U.S. Trucking Companies Expect Reversal of Freight Slump After Tough Quarter
U.S. Trucking Companies Expe...
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U.S. Trucking Companies Expect Reversal of Freight Slump After Tough Quarter

28 August 2023
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U.S. Trucking Companies Expect Reversal of Freight Slump After Tough Quarter

Shipping Shifts

The U.S. trucking industry anticipates a rise in freight demand in the second half of the year, despite a quarter of lower profits due to decreased package volumes. Executives and analysts are optimistic about a positive shift ahead.

The optimism arises from US retailers improving inventory and expecting more inbound container shipments. Target and Macy's have largely resolved last year's inventory issues, crucial as they restock for the high-demand holiday season.

Simultaneously, the National Retail Federation projects a reduction in the decline of large container volumes handled by U.S. ports, indicating retailers' preparations for heightened demand during the year-end holidays.

Chief of logistics company XPO, indicates improved retail inventory situations, implying a rise in freight demand. XPO, which serves clients like Ulta Beauty, saw positive July shipment trends, hinting at a better freight outlook. Harik predicts potential recovery until 2024.

Old Dominion Freight Line's CFO, Adam Satterfield, notes inventory adjustments due to pandemic shopping shifts. Retailer actions to prevent stockpiling also affected transport sectors.

Notably, trucking firms like JB Hunt, Old Dominion, CH Robinson, and XPO reported a significant drop in adjusted net income in the second quarter compared to the previous year.

While the second quarter posed considerable challenges due to high wage costs and low spot rates, there's optimism for the future. Experts like Tim Denoyer from ACT Research anticipate a turnaround. Denoyer projects a return to growth in the next year, citing factors such as the recovery of import volumes and supply reduction. Knight-Swift Transportation sees a similar positive trajectory.

Although certain retail sectors continue to grapple with high inventories, the need for restocking is anticipated to expand across various categories over time.

Furthermore, the recent closure of Yellow Corp, the third-largest U.S. trucking company, could potentially elevate rates for competitors like XPO, FedEx Freight, and Old Dominion, according to analysts.

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