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Some signs of market tightening are emerging, signaling changes in the industry, according to an analyst and key trucking executive.
Overall attrition continues as trucking companies exit the market, Werner Enterprises CEO and President Derek Leathers he said last week at the Wolfe Transportation Conference.
On a weekly basis, the carrier tracks the number of trucking businesses that have had their operating authority suspended and has repeatedly noted a trend of more trucking businesses closing than entering the industry.
But that ongoing change “hasn’t gotten to the point where we have a true tilt yet,” Leathers said.
Councilman Dave Lazaridis shared similar suggestions in a briefing before the Single Carrier Registration Plan Advisory Subcommittee this month. The plan collects annual registration fees for states from motor carriers, private carriers, freight carriers, brokers and leasing companies.
While the transportation industry had 247,930 new entrants in 2021, this has turned into 214,101 new entrants in 2022 and 169,235 in 2023, according to a report shared with the subcommittee.
“We’re obviously not done with ’24, but we’re on a trajectory that suggests we’re at least going to break even with ’23,” Lazaridis said. That level could rise by 5% to 177,159, the report said.
Carriers have noted how capacity can play a role in rates, suggesting that larger carriers are better off in the long run. But analysts have noted how demand may be a more important indicator to follow.
During the transportation conference, Leathers gave remarks similar to the messages he gave on earnings calls last year. It also provided new details on how, according to Werner’s analysis, new entrants have survived for so long, defying industry expectations.
Strong pandemic demand meant “anyone could make money from trucks during this time,” and a variety of stimulus programs meant companies could bring in a cash level of about $100,000 per truck, Leathers said. .
“We think they’re burned out now,” Leathers said, suggesting that’s what’s leading to early signs of some tightening in the market.
The impact of this year’s International Road Check in May, where many drivers avoid traveling during the annual inspection check, was also noticeable. Leathers said there was a more physiological impact and ACT Research made similar observations.
“Spot rates rose a bit more than normal during the Roadcheck this year, but except for two days last week, spot rates remain below year-ago levels,” said ACT Research Vice President and Senior Analyst Tim Denoyer . statement of 22 May. “The cargo/truck ratio is now up annually and the trend over the past six months has improved as capacity has shrunk.”
Denoyer said the research firm saw “tighter momentum” suggesting an improvement in spot rates.