The Midwest was hit by a combination of soft manufacturing conditions, winter weather, a drop of over 30% in housing starts and a 20% decline in volumes from Canada. Severe weather conditions – snow in the south-west and south-east and wildfires in southern California – were massive factors. On the other hand, volumes in the west and north-east were fuelled by buoyant imports.

“All told, there are some signs of improvement amid persistent headwinds for the trucking industry,” commented Bob Costello, SVP and chief economist at the American Trucking Associations.

The authors of the report stressed that the widening gap between volume and spending declines pointed to a tightening in capacity, adding that manufacturing was showing signs of strength in the first two months of the year.

Spot and contract rates were still down year on year, but rose moderately over the previous quarter. Carriers like Knight-Swift and Schneider’s trucking segment recently reported low to mid-single-digit contract rate increases this month when they discussed their Q1 results.

However, the manufacturing PMI dropped back into contraction in March, and signals for the coming months are ominous.

Trucking volume was still up in April, according to DAT Freight & Analytics, but this has been largely attributed to front-loading as importers scrambled to bring in goods ahead of tariffs. The uncertainty of how the tariff landscape will evolve has made shippers more cautious, noted Knight-Swift CEO Adam Miller during his company’s earnings call.

DAT noted that domestic manufacturing, the biggest driver of large truck traffic, is showing declining demand. The housing market has been unexpectedly slow, and looks unlikely to rebound as consumers brace for higher costs and a possible recession. With imports slowing amid reports of drastically reduced shipments from China and order cancellations from China by large US retailers, the trucking sector is facing a bleak outlook.

Indeed, Knight-Swift lowered its outlook for the second quarter and did not offer a guidance for the third quarter. Schneider cut its guidance for the year by 17% and now expects rate and volume momentum to be muted. And CEO Mike Gerdin of Heartland Express, which reported another quarter of deficit, struck an even more pessimistic note when announcing the results.

“Our consolidated operating results for the three months ended 31 March reflect a combination of adverse weather experienced in January and February, tariff uncertainties amongst our customers in March, along with prolonged industry-wide challenges where operating cost inflation continue to outpace customer freight demand and freight rate improvements,” he said.

In light of the rapid deterioration in demand in response to the trade war, DAT now forecasts flat volumes and rates for this year.

According to JB Hunt CEO Shelley Simpson, margins for many US trucking operators are ‘slim to non-existent’, adding that rate increases lag operating costs because of strong competition for business. She sees the trucking market on a stretch of decline of unprecedented length.

“I’ve never seen a recession last three years,” she added during the company’s earnings call.