Trucking’s recovery continues to hinge on tighter capacity

“Truck tonnage was down in four of the last five months,” Costello said. “Because of all the supply constraints, however, the market is generally better.” (grandriver/Getty Images)

Another decline in truck tonnage in August reinforced that shrinking capacity, rather than stronger demand, is driving the freight market turnaround.

The American Trucking Associations For-Hire Truck Tonnage Index declined 0.5% sequentially to 112.7 from 113.3. It also decreased 1.6% from last year. Freight tonnage increased 1% year to date due to robust year-over-year gains from February through April.

“The truck market has certainly flipped this year, but recent tonnage levels confirm this is due to reduced capacity, not robust demand,” said ATA Chief Economist Bob Costello. “Truck tonnage was down in four of the last five months. It is down 4.3% from the recent peak in March … . Because of all the supply constraints, however, the market is generally better.”

Jonathan Phares, assistant professor of supply chain management at Iowa State University, suspects gains in the industrial economy, such as those surrounding artificial intelligence infrastructure, haven’t been enough to offset losses in consumer markets.

“The customer out there is definitely feeling tighter with how much their paycheck can run,” Phares said. “That’s exacerbated by how fuel prices are being affected by global conflicts. That’s raising prices of things, but it’s also tightening the purse strings of consumers as well.”

Demand versus capacity remains the focus

Phares would expect rail cargo or idle freight to increase more significantly if capacity were the main issue. He instead suspects that while the bifurcated economy has driven more freight in select lanes, that hasn’t been enough to offset the downside.

“That bifurcated economy is probably a distinction between industrial products versus consumer products,” Phares said. “I tend to talk a lot about consumer sentiment, consumer purchasing and things, that’s where I think that the freight demand is starting to decline more.”

The Cass Freight Index found that shipments increased 2.1% year over year to 1.038 from 1.017. They also rose 5.6% sequentially from 0.983. The Logistics Managers’ Index decreased 2.2 points from the previous month to 66.6 in August.

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(grandriver/Getty Images)

“August reinforced a market dynamic we have been watching closely,” said Jenny Vander Zanden, chief operating officer at Breakthrough. “Freight demand remains uneven, but capacity is not loosening in the way we would typically expect in a softer freight environment.”

Breakthrough data found that overall freight volumes were slightly negative year over year, with strength concentrated in retail, paper and packaging. But durable goods, food and beverage, and consumer packaged goods remained under pressure. Zanden said that mix suggests the market is not yet experiencing a broad-based demand recovery.

“Contract rates continued to show upward pressure, and spot rates softened in several truckload segments but continued to hold a premium over contract rates,” Zanden said. “For transportation professionals, that is an important signal: The market is not being driven by aggregate demand.”

Geopolitical pressures

“The biggest issue for the supply chains right now is the cost of diesel,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “That cost of diesel is a function of what’s happening in the Strait of Hormuz, as well as, very importantly, what’s happening with the Ukrainians taking out the Russian refining capacity.”

Dhawan stressed that this has led to a global shortage of refined products rather than oil. He warned that the reductions in refinery capacity are becoming a problem. Russian production had acted as a release valve, he noted, but its refining capacity has been significantly hit.

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(Andrey Rudakov/Bloomberg)

“That’s why there’s a shortage of diesel in the world, and the price of diesel has actually doubled, whereas the price of gasoline is only up 30% to 40% in the U.S.,” Dhawan said. “The second problem is the Strait of Hormuz bottleneck also means the LNG hasn’t been getting out from Qatar.”

LNG is used to make fertilizer and other products, he noted.

Dhawan expects the higher costs to reduce profitability in the short term, with diesel and fertilizer prices eating into crop-harvesting profits. But he also warned that demand destruction could occur in the long term and that this might be a signal central banks are sending.

“The Federal Reserve raised the interest rates,” Dhawan said. “The European central bank has also raised the rates, and so has the Bank of Japan. So all the major central banks are now sending a signal that this oil price-led inflation, which was first in jet fuel, gasoline, diesel and other stuff, is now beginning to get into the other parts of the economy.”

Consumers lack confidence

The Conference Board Consumer Confidence Index fell to an eight-month low of 89.4, while its expectations index fell into the range associated with recession risk at 68.2. The Conference Board noted that expectations for household incomes moderated but remained optimistic overall.

“Demand stayed muted in August, and the clearest reason is the consumer, not anything specific to trucking,” said James Roe, director of shipping, logistics and infrastructure at AlixPartners. “What makes that interesting is the contrast with the ocean side of the network.”

Roe added that container imports hit their third-highest month on record at 2.6 million 20-foot-equivalent units in August. This came as the ports of Los Angeles and Long Beach posted their busiest Augusts ever. He noted that kind of import strength would normally be expected to translate fairly quickly into dry van truckload demand, but this time it has not.

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(Eric Thayer/Bloomberg)

“The national numbers make August look like a softer freight month, but that is not necessarily what bulk and breakbulk shippers felt,” said Matt Everson, senior vice president of sales and marketing at IntelliTrans. “If you are moving steel, lumber, machinery or other heavy freight, you are still dealing with a pretty limited pool of specialized equipment.”

IntelliTrans data showed spot rates were still more than 30% higher than in August 2025. It also found that flatbed volume was down 5% from a year ago and 3% sequentially. Everson noted that pockets of demand were keeping pressure on that specialized equipment.

“So softer demand does not automatically mean capacity gets easier to find,” Everson said. “For a bulk shipper, overall truck demand can be down and you can still have a tough time finding the right equipment where you need it.”