Freight Recession is Over. Now What?

Having made it through the Great Freight Recession, the industry’s worst downturn in decades (2022-2024), rates are climbing sharply, not driven by booming demand, but because freight capacity has contracted due to carriers exiting the market, fleet downsizing, and slowing equipment investments, according to data released from AlixPartners.

Shippers who treat this as a cyclical event by waiting for a return to lower rates are likely to be caught flat-footed.  

Key takeaways:

·       The roots of the structural issues facing the trucking industry can be traced back to the massive spike in consumer demand that resulted from the pandemic era.

·       Despite a reduction in capacity that led rates to a slight rebound above the $2-per-mile mark in late 2024-2025, rates continued to bounce around in line with seasonal demand and tariff-induced inventory front-loading as the new industry dynamic took hold: trucking capacity shortages were not temporary, and would not be quickly turned around.  

·       Driver shortages resulted from new federal eligibility rules that forced 250,000-400,000 drivers out of the market. 

·       Additionally, maintenance costs are rising for an aging truck fleet, 69% of which are operating beyond their ideal replacement age.

·       Since January 2024, over 8,000 trucking companies have exited the industry. 

·       The rate outlook for the next 12-18 months is what matters now for shippers focused on 2027 budgets and contract negotiations. The capacity missing from the market will take years to rebuild. This structural imbalance means shippers can expect 4Q2026 rates to remain 15-20% over those one year ago.  

4 action items for shippers

1.    Re-examine contract strategy and structure. Shippers who accept that the freight recession is over are likely to fare better by renewing contracts now.

2.    Diversify carrier relationships – make new friends. Consolidation in the industry may pose problems for shippers dependent on a small number of carriers.

3.    Optimize modes – sharpen your calculations. Stay on top of which modes are tightening the fastest and review whether shipments could move to LTL or intermodal if the economics for one mode become more favorable.

4.    Monitor tender rejection rates and adjust contract rates accordingly. Rising rejections signal that carriers are dropping below-market awards.