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Tools to Combat the Ongoing Freight Recession

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2024 has been off to a rough start in many ways for the transportation industry, with carriers still feeling the lingering effects of a labor shortage, rising prices, and supply chain disruptions.  

 

To top it off, the freight recession that began in 2023 has continued to affect carriers of all sizes, with layoffs and closings increasing across the country.  

 

However, as the economy begins to stabilize and consumer spending returns to pre-Covid rates, some industry experts are predicting a turnaround and return to normalcy by the end of the year.  

 

Although the future is unpredictable, there are some tools that every carrier should utilize to navigate the ongoing freight recession. Keep reading to find out what’s causing the recession, and how your carrier can cut costs and optimize operational efficiency to stay ahead of the curve and weather these challenging times.  

 

Understanding the Landscape 

In order to deal with the impacts of the ongoing freight recession, it’s essential to understand why it began in the first place.  

 

The first two years of the pandemic saw a rapid increase in consumer spending, leading many carriers to enter the market while shippers prepared for the trend to continue. However, the freight boom was relatively short lived, and there was soon an oversupply of trucks with a decreasing amount of available freight.  

 

This quick change had an dramatic impact on carriers nationwide, with FreightWaves estimating that 35,000 recently opened trucking companies had shut down by the end of 2023. The effects weren’t just limited to new businesses though, as seen when long-standing transportation company Yellow Corporation filed for bankruptcy in the same year.  

 

These factors, combined with high fuel prices and a fluctuating global economy, have made it imperative for carriers to prepare for the future and position themselves for success.  

 

Operational Efficiency is Key 

The best way to safeguard your carrier against the negative impacts of the freight recession is to ensure that you are effectively and efficiently utilizing both your equipment and team members.  

 

Carriers of any size cannot afford unnecessary expenses in today’s market, with the American Transportation Research Institute finding that operational costs rose over 53% per mile from 2022 to 2023. Fuel alone accounted for 28% of total operating costs on average, making efficiency a priority for every driver.  

 

Investing in transportation management systems and route optimization tools might come with an upfront cost, but the payoff is immediate as carriers can save on time, fuel expenses, and vehicle repairs.  

 

Fleet telematics and tracking systems, such as Electronic Logging Devices and GPS tracking, provide real-time data on vehicle location, fuel consumption, driver behavior, and maintenance needs. This allows carriers to optimize routes, reduce idle time, and improve fuel efficiency while increasing driver safety.  

 

Predictive analytics and AI-based technology work by analyzing existing data to forecast demand, optimize pricing, and prevent supply chain disruptions. These algorithms can also adjust capacity according to anticipated market trends and set competitive rates based on demand fluctuations.  

 

Digital freight matching is another tool many carriers are using to efficiently connect drivers with available freight while saving time on paperwork, optimizing space, and cutting costs.   

 

Instead of the traditional methods of freight brokerages and third-party logistics (3PL) businesses, digital freight matching uses predictive analytics and algorithms to optimize matches for service, efficiency, capacity, and cost. Since most DFM platforms are available as mobile apps or online websites, this also provides a single access point for every step of the matching process.   

 

Prioritize Driver Engagement and Retention  

Another ongoing problem that is likely familiar to every carrier is driver turnover and low retention rates. This issue can make the effects of the freight recession worse, leading to high recruitment costs, training expenses, and disruptions in service.  

 

By focusing on creating a driver-centric work environment and engaging existing employees, carriers can avoid additional expenses and cultivate a culture of hardwork and dedication.  

 

Consider offering frequent driver engagement surveys or one-one-one meetings to gather feedback and demonstrate your commitment to the needs of your drivers. Make sure to implement actual changes from the feedback to show that you really value their perspectives and experience.  

 

Investing in your team by providing skill development training, certification programs, and career advancement opportunities is another way to raise retention rates while also attracting other qualified drivers.  

 

Encouraging and rewarding driver milestones and safety accomplishments can also increase driver morale while saving money on fuel costs and vehicle repairs. Studies have shown that driving above 60 miles per hour lowers fuel efficiency, a behavior that can be changed by safety rewards and fleet telematics.  

 

 

 

For more information on the state of the transportation industry and advice to recruitment and retain qualified drivers, be sure to check more of our Employer Blog posts and follow us on social media.  

2024 Outlook: State of the Industry  

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2024 Outlook: State of the Industry  

After two years of post-pandemic global supply chain disruptions, the ongoing driver shortage, and rising fuel prices, experts in the field forecasted a gradual recovery in freight and some growth as volume returns to pre-pandemic levels. An increase in consumer spending was expected to impact demand, however economic uncertainty continued to be a concern. 

