The surprising strength in the economy in 2023 may provide less ballast for freight in 2024, but supply contraction should propel the cycle forward in 2024, even if the broad economy slows, according to the latest release of the Freight Forecast, U.S. Rate and Volume OUTLOOK report.

“Capacity expansion continues to pressure the for-hire market, as the industry still collectively ignores the first rule of getting out of a hole: to stop digging,” said Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “In addition to falling pent-up capital spending, low freight rates are driving net revocations of operating authorities to a record pace, so we expect this to shift next year.”

As freight volumes remain broadly soft, despite a few signs of recovery, the spot market remains loose. Even with a robust economy, spot dynamics remain soft as the owner-operators who returned to the road after Thanksgiving are likely running maximum miles and private fleets keep adding equipment. As capacity rebalancing and a freight volume recovery gain momentum in 2024, spot dynamics should turn, but not before at least a few more months of rough sledding.

“Consumer purchasing power is improving with significant disinflation and solid wage growth driving improving retail sales trends, which will push the inventory cycle forward. And as the industry right-sizes, tighter capacity should eventually start to push truckload spot rates higher. In an early sign of better cyclical demand in 2024, container imports and intermodal volumes have returned to growth, with global ocean constraints at both the Panama Canal and the Suez Canal pushing freight to west coast ports,” Denoyer concluded.