Top 5 stories from Trucking Dive

Recent data points to a potential positive transition in the freight cycle, analysts recently said, noting some changes show promise for carriers.

FTR said July 15 that the market has “bottomed out,” following an upswing in trucking and warehouse businesses as well as trucking authority gains.

The firm noted “new applications for transportation and warehousing businesses in June saw their largest increase since August 2022. Coupled with data showing recent gains in new trucking authorities, the data reinforces” its low point assessment.

For dry van spot rates, including fuel, a bottom in pricing appeared to occur in April, Michigan State University interim chair of the school’s Department of Supply Chain Management Jason Miller said in an email.

“I believe spot pricing for dry van is off a bottom, with contract prices either at or very soon at bottom given the lag in adjustment,” he wrote.

A ratio between contract rates and spot rates can also shed light on whether a bear or bull market pricing is occurring. Miller calls this the dry van spot market cycle indicator and calculates it from DAT Freight and Analytics data.

With that ratio, a 10% threshold or below indicates a bull market cycle, while a 15% or higher threshold suggests a bear market kicking in, Miller noted. “July's data is around 16%, suggesting no change is imminent from an uptick standpoint,” he wrote. The threshold had been mostly above 19% from May 2022 through April 2024.

Miller also discussed the issue in a LinkedIn post, saying, “The bad news for carriers is that July’s reading of 15.8% is well away from the 10% threshold. As such, there aren’t signs of the market being ready to turn.”

Following monumental surges in spot and contract rates during the COVID-19 pandemic, a subsequent dropoff in demand has left a drag on operations. That’s meant bankruptcies across the trucking sector along with trucking authority stops that have persisted in negative territory.

That down cycle has also lasted longer than normal. Dry van spot rates have been lower year over year each month for 27 consecutive months, excluding fuel surcharges, according to DAT data. 

“Typically it's 19 to 22 months,” DAT Chief of Analytics Ken Adamo said. “Sometimes they stretch to 24, but you know, we're certainly seeing another six to eight months of what you would typically see.”

Positive YoY growth that can sustain for more than a month will help make the case for a turn in the market, Adamo suggested.

“I would look for a quarter of sustained performance above positive,” he said. “I'd love to see it one month positive. I'd really love to see it two months positive. Once it's kind of in that positive territory, or even if it chops up and down, but generally positive for a whole quarter, I'm going to feel a lot better about where we are.”

The downturn has also involved nearly two years worth of negative YoY contract rates.

“The velocity which ... contract rates are coming down has definitely slowed,” Adamo said. “They're tailing spotting rates by a couple months. I wouldn't be surprised if by the holidays, contract rates aren't kind of dead on year over year flat.”

Carriers such as J.B. Hunt Transport Services have faced dwindling profits but reported some signs of optimism earlier this month. Iowa-based Heartland Express posted Q2 earnings on July 30 showing an operating ratio of 99.9%, a tougher operating environment than a year ago, when the company posted a 94.7% operating ratio.

"We continue to believe that the freight market will improve as more capacity exits the market so the industry as a whole can return to more disciplined operating decisions and improved financial results,” Heartland Express CEO, President and Chairman Mike Gerdin said in a Q2 earnings statement. “But, our current expectation of the timing of that favorable change likely extends into 2025.”

LANCASTER, Texas — An autonomous tractor-trailer steered itself onto Interstate 20, safely merged into dense traffic, and later slowed down to 48 mph when approaching a car stopped on the highway's shoulder.

Kodiak Robotics safety driver Robert Roland’s hands hovered over the wheel, prepared to intervene if necessary, while the company's technology navigated traffic, hazards and ramps — as well as local streets near its terminal — during a morning demo ride near Dallas in May.

“It’s a totally different world,” the third-generation truck driver said.

As Kodiak Robotics and Aurora Innovation prepare to operate their autonomous vehicles on public roads without safety drivers, which could happen later this year in Texas, Trucking Dive visited the companies’ sites for an up-close look at their progress toward full autonomy.

