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A push and pull of forces complicates the truck market cycle.
The industry may finally be moving beyond a persistently sluggish recession, but the current environment may continue to linger longer than many would like, industry leaders recently suggested.
Werner Enterprises CEO and President Derek Leathers spoke on the matter last week at a Wells Fargo Conference in Chicago.
“We’ve continued to see exits of companies that have led to a situation where we’re closer to the end than the beginning, but not yet an inflection point at this point,” Leathers said.
But some positive signs have emerged. A recent spike in spot market pricing as a result of the International Road Check was more akin to pre-COVID-19 levels, Leathers said.
“But there’s still some … more attrition that needs to happen,” he said, adding that net shutdown statistics have shown a long-term trend of more carriers terminating operating authorities.
While truck demand is low, capacity is not fundamentally changing, DAT iQ principal analyst Dean Croke said on June 11. weekly market update online broadcast.
Before the 2027 emissions regulations went into effect for trucks, there was very strong demand for new vehicle orders, flooding the used market and contributing to market capacity, he said.
Croke called it “a really strange situation”.
Werner executives do not expect customers to radically change their habits. “We don’t believe in any kind of significant increase in consumer behavior, but we also don’t assume that the consumer will suddenly go silent,” Leathers said.
In Werner’s one-way business, Leathers noted that deals are better than a year ago, when a deal might contain mostly new volume — a highly inefficient relationship for shipper and carrier, he said.
“This year, it’s been a more consistent approach,” he said. “This is also an indication that everybody, let’s say, both sides of the office, realizes that we are closer to a tipping point.”