Werner Enterprises CEO, Derek Leathers, noted that emerging trends in the cargo market signal a long-awaited shift that could help the trucking industry emerge from its prolonged freight recession.
“Inventory levels in general are now more normalized,” Leathers said during a June 11 presentation at the Wells Fargo 2024 Industrials Conference in Chicago. “As people and retailers are selling through goods, they’re back into a replenishment cycle that we haven’t seen in a couple of years. And that can be very meaningful as we set up for this coming fall and peak season.”
The trucking sector has experienced a downturn for nearly two years, with capacity far exceeding freight demand. Although consumer demand has remained fairly stable during this period, Leathers pointed out that there are no indications of a major increase in spending. “We’re not banking on any kind of significant uptick in consumer behavior, nor are we assuming that the consumer suddenly goes silent,” Leathers said.
“Everyone got their inventories out of whack post-COVID no matter how good they were as a retailer,” Leathers said. “But the really good retailers have gotten back to normalized levels. They feel like they’re where they need to be — that they don’t have any sort of bloat left over. Now they’re back to normal replenishment. So, as they sell through, they’re replenishing and preparing for what could look like a more normalized fall. Those are all encouraging signs.”
Leathers mentioned that this year’s bid season has shown improvement compared to 2023, which saw significant turmoil as carriers tried to maintain pricing.
“This year has seen a more stable approach,” Leathers explained. “There is still some pricing pressure, but there is much less turmoil. This suggests that both parties recognize we are nearing an inflection point. Therefore, it’s not a good time to make drastic changes to your carrier providers.”
Leathers concluded that Werner plans to maintain its current course.
“From a rate perspective we’re going to be disciplined,” Leathers said. “We’ve been public about that. I don’t think the industry has any more to give. Whether the industry chooses to or not, we don’t, and we’re not.”
Source: Transport Topics
