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Explore the latest insights from major trucking industry players, revealing a prolonged downturn expected until mid-2024. Discover the factors contributing to this trend and how trucking companies are adapting to navigate the challenges. Trucking Heads Kick Can Further into 2024 The trucking industry is facing a prolonged downturn, with little change in demand expected until at least mid-2024. This is according to comments made by heads of some of the largest publicly traded truckload (TL) providers at the Stephens 25th Annual Investment Conference in Nashville, Tennessee. The sentiment aligns with a recent report from freight payments platform Cass Information Systems (NASDAQ: CASS), which said October produced a cycle low for shipments. Landstar System (NASDAQ: LSTR) Freight broker Landstar System said the market is a little softer than it was at the end of October when it reported third-quarter earnings and provided fourth-quarter guidance. The company said it doesn’t expect a peak season this year. “There’s no excitement out there — whether it’s the parcel carriers, the shippers — or anybody who thinks this thing is going to turn anytime soon,” said Jim Gattoni, Landstar president and CEO. He said sequential seasonal patterns have been lower than normal in every month of 2023. He reiterated the company’s fourth-quarter outlook but now expects results to shake out closer to the middle or the lower end of the range. He doesn’t see spot rates stepping materially higher until next year and said that it usually takes better demand versus capacity attrition to move the market. Turnover among Landstar’s business capacity owners, a proxy for truck capacity, is 39% this year, which is in line with the 36% rate recorded during the 2019 downturn. “We’re continuing to pull down,” Gattoni said about spot rates. “But I think by the time we get into 2024, maybe midsummer, we’ll start seeing regular seasonal patterns again.” Werner Enterprises (NASDAQ: WERN) Management from TL carrier Werner Enterprises noted a “fairly muted” peak season. It said volumes have been steady to slightly better than last year’s peak but pricing has been weaker, resulting in lower revenue year over year (y/y). The company has seen “no surprises to the negative” since its Nov. 1 earnings report. However, it noted the next four weeks are very important to the fourth-quarter result. Werner didn’t provide a pricing outlook for next year but said that its contract rates have already fully reset lower and an elevated cost structure means “there isn’t much to give” even as inflation moderates. Werner’s fourth-quarter outlook calls for revenue per total mile in its one-way segment to be flat to slightly down from the third quarter but off 7% to 9% y/y. Revenue per truck per week in its dedicated unit is expected to finish 2023 flat to up 3% y/y. Werner said it will continue to focus on cost control but didn’t provide a time frame for an eventual turnaround. “History has indicated that it won’t take much of a blip in demand along with the ongoing decrease in supply … . The ‘when’ is hard to say,” said Craig Callahan, Werner’s chief commercial officer. J.B. Hunt Transport Services (NASDAQ: JBHT) Multimodal provider J.B. Hunt Transport Services provided a more upbeat tone, at least for its intermodal segment. The company said it expects intermodal volumes to grow in the fourth quarter and that it has seen some improvement in pricing. However, J.B. Hunt also noted that the trucking market is “still soft” and that it is “not seeing a lot of demand growth.” The company said it is “cautiously optimistic” about the future but that it is “not expecting a V-shaped recovery.” Conclusion The trucking industry is facing a prolonged downturn, with little change in demand expected until at least mid-2024. This is due to a number of factors, including the ongoing war in Ukraine, the Federal Reserve’s interest rate hikes, and the global economic slowdown. As a result, trucking companies are being forced to cut costs and reduce capacity. This is leading to lower spot rates and contract rates. It is also making it more difficult for trucking companies to find and retain drivers. The trucking industry is expected to eventually recover, but it is unclear when this will happen. In the meantime, trucking companies are being forced to adapt to the new market conditions.