The latest economic reports show a continued slow recovery in freight conditions, with U.S. for-hire truck tonnage edging up slightly in July.

The news isn’t as promising for trailer makers, as orders are low and cancellations high, and industry analysts anticipate carriers will likely prioritize the purchase of power units with their limited cap-ex in advance of costly EPA27 emissions regulations.

The nearshoring trend continues, notes Motive in its latest economic report, with record imports from Mexico to the U.S. And the number of carriers exiting and entering the market is beginning to level out.

Tonnage indicates trucking “slowly” turning corner

U.S. for-hire truck tonnage edged up 0.3% in July, after a 1.8% pullback in June.

“While July wasn’t a strong month, we see continued evidence that the truck freight market is likely turning a corner, albeit slowly,” said ATA chief economist Bob Costello. “Some of July’s small gain was likely due to strong import activity, especially at West Coast seaports. Decent retail sales and factory output growing slightly from a year earlier also helped truck tonnage last month.”

Still, tonnage was down 0.9% year over year in July.

‘Pause button’ still affecting trailer orders

Trailer orders jumped 26% in June, to 5,961 units, according to preliminary data from FTR. But the order intake was down 38% year over year and 64% below the monthly average over the past year.

Cancellations remained elevated, at more than 30% for the third straight month, FTR reported.

“FTR believes that some fleets may be prioritizing capital expenditures on new power units over investing in new trailer equipment, possibly due to reduced profitability or shifts in trade cycles,” reasoned Dan Moyer, senior analyst, commercial vehicles with FTR.  

“The upcoming opening of 2025 order books in a few months, along with a potential recovery in truck freight, could improve market conditions, although such an outcome is far from certain. A recent FTR survey revealed that dealer trailer inventories in Q2 of 2024 were lower compared to the previous year, but they remain well above ideal levels.”

ACT Research reported preliminary orders of 7,200 units. Jennifer McNealy, director of commercial vehicle market research and publications at ACT, said year-to-date orders are down 26% compared to the same period last year.

“Despite the sequential improvement in orders, July data continues to bear witness to our expectations of weaker demand against the backdrop of elevated order velocity the past few years, continuing weak for-hire truck market fundamentals, and already-filled dealer inventories,” McNealy said. “That said, it is important to remember that for orders, we remain in the weakest months of the annual cycle, minimally suggesting there is no catalyst for stronger orders before the fall and the OEMs’ opening of their 2025 order books.”

She too anticipates fleets will allocate cap-ex toward the purchase of power units ahead of EPA27 emissions regulations.

She concluded: “Industry anecdotes suggest that the ‘pause button’ is expected to remain pressed through the remainder of 2024, although dealers are making progress in right-sizing inventory levels. However, cancellations remain elevated, resulting in trailer maker concern about how long demand will stay subdued, as well as whether the supply chain will be ready to respond when demand does ramp.”

Spot rates decline across the board

Truckstop and FTR Transportation Intelligence reported spot market rates were weaker across all equipment types for the week ended Aug. 16. However, the declines were largely in line with seasonal expectations, they added.

Dry van and reefer spot rates have begun trailing prior-year levels and in both cases the most recent week saw the largest year-over-year deficits in several months. Good news could be on the horizon, however, as there is generally a spot rate increase seen in advance of the Labor Day holiday.

Truckstop’s Market Demand Index fell to 54.2, its weakest reading since the end of December.

Motive notes acceleration of nearshoring activities

In its latest monthly report, Motive predicted 2024 will see a stronger holiday shopping season while also declaring 2024 will be a record year for Mexican imports into the U.S., as Mexico establishes itself as its top importer through at least 2030.

Motive also predicts the trucking market will hit net-positive growth by November, ending nearly two years of losses.

In terms of Mexico trade, it’s at an all-time high. In May, 675,000 trucks brought US$32.5 billion in freight from Mexico to the U.S. Chinese imports, meanwhile, were down 19.9% year over year in May.

Motive says the trend is driven by American companies diversifying supply chains, more protectionist trade policies, and the types of products being imported.

“We think it is unlikely this trend will slow down regardless of the election outcome,” Motive said in its monthly economic report.

Meanwhile, the same report indicated trucking entrants and exits in the U.S. are moving toward equalization as the market begins to recover and edge closer to net positive growth.

Net exits in July fell by 53.6%, or 74% year over year, marking the lowest contraction levels since October 2022. New carrier registrations rose 4.5% in July and 3.6% year over year.