Self-driving trucks have been pulling customer freight in tests on public roads under the supervision of safety operators like Roland, and the ride provided a glimpse into the trucks' potential readiness for real-world driving scenarios.

"They drive defensively. They drive cautiously," Kodiak Director of External Affairs Daniel Goff said.

A focus on safety first, “PERIOD”

Kodiak's system is designed to be courteous to other drivers, slowing down and letting vehicles merge.

"The system is designed to treat unknown objects as a human would: with extra care," Goff said.

At the company's Lancaster, Texas, operations hub, Director of Operations Don Lepard pointed out a map on a wall that shows routes where Kodiak has delivered freight for a customer for revenue. A lowercase “k” appears in places across California, Florida, Georgia, Oklahoma and Texas.

On another wall, a message says, "Safety first and always. PERIOD."

In nearby Palmer, Texas, Aurora staff stress safety efforts at a busy AV terminal as well as the company's technology.

Aurora trucks can operate in fog and light rain and have strong capabilities even in torrential downpours, President Ossa Fisher said in an interview there.

But deployment in ice and snow may take a few years, she said. Fisher likened self-driving trucks' precautions to when airlines decide not to fly because of hazardous weather conditions.

"We believe that will actually increase road safety," she said, "because right now, there are trucks on the road and conditions that really nobody should be driving."

At the Mid-America Trucking Show in March in Kentucky, Aurora Senior Safety Specialist Bryan Jones stressed the company's emphasis on safety, noting that efforts seek to foster continuous improvement.

Aurora believes it "can always be safer and always strive" to improve the company and its technology, he said.

The company is developing a safety case and reported its autonomous readiness measure was 95% complete as of mid-April. Aurora is seeking to make that 100%.

Running operations now and in the future

Like Kodiak, Aurora uses pairs of people to ride in the trucks, and Aurora specialists like Zach Riley monitor the technology with a laptop in the truck to see how the system is observing the environment, traffic and hazards.

Riley noted how a sensor on Aurora's lidar, short for light detection and ranging, can see objects over 400 meters away. On a recent trip, the technology saw through fog and recognized and responded to upcoming traffic before Riley could even see it, he recalled.

With the technology's ability to enhance a vehicle’s navigation of traffic environments, Riley likens it to a superpower. He said he wished he could have the technology in his own car.

Proponents of the technology say there will still be work for drivers even after autonomous operations take hold.

At Aurora’s terminals, CDL holders perform Commercial Vehicle Safety Alliance inspections before the trucks embark each day.

"We will always have a need and be using truck drivers," Jones said at MATS.

He noted with all the moving parts at terminals, there's always going to be risk, but company staff "also believe that we can manage the risk down by implementing smart solutions that we've seen work across other spaces."

Jones also said safety training is not merely a one-time session that's never revisited: Instead, he and Aurora's safety team visit the terminals routinely to ensure that the training is fresh.

Safety assessments continue to unfold

The National Highway Traffic Safety Administration has required those involved with autonomous operations to provide details on crashes, helping track the safety record of companies through a public database.

The incidents do not necessarily mean an autonomous vehicle was at fault, and the database has provided details on incidents for a nearly three-year period as of April. Manufacturers and operators must report the information to NHTSA.

Kodiak, which recently recorded 3 million miles of real-world operations with its technology, has reported only three incidents. All the incidents happened when trucks were being operated by a driver in manual mode, and no injuries were reported.

In one incident in October 2023 on a highway in Fort Worth, a Kodiak truck was traveling 34 mph by a safety driver while a Class 8 semi was encroaching on its lane, the company said in a NHTSA summary. Minor contact scratched a mirror-mounted SensorPod, and the AV safety driver pulled over.

The NHTSA crash database lists six Aurora incidents, most of which occurred when the vehicle was operating autonomously, according to crash summaries. Like with Kodiak, none of those or crashes had any injuries reported.

