Trucking Q1 Results Show Substantial Slowdown

Signs Indicate Stagnation Likely to Continue
Trucks on the highway
Consumer weakness and inventory overhangs hampered trucking activity in the first quarter, according to one analyst. (.CHUYN/Getty Images)

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The trucking industry stumbled through the first quarter amid a slowing economy and high inventories, according to experts.

“Broadly, numbers had to come down,” Wells Fargo analyst Allison Poliniak-Cusic said. “Things are a bit muted than maybe we anticipated as we entered the year. A lot of macro uncertainty is still very much front-and-center. So, I would say from a volumes standpoint, earnings will be lower, volumes will be lower, pricing seems to be coming in at the lower end of where we thought originally.”

TD Cowen noted in a report that elevated inventories and weak imports have pressured rates across its coverage. It noted truckload rates may be approaching trough levels, but increasing uncertainty on consumer resilience offers mixed signals.

“We entered 1Q with low expectations based off the proprietary research and extensive industry channel checks,” the report noted. “Now that we are largely through transport earnings, we can state that macro conditions have deteriorated more than we had initially thought. Not only was the ‘back-half turnaround’ pushed out to 4Q at a minimum, but normal seasonality ceased to exist in March.”

Chris Wetherbee


TD Cowen added that seasonal patterns appear to have returned in April. But those were off a much lower base, giving the second quarter a weak start. Because of that, the investment banking company is bringing down most of its estimates for the year.

“The big sort of takeaway I had is really how much of a head fake January was,” Citigroup analyst Chris Wetherbee said. “There was this stabilization or atypical seasonal improvement that we saw from the trucking companies that really didn’t last at all.

“So that was clearly the best month of the quarter, and then things decelerated into February as well as March. And when I say decelerated, I mean relative to normal seasonality.”


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Wetherbee noted the first quarter normally would see improving results as it progresses. But this time, consumer weakness and inventory overhangs caused the opposite to occur. He noted some of that is the industry coming off the active market during the coronavirus pandemic that peaked at the end of 2021, but he warns there are signs it could be more than that.

Freight has been weak and rates have been dropping sequentially for more than a year now,” Wetherbee said. “I think we probably have done a good deal of burning off the excess, and we might now be kind of getting into something that more reflects a weaker economic environment.”

Wetherbee noted the market fundamentals and trucking companies may be reflecting a mild recession in terms of some economic weakness. But he noted the numbers aren’t indicating something more severe at this point.

Amit Mehrotra


“Typically, the way seasonality works in the freight market is you get stronger as you progress through the year,” Deutsche Bank analyst Amit Mehrotra said about the quarter. “And so, January is usually the weakest month, and February is still pretty weak, and March you see some signs of life with the weather opening up and produce coming in, and then we kind of are off to the races from there. Well, that was really turned on its head in the first quarter.”

Mehrotra added that there is very little freight momentum in the market, but he does believe the worst is behind the industry at this point. He noted there have been early signs inventories are being worked down and import activity grew heading into the second quarter. He also noted there is uncertainty around how hard the industry inflects going forward.

“I think there’s a bunch of things that kind of came together to create a perfect storm,” Mehrotra said. “The key of those being that we have a very difficult macro environment where there’s a lot of uncertainty out there, and that’s obviously bleeding into the consumer psychology. But then what’s exacerbating those dynamics is the fact that we have a huge over-inventory position.”

Allison Poliniak-Cusic of Wells Fargo


Poliniak-Cusic noted her main concern at this point is whether the industry is heading for another challenging pricing environment next year. She originally was anticipating that the second half of this year would start to look better with inventories resetting to a point they would have to be replenished.

“We just don’t know how that consumer situation is going to play out,” Poliniak-Cusic said. “Now we have layered onto industrials, which is talking about some weakness on their end as we enter the back half of the year as well. So, I would say all signs are pointing to maybe a little softer than we originally anticipated at this point.”

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