2023 State of Logistics: Truckload

An expected slow start for freight demand has morphed into unknown expectations for the rest of the year, with truckload (TL) executives split on their outlooks.

“The back half of the year will be much better than the first,” says Greg Orr, president of CFI, a major TL carrier. “You will see things improve as inventories go down.”

J.B. Hunt executives stated recently that the TL market is in the midst of a “freight recession,” which caused its operating revenues to fall 7% to $3.23 billion in the first quarter. But that hardly means the future doesn’t look robust. Hunt CEO John Roberts says that it’s “not really a question of if the freight demand will come back to normal. It’s really a question of when.”

In the first quarter, Hunt saw volumes plummet across the board. J.B. Hunt reported a 25% volume decline in its integrated capacity solutions segment, a 5% drop in intermodal and 17% decline in final-mile services.

Many TL executives had previously forecast a freight rebound by the second half of 2023. However, they now say that recovery appears less certain due to cooling economic conditions.

As if to back up TL executives’ warnings about lackluster freight demand, the American Trucking Associations’ advanced seasonally adjusted for-hire truck tonnage Index fell 5.4% in March after increasing 0.9% in February. It had risen a total of 2.6% during the three previous months.

This sequential decline in March, the last month for which figures were available, was the largest monthly drop since April 2020 during the start of the pandemic.

ATA chief economist Bob Costello cites falling home construction, decreasing factory output and soft retail sales as factors in declining contract freight tonnage. Despite the largest year-over-year drop since October 2020, contract freight remains more robust than the spot market, which continues to see what Costello called “prolonged weakness.”

J.B. Hunt, the nation’s 2nd-largest TL concern, cited declining imports for its lower intermodal volume in the first quarter of 2023. However, Hunt executives remained bullish over future growth potential.

“Our network and service offering is a coil spring that can handle significantly greater volume today and unlock a lot of value for our customers and our company. We have the people, the capacity, and the containers that could handle upwards of 15% to 20% more volume today.”
-Darren Field, Hunt’s executive vice president and president of intermodal

TL executives say they’re waiting for imports to increase because of improving economic conditions in order to fill their excess capacity. But analysts say there are many questions ahead. “Now we expect to hear 50 shades of ‘we have no idea’ on the conference calls,” a panel of Morgan Stanley trucking analysts recently wrote in a note.

Trade at the Port of Long Beach in March declined nearly one-third from the same period last year as retailers continue to clear warehouses and shippers shuffle routes from the West Coast to seaports on the East and Gulf coasts.

“Warehouses remain full and fewer cargo containers are crossing the docks because consumer spending remains slow,” Port of Long Beach executive director Mario Cordero adds.