A collision in March on a west Texas highway captured how the technology can handle problems. An Aurora truck was traveling autonomously at 64 mph when a car veered into the lane of the truck and collided with the left rear of the trailer, per an NHTSA summary. Both vehicles were eventually able to leave the scene.

Nevertheless, the potential for more dangerous situations is raising concern among truckers.

"We'd like to see as much restriction and oversight as what we see on drivers who have already proven themselves," Owner-Operator Independent Drivers Association EVP Lewie Pugh said, noting how a top-performing trucker can drive millions of miles safely.

The public should not be guinea pigs in testing on roadways, an OOIDA spokesperson said in an email.

Werner Enterprises SVP of Van and Expedited Chad Dittberner said setting a safety standard is a tough issue to address, noting the carrier has over 600 drivers currently who have driven over 1 million miles without a single accident.

Dittberner, a member of the Kodiak Industry Advisory Council, said safety is Werner’s priority for AVs and the rest of its fleet.

"The ultimate goal is a truck that's never involved in an accident," he said, "which is the same goal we have with our drivers today."

Several major trucking companies have split their president and CEO jobs, handing the responsibilities to separate executives, rather than to one top official, as many businesses in trucking and other industries do.

Werner Enterprises, Prime Inc. and Estes Express Lines are among a number of carriers that have separated the roles by promoting presidents from within — while keeping their CEOs in the top job.

The reasoning behind such a move usually varies by the company. But two trucking executives who have held both job titles shared their insights with Trucking Dive on the demands of each role.

Many trucking companies view the job of president as closer to a COO’s than a CEO’s: more closely running and monitoring daily operations than devising strategy and serving as the public face of the company.

Keeping a CEO in place while promoting someone else to president can help maintain stability while choreographing a future leadership transition — or simply allow a company to reward high-performing talent with an executive job.

Immediately after announcing Darryl Hopkins’ elevation to president, Prime Inc. Founder Robert Low assured employees: “That doesn’t mean I’m going anywhere. I’m still the CEO.”

But how and why each company divvies up the job titles and responsibilities? “It depends on the company and the situation,” ArcBest Chairman, President and CEO Judy McReynolds told Trucking Dive in an interview.

While McReynolds holds all three titles at the parent company, she noted Seth Runser’s job as president of ABF Freight, its 100-year-old flagship LTL carrier. Larger companies with subsidiaries will often organize their leadership structure that way, she pointed out.

“There are times whenever that makes sense,” McReynolds said. “But a CEO, in my opinion, is really a role designed for somebody who has ultimate responsibility for what they're doing.”

XPO’s Mario Harik offered a similar take on the two roles within a trucking business.

“Where the CEO would be obviously overseeing the whole company, the strategy and all those different stakeholders,” Harik said, “the president of the company or the COO would be focused on day-to-day operations and making sure that execution to the plan is going flawlessly.”

Before taking over as CEO from XPO founder Brad Jacobs, Harik was president of LTL.

Now nearly a pure-play LTL instead of a conglomerate, the carrier uses the title of president for the top officials in its east and west divisions. Dave Bates, whom XPO hired as COO from Old Dominion Freight Line in April 2023, is the company’s overall operational lead.

“He's fully embedded in our operation, and we're very grateful to have him on the team,” Harik said.

LTL carriers are handling more than their typical share of retail freight as they confront stagnant industrial demand, several executives said during earnings calls in August.

Old Dominion Freight Line, Saia and TForce Freight are all eager for an industrial demand rebound for the same reason. “We’re paid by the weight,” TFI International Chairman, President and CEO Alain Bédard reminded investors.

The revenue profile of retail freight “is lower — or it's different — than what we have traditionally dealt with,” Saia CEO Fritze Holzgrefe said. “It's part of the nature of our business. ... It had an impact on the second quarter.”

LTL carriers closely monitor changes in freight mix for what it might mean for their businesses. Some of the oldest and most successful carriers have historically adapted alongside demand as necessary while maintaining pricing discipline.

