The OOIDA Foundation has released its December freight market update, suggesting that an upcycle for the freight industry may be on the horizon. Building off the Foundation’s third-quarter report, which anticipated growth beginning in Q2 2025, the latest insights reinforce these projections.
The data for December identifies market conditions as stabilizing, with demand remaining flat, capacity finding equilibrium, rates trending upward, and operational costs steadying. For the second month in a row, the Foundation has maintained a neutral outlook for the near-term future but remains optimistic about a market rebound.
“As the number of owner-operators continues to increase, we believe the market will turn upward in early Q2 2025,” the Foundation stated.
Van Market Insights
The van market experienced mixed results in December, with half of all regions reporting declines in the market demand index. Spot rates saw little to no movement month-over-month but were anticipated to rise toward the end of the year. According to the Foundation, the divergence between spot rates and the three-year moving average highlights the current stage of the dry van market cycle.
Other noteworthy observations include:
- The inventory-to-sales ratio stayed unchanged.
- Household appliances continued their strong performance since late 2023.
- Retail sales, adjusted for seasonality, showed growth in electronics, appliances, and furniture sectors while declining for general merchandise.
Flatbed Market Outlook
Flatbed carriers operating in the Southeast and Mountain Central regions performed better in terms of freight ratios. However, spot rates for flatbeds experienced their 28th consecutive month of year-over-year declines.
Key flatbed market updates:
- After a brief uptick in August, the seasonally adjusted flatbed composite index dipped again in September.
- Federal interest rate cuts are expected to take months to impact the market indirectly, as they don’t directly influence mortgage rates.
- Inventory levels for building materials, garden equipment, and supplies remain a challenge, sitting 4% above 2019 levels. High inventory continues to hinder freight demand.
Reefer Market Trends
The reefer market faced an unusual decline in demand for December, a trend not typically seen during the end-of-year period. Despite this, spot rates posted gains and bounced back considerably from April 2023 lows.
Additional insights for the reefer market include:
- The Mexico-Texas region recorded the most substantial month-to-month increase in carrier pay-per-mile, according to the USDA.
- Eight regions reported significant dips in reefer volumes.
- Truck capacity saw tightening, contradicting lower volumes and rates. This anomaly suggests volume data may adjust positively next month.
Broader Trucking Market Analysis
The trucking market is simultaneously facing pressures and opportunities as various economic factors take shape.
- Private fleets are moderating demand within the for-hire market, but slowing private fleet growth and pre-tariff shipping could boost for-hire activity in the first half of 2025, according to the Cass Shipment Index.
- Class 8 truck sales—both new and used—declined slightly; however, used truck sales exceeded new sales for the 11th month in a row.
“Given that typical seasonality called for a decrease of 18% month-over-month, the small dip [in used sales] was a big win,” said Steve Tam, vice president at ACT Research.
- Transportation prices rose for the second-highest reading in two years, as indicated by the Logistics Managers’ Index, signaling that the freight market is nearing equilibrium.
Other economic factors shaping the trucking market include:
- Diesel prices have dropped $2.23 since their peak in June 2022, now showcasing much-needed relief for carriers.
- Slight increases in wages and salaries have been offset by a rising Consumer Price Index.
- Despite weak demand, supply chains remain adequately equipped, with shorter lead times reported. However, sporadic product shortages have emerged.
“A general construction slowdown in the fourth quarter has created a surplus of finished goods,” the OOIDA Foundation shared. “We are closely monitoring demand in Q1 to assess whether permanent workforce reductions may be necessary.”
For the full monthly and quarterly freight market updates, visit the OOIDA Foundation website.
Source: Land Line
