Trucking capacity left the industry in Q3, apparently bringing it closer to equilibrium, based on Federal Motor Carrier Safety Administration data.
During the quarter, losses in operating authority outweighed new entrants and reinstatements.
But exits from the market generally became less severe in recent months.
Trucking firm exits move toward equilibrium
“[We] seem to be stabilizing despite some monthly volatility,” FTR VP of Trucking Avery Vise said in an email Tuesday. “The net decrease of 2,636 for-hire carriers was the fewest in a quarter since the current downturn in the population began in the fourth quarter of 2022.”
Carrier exits have been slowing, FTR CEO and Chief Intelligence Officer Jonathan Starks said on LinkedIn this week, adding that he sees “nothing in the current data to suggest that another mass exodus is upon us.”
Growth periods are captured by a net change that’s positive, but an overall reduction in capacity has generally prevailed since October 2022 — at least based on FMCSA operating authority data.
Interruptions in that trend of carrier exits have come in March 2023 as well as March and August of this year, suggesting pushes toward equilibrium.
But that latest reprieve has yet to develop into a sustained swing in the pendulum.
“The current level of carrier population decline could continue for a long time,” Vise also wrote. “As of the end of September, the market still has more than 92,000 (36%) more authorized trucking firms than it did in February 2020.”
The data is just one puzzle piece that executives, analysts and other industry stakeholders are using to get a sense of the market. That’s essential, because the FMCSA operating authority data provides a limited view: The numbers don’t show the number of truckers in each firm, so the full extent of swings in the market can be masked.
To get a more complete view, industry leaders are also taking into account factors such as how much of an impact International Roadcheck is making, seasonal demand signs and spot rate nuances.
Meanwhile, a calculation comparing spot to contract rates, known as the spot premium ratio, was negative 10% in mid-September and trending down, DAT Freight & Analytics’ Group Product Manager Chad Kennedy said on a weekly market update Tuesday.
That suggests continued downward pressure on pricing, and spot rates need to rise above contract rates for a turn in the market, he noted.
Additionally, a Logistics Manager’s Index for September suggested transportation capacity is slated to fall from a score of 50 to 44.2, “indicating expectations of contracting Transportation Capacity over the next 12 months,” researchers said.
