Overall truck loadings have been flat through last year and this year, but there’s reason to believe they’ll begin to improve in the third quarter.

That’s the word from Avery Vise, FTR’s vice-president of trucking, who was speaking on a recent State of Freight webinar. But he tempered expectations by adding “I would say it’s not going to be overall particularly robust growth.”

At this point of a long-running freight recession, fleets can be forgiven for grabbing onto any positive projections. And most positive movement for truckers in terms of volumes and rates will come as a result of capacity exiting the market.

This process began in 2022, and by late that year the carrier base began to decline consistently on a net basis, Vise explained. “We’ve had some volatility in this trend, especially recently. But in general, more carriers are still failing than are entering the market.”

Still, today there are roughly 92,000 more authorized for-hire carriers in the U.S. than existed pre-pandemic, though most of them are one- and two-truck operations. This stemmed from an influx of new entrants beginning in July 2020 as truckers got into business for themselves to chase surging spot market prices. That resulted in an increase of the carrier base to the tune of about 42%, Vise said.

“So, we have substantially more very small carriers than we did before the pandemic,” he added.

While carrier exits reflect a reduction in capacity, they are partly offset by rising employment rates in 2022, indicating many of those owner-operators went back to working for a larger carrier.

“Over the last year though, the decline in the carrier population does represent lost driver capacity since the larger carriers haven’t been adding to their payrolls,” Vise explained.

Active truck utilization will point to when there’s upward pressure on rates. “Think of it as a pressure gauge, if you will,” Vise said. It was as high as 100% in 2021 before dropping sharply to 88-89% the following year. The 10-year average is a bout 92%, and utilization begins to exert upward pressure on rates at the 94-95% mark, Vise said.

He anticipates we’ll reach that level by this time next year. In the meantime, expect spot market rates to only increase by about 1% this year, Vise said. Contract rates appear to have bottomed at levels that are negative year over year, and expected to remain there for the bulk of the year, he added.

“Although rates do look to start improving in absolute terms by the end off the year,” Vise said. “This is not taking into account all the increases we’ve seen in driver pay, fuel, equipment costs and so on.”

Looking at the broader economy, FTR chairman Eric Starks, said it’s a mixed bag.

“It’s been doing OK, but it feels so different for everybody,” he noted. The U.S. economy continues to generate jobs and consumers continue to purchase goods.

Manufacturing, “the lifeblood of transportation,” has been flat, as has industrial production.

The GDP Goods Transport Sector (which adds back in imports, since they do move by truck once they arrive here) is growing at about 2.5-3%.

“Traditionally, we need to see something above 2.5% in this metric to show material increases in the generation of freight,” Starks said. “So, this is a status quo type of a forecast.”