9 Key Insights on the Freight Market Outlook for 2023 | Trucking Industry Trends

Freight Market Outlook: Navigating Uncertainties in 2023

A fleet of trucks driving along a dusty road at sunrise, symbolizing the freight market outlook for 2023.

The trucking industry is at a crossroads, looking for market upturn signals amidst uncertainty.

In 2023, the trucking industry finds itself at a crossroads. Leaders are observing any indication of a market upturn, navigating the uncertainties surrounding the freight market outlook. Despite these challenges, the industry remains resilient and hopeful. Yet, executives recently conveyed to investors and analysts that a distinct turning point is yet to appear.

They collectively portray a freight market under-performing its typical spring seasonality, tempering expectations for a swift rebound. In the midst of this uncertainty, industry experts continue to analyze trucking industry trends, studying:

Freight rates
Demand
Volume

in an effort to make accurate forecasts.

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ArcBest: Balancing Volume and Revenue

ArcBest’s significant tonnage jump raises questions on prioritizing volume over shipment value.

Steven Leonard, ArcBest Corp.’s Chief Commercial Officer, stands at the forefront of discussions on the freight market outlook. He raises a poignant question – not if freight rates have hit their lowest, but the duration they might linger there. ArcBest’s largest quarter-to-quarter jump in tonnage amidst a weak demand environment prompted discussions on whether the carrier had prioritized volume over revenue per hundredweight, a measure of shipment value.

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This situation echoes the broader challenge faced by the logistics market: the need to balance freight volume and revenue in an uncertain market.

Heartland Express: Acquisition Challenges and Rising Operational Costs

“Heartland Express, having recently expanded its operations through acquisitions, faces a new set of challenges in the current freight market. The carrier foresees a continuous trend of lower freight demand and freight rate pressure for one to two quarters.”
Heartland Express faces challenges from acquisitions amidst continuous freight demand drop.

Despite these hurdles, it’s a testament to the carrier’s resilience as it navigates freight industry expectations and strives to overcome rising operational costs.

Old Dominion: Adapting to Weak Demand

Old Dominion Freight Line, a major player in the logistics sector, grapples with persistently weak demand. It has had to modify its previous expectations for a second-quarter freight rebound. The carrier’s less-than-truckload (LTL) tonnage per day has seen a significant drop. Despite these challenges, Old Dominion continues to adapt its business strategies to meet the current market conditions and prepare for a possible freight market recovery.

Old Dominion Freight Line Truck at night next to old brick building

Old Dominion adapts its strategies to counter persistently weak demand.

Schneider National: Inventory Challenges and Uncertainty

Schneider National, a key influencer in the trucking industry, anticipates a moderate freight recovery may be on the horizon in the second half of the year, but uncertainty remains. Industry capacity levels are adjusting slower than expected, and tighter credit access may speed up smaller carriers exiting the market. Schneider National’s strategy highlights the need for flexibility and swift adaptation in the face of freight market challenges.

Schneider National forecasts a possible moderate freight recovery in the second half of the year.

Knight-Swift: Projections for Freight Market Recovery

Knight-Swift Transportation Holdings is not just observing the changing freight market, but actively making projections for its future. It forecasts:

A capacity exit
Improving freight volumes in the second half of the year
A recovery in spot pricing

Knight-Swift actively projects capacity exit, improved volumes, and spot pricing recovery.

These projections reflect the company’s depth of understanding of the freight market dynamics and their commitment to delivering quality carrier performance.

TFI International: Contract Negotiations Amid Volume Drop

TFI International finds itself in the midst of contract negotiations with the International Brotherhood of Teamsters over a new contract. This comes against a backdrop of a 20-percent drop in volumes at the union-represented LTL unit. As the company navigates these negotiations, it remains focused on maintaining its strong position in the logistics sector.

Yellow: Dealing with LTL Tonnage Drop

Yellow Corp. innovates to maintain profitability despite a drop in LTL tonnage.

Yellow Corp., a veteran in the trucking industry, reported a 12 percent year over year drop in LTL tonnage per day in the first quarter. As it restructures its One Yellow network with the Teamsters, it aims to safeguard its large customer base. Despite the challenges, Yellow Corp. continues to strategize and innovate to ensure its operations remain profitable in the changing freight market.

XPO: Limits Tonnage Loss

XPO Logistics, a leading global provider of supply chain solutions, has been successful in minimizing the loss of less-than-truckload (LTL) tonnage per day to 1.8 percent year over year in the first quarter. Notably, its daily shipments have risen by 1.5 percent. The carrier projects further headcount reduction and anticipates realizing the full run rate benefit of more than $50 million in annualized labor-related cost savings by the third quarter.

XPO Logistics successfully limits the loss of LTL tonnage YOY.

Chief Executive Mario Harik offers a glimmer of hope: XPO outperformed typical seasonality from March to April. “A lot of these things are company-specific, but we’re seeing a slightly better demand environment in April than we did see in March,” Harik shares.

Conclusion

The current freight market outlook might be fraught with uncertainties and challenges, but it also presents opportunities for innovation and growth. Companies like ArcBest, Heartland Express, Old Dominion, Schneider National, Knight-Swift, TFI International, Yellow Corp. and XPO are not just passive observers of these changes, but active participants shaping the future of the trucking industry.

As they adapt and innovate, they set the stage for a resilient and dynamic freight market. The insights from these industry leaders provide valuable lessons for other businesses navigating the freight market’s complexities. The current outlook may be uncertain, but the industry’s future remains bright as these companies continue to push the boundaries and redefine what’s possible in the freight market.

Key Insights into the Freight Market Outlook for 2023

1. 1. Market Uncertainty: The trucking industry finds itself at a pivotal juncture in 2023, with leaders diligently scanning for signs of market recovery amidst a performance lag behind the typical spring seasonality.
  2. ArcBest’s Balancing Act: Amidst a challenging backdrop, ArcBest is juggling with balancing freight volume and revenue due to a surge in tonnage amidst weak demand.
  3. Heartland’s Acquisition Challenges: Following its recent acquisitions, Heartland Express confronts declining freight demand, pressure on freight rates, and climbing operational costs.
  4. Old Dominion’s Strategy Shift: Old Dominion Freight Line is recalibrating its approach to manage persistently weak demand, and has revised its expectations for a second-quarter freight rebound.
  5. Schneider’s Anticipation: Schneider National is hopeful of a potential moderate freight recovery in the second half of 2023, despite ongoing uncertainty and slower-than-expected industry capacity adjustments.
  6. Knight-Swift’s Projections: Knight-Swift Transportation Holdings projects a capacity exit, a rise in freight volumes in the second half of the year, and a recovery in spot pricing.
  7. TFI’s Contract Negotiations: Amidst a significant volume drop at the union-represented LTL unit, TFI International is negotiating a new contract with the International Brotherhood of Teamsters.
  8. Yellow Corp’s Adaptability: Despite a YoY drop in LTL tonnage, Yellow Corp. is consistently strategizing and innovating to ensure profitability and protect its substantial customer base in the evolving freight market.
  9. XPO’s Tonnage Management: XPO Logistics has limited its loss of LTL tonnage per day to 1.8% YoY in Q1, with an uptick in daily shipments. CEO Mario Harik offers a ray of hope, indicating a slightly improved demand environment in April compared to March.