The Freight Market’s Long Hangover
Trucking spot rates have stayed stubbornly low through the first half of the year, grinding down carrier margins and pushing a growing number of small fleets toward insolvency. The dynamic is not new – the freight market has been in a prolonged correction since the demand surge of 2021 and 2022 collapsed – but the persistence of the downturn is starting to reshape the industry’s competitive structure in ways that will outlast the cycle itself.
Dry van spot rates remain well below the levels that most owner-operators and small carriers need to cover fixed costs. Fuel, insurance, truck payments, and compliance costs have all risen sharply over the past three years, while the rate environment has moved in the opposite direction. For fleets running on thin reserves, the math has become untenable.
Carriers Are Exiting at an Accelerating Pace
Carrier failure data from freight analytics firms has tracked a steady rise in authority revocations – the regulatory step that signals a carrier has shut down operations. The numbers have been elevated since late 2023 and show no clear sign of reversing. The carriers most at risk are those with one to ten trucks, the segment that expanded rapidly when spot rates were high and contract freight was abundant, and that now has the least cushion to absorb a prolonged rate depression.
The exits are not happening quietly. Load boards that once listed available capacity from hundreds of small carriers in a given lane are seeing fewer postings, a slow bleed that has not yet tightened rates enough to change the market’s direction. The attrition is real, but so is the remaining overhang of capacity from fleets that have cut costs, deferred maintenance, and are hanging on through the downturn.
Large carriers and asset-light brokerages are watching the shakeout with a degree of patience. For the carriers that survive, a tighter capacity market eventually means better pricing power. For brokers, a consolidating carrier base is a mixed outcome – fewer options for spot coverage, but also potentially stronger relationships with the fleets that remain. The question is how long the market takes to clear the excess, and how many operators go under waiting for it.
Why Rates Have Not Recovered
The standard freight cycle logic holds that capacity exits until supply and demand rebalance, at which point rates recover and the cycle resets. That logic is not broken, but several factors have stretched the timeline considerably. Consumer spending has held up better than many predicted after the pandemic-era goods surge ended, but the composition of spending shifted heavily toward services – travel, dining, experiences – rather than the physical goods that fill trailers. Retailers, burned by the inventory glut of 2022, have kept stock levels lean and replenishment cycles tighter, which means fewer truckloads even as consumer activity remains relatively healthy.
Diesel prices, which spiked to historic highs in 2022, have come down from their peaks, and that has reduced one pressure point for carriers. But it has also removed a cost argument for rate increases. When fuel surcharges were absorbing a large share of shipper costs, carriers had a clearer case for base rate support. With diesel more stable, the conversation returns to pure supply and demand, and demand has simply not grown fast enough to absorb the trucks still in the market.
The broader economic picture is not helping. Freight volumes track manufacturing activity, construction spending, and retail inventory cycles closely, and each of those sectors has faced its own headwinds. Manufacturing output has been sluggish, housing starts remain below the levels that generate significant freight demand from building materials and appliances, and retail inventory managers are not rushing to rebuild stock ahead of uncertain consumer conditions. With recession bets quietly building in the bond market, the case for a near-term freight demand recovery is not obvious.
There is also a structural argument worth making about the capacity that entered the market during the boom years. A significant share of the trucks that hit the road in 2021 and 2022 were purchased by first-time owner-operators who saw freight rates as a straightforward path to income. Many of those operators have since exited, but not all. Some have renegotiated their truck financing, found secondary revenue through dedicated or local haul arrangements, or simply reduced their rate expectations enough to keep moving freight. That behavioral adaptation has slowed the capacity exit that the market needs to rebalance. The carriers who should have exited on paper have found just enough ways to stay marginal, which keeps downward pressure on rates for everyone else.
For the carriers still standing, the calculation now involves timing as much as economics. Exiting the market means selling equipment into a soft used truck market, losing operating authority that takes time and money to rebuild, and walking away from customer relationships that took years to develop. Staying in means absorbing losses – or at minimum, operating at break-even – with the belief that the rate environment will eventually shift. The fleets that made it through the last major downturn, in 2019, know that recoveries do come. What they did not plan for was a correction this deep, running this long, arriving immediately after the most expensive fleet expansion in recent memory.