 

Last year was a turbulent one in the world of transportation and logistics, amid fluctuating fuel prices, continued driver shortages, economic volatility, and a growing freight recession. Nearly two months into the new year, experts are still unsure if consumer demand will increase enough to offset the freight recession or if inflation and the overall global economy will continue to slow down and improve.  

 

Keep reading for Drive My Way’s outlook on the state of the industry in 2024, and find out what are the biggest trends, underlying issues, and expert predictions to keep an eye on this year.  

 

Ongoing Freight Recession and Economic Concerns 

The issue on the mind of most experts in the trucking industry going into the new year is how to address the ongoing freight recession that developed in 2023. Although the overall US economy was able to avoid a recession last year, the transportation industry wasn’t as lucky, due to a number of factors.  

 

After two years of a post-pandemic freight boom, consumer spending began to decrease in 2023, bringing overall freight volume down. Coupled with the influx of new carriers that arrived during the boom of the first two years of the pandemic, the trucking industry is now seeing an oversupply of trucks compared to a waning amount of available freight. A notable marker of the market’s volatility was long-standing trucking behemoth Yellow Corporation filing for Chapter 11 bankruptcy in August of 2023.  

 

Although a recent CNBC Supply Chain Survey confirmed that these difficult economic conditions will continue at least until the end of the first quarter of 2024, the survey did hint at a potential slow increase in demand throughout the second half of the year. Some experts also believe that an upswing will come faster than initially anticipated due to the gradual turnover of the excess carriers that entered during the post-pandemic swell.  

 

With a global economy as volatile and unpredictable as we have witnessed the past three years, carriers should continue to monitor consumer trends and hire accordingly. Consider rightsizing or implementing strategies such as a hiring waitlist while the market continues to stabilize over the course of the year.  

 

Yes, There Still is a Truck Driver Shortage  

Despite this unprecedented freight recession, a familiar issue has continued to plague the industry in 2024. The American Trucking Associations (ATA) projected a driver shortage of over 82,000 for 2024, a sharp increase from the 60,000 gap that was projected in 2023.  

 

This increase is due to the fact that carriers are still struggling to recruit and retain quality drivers from newer generations to supplement the drivers that will leave throughout the decade. With the average age of an American trucker being around 47, carriers must focus on new hiring strategies to meet candidates where they are at, while focusing on retention to decrease the industry-wide high turnover rates.  

 

In 2024, continue to keep in mind what drivers are looking for from employers, and how you can streamline your hiring and training processes to cut down on unnecessary spending and save your drivers time and effort.  

 

Keep an Eye on Changing Trends 

A key to success in the new year will be flexibility and the fast adaptation to dynamic trends. As consumer buying patterns change and legislation involving trucking continues to be unveiled, every carrier should be ready to pivot when necessary while remaining prepared for the unexpected.  

 

With the steadily increasing rise of e-commerce, it’s important to have the proper infrastructure to optimize last-mile delivery services and real-time tracking. Focus on route optimization and delivery consolidation to prepare for the quick moving and relatively short distance required of e-commerce deliveries.  

 

It’s also important to keep in mind that new environmental regulations for the trucking industry will continue to have a greater impact in 2024. State level policies, such as California’s 2023 Advanced Clean Fleets rule, which plans on transitioning all commercial trucks and vans to zero-emission vehicles by 2045, will likely be felt by an increasing number of carriers and drivers this year. Six states have already pledged to join California, including New York, New Jersey, Oregon, Massachusetts, Washington and Vermont.  

 

When drafting your budgets this year, analyze what changes could be made in the present to lessen the cost and time required down the line to adhere to new sustainability regulations. Although electric vehicles still cost 3% more on average than their diesel counterparts, there are other efforts fleets can make to cut down on emissions, such as improving truck aerodynamics and investing in detailed telematics tracking.  

 

 

 

Although it hasn’t been off to a steady start, many experts still believe that 2024 could be a turnaround year for the trucking industry with an uptick in the second half of the year. With breakthroughs in combating supply chain issues and moving the industry towards a more sustainable future, it’s possible that carriers could see positive growth and a larger return on investments by the end of 2024 and into 2025.  

 

For more information on evolving trends in the trucking industry and how to stay ahead of the curve when recruiting and retaining quality drivers, be sure to follow us on social media and stay up to date on our Employer Blog posts.