Old Dominion Freight Line CFO Adam Satterfield pointed out the trend of “a little bit stronger retail-related performance in the second quarter.”

“Industrial was OK, but kind of reflects the industrial environment,” Satterfield said, noting the Institute for Supply Management reporting manufacturing industry contraction for 19 out of the past 20 months.

At TForce Freight, growing the share of industrial freight is a priority as it works to improve its average weight per shipment, its parent company’s CEO said. 

“Rule No. 1, guys, is that we have to slowly get more into the industrial freight, versus the retail freight,” Bédard said.

Saia’s freight mix could be optimized, Holzgrefe said, but the increase in its proportion of retail freight “doesn't erode in any way our longer-term value proposition” amid its $1 billion network expansion.  

“If we look at it over time, the thesis that we have here is that we can build a national network that provides great service [and ensure] we're compensated appropriately for all the service we provide,” Holzgrefe said.

XPO, which is also significantly growing its network, saw relatively stable industrial demand picking up a bit from May, CEO Mario Harik said on a Q2 earnings call in August. “Retail sales came in better,” he said.

“In terms of mix, it's largely unchanged between the industrial side and the retail side,” Harik added. “We're still same proportions. But where we are seeing faster growth is in the local channel.”

Dive Brief:

The trucking industry is raising concerns about President Joe Biden downgrading marijuana to a lower level of drug classification — especially how the move could threaten highway safety.

The American Trucking Associations’ and Owner-Operator Independent Drivers Association’s questions about reclassifying cannabis from a Schedule I to a Schedule III drug include how it would affect carriers’ ability to test drivers for the substance.

“Absent an explicit allowance for continued employer marijuana testing of safety-sensitive workers, this change may have considerable negative consequences for highway safety and safety-sensitive industries,” the ATA said in a letter to three federal department heads.

Dive Insight:

While opinions on marijuana might vary among members of the trucking industry, a collective concern is that existing drug tests don’t differentiate between active impairment and use in the past month or so. 

Some drivers could argue that’s unfair, because “what a guy did a month ago doesn’t have a thing to do with what he's doing today,” OOIDA EVP Lewie Pugh said in an interview.

“Whether you're pro or con, or whatever, there's still a lot of questions when it comes to transportation and other labor,” Pugh said.

The American Transportation Research Institute has highlighted drivers’ and carriers’ shared frustration with current testing limitations.

The marijuana rescheduling has “no immediate, direct effect on drug testing programs for commercial drivers,” OOIDA President Todd Spencer said in a statement.

But retired Federal Motor Carrier Safety Administration Chief Safety Officer Jack Van Steenburg put forward several questions of his own about reclassifying cannabis in a LinkedIn post.

“What will be the impact of CDL drivers if Marijuana is reclassified as a Schedule III drug?” Van Steenburg wrote. “Will it still be a disqualifying offense? Will drivers still be prohibited from operating a CMV?”

Dan Horvath, ATA SVP of regulatory affairs and safety policy, expressed concern about carriers losing the ability to test their drivers in his May 15 letter to Attorney General Merrick Garland, Health Secretary Xavier Becerra and Transportation Secretary Pete Buttigieg.

Current federal Transportation Department drug and alcohol testing requirements allow trucking industry employers to test only for Schedule I or Schedule II drugs, ATA noted.

“If the trucking and broader transportation industries’ ability to conduct drug testing is restricted, the risk of impaired drivers operating on our nation’s roadways undetected would increase, endangering all who share the road,” Horvath wrote.

As of March, marijuana violations accounted for 60% of all positive drug tests among truck drivers, Horvath noted, citing the federal Drug & Alcohol Clearinghouse.

“While ATA acknowledges the prevalence and increasing societal acceptance of marijuana for medical and recreational purposes, absent an impairment standard, testing for marijuana use by safety-sensitive employees must remain in place,” he wrote.