The trucking industry is in a better position entering 2025 than it was for the past two years. But the trucking economy still faces some great unknowns as to operational costs and how the US economy will perform in 2025
Trucking companies are positioned for a better year in 2025 than the previous two years. According to industry analysts, the freight recession that has impacted trucking companies has ended after several difficult years. One factor that points to the end of the freight recession is a significant reduction in trucking capacity. Thousands of trucking companies and freight brokerages, from huge corporations to smaller firms, closed their doors in 2023 and 2024. While unfortunate, analysts state that these conditions will lead to a rebalancing of supply and demand.
Data sources including ACT Research and Bank of America state that rising spot rates for dry-van truckloads indicate a stronger transportation market and potential for increased volumes. Businesses are also showing signs of inventory normalization, leading to a more stable demand for freight transportation.
“A persistent shortage of qualified drivers continues to challenge carriers, as well as a lack of technicians needed to keep trucks up and running,” said Jessica Gail, ATA spokesperson.
Other operational costs like fuel are difficult to predict and impossible for trucking companies to control. Despite these challenges, Gail said, “The trucking industry is adaptable and resilient, and the ATA will continue to ensure our industry has a seat at the table so that policymakers pursue a pro-trucking, pro-growth, and pro-safety agenda.”
Regulatory Environment
Some of the regulations that are potentially of concern to trucking companies are the California Clean Air Act (CCA) and laws governing the independent contractor business model for truck drivers.
The CCA requirements are a cause for concern for trucking companies, railroads, and port operators and have been denounced by some organizations like the American Association of Railroads as not only unpractical but impossible to implement because locomotives that would meet the demands do not currently exist and would take years and vast amounts of money to build.
“The ATA is calling on the incoming administration to rescind the waivers granted to California under the Clean Air Act and to restore common-sense, national emissions standards that are achievable and reflect the operational realities of trucking,” said Gail. “The industry has an incredible track record of reducing emissions and shrinking our environmental impact, but maintaining that progress requires rules that allow innovation to flourish and provide our industry with a range of technological solutions, many of which exist today and are readily available.”
The classification of drivers as employees rather than independent contractors has been a source of numerous court cases for more than a decade. Advocates for independent contractors state that owner-operators should be afforded the same autonomy as taxi or Uber drivers.
“It’s also imperative that we protect the right of independent contractors to choose their own career paths,” said Gail. “The supply chain depends on 350,000 independent truckers who choose to operate as ICs, which has been backed by 90 years of case law.”
Rising Insurance Costs
For years, many trucking companies have operated on razor-thin margins. While many companies have become savvier at pricing and adopted technologies to reduce operational costs and improve efficiency, one line item that is significantly impacting trucking companies’ profitability is, the rising cost of insurance.
According to the Operational Costs of Trucking Report from the American Trucking Research Institute (ATRI), truck insurance premiums rose 12.5%—the largest jump amongst the various cost centers examined in the report. This issue is a top priority for the ATA in its efforts to support carriers.
“Insurance costs remain a top concern for carriers which is why ATA will continue to advocate for common-sense reforms to the civil litigation system that curb lawsuit abuse and the rise of nuclear verdicts,” Gail noted.
Uncertainty About Tariffs
With a new presidential administration, there is a potential for change in tariffs, which could significantly impact global trade. However, with many trucking companies, like XPO, developing strong business relationships with North American trading partners like Mexico, the potential tariff changes could have a significant impact much closer to home.
On a broader scale, tariffs have the potential to significantly increase the cost of goods, which could ultimately lead to lower consumer spending and less demand for trucking services, or aggressive pricing for transportation to offset the higher tariffs.
President Donald Trump’s proposed tariffs have already caused some industries to begin taking action to safeguard their profits. The tariffs, which include a 10-20% tax on all imports and 60% on goods from China are causing significant concerns for businesses and consumers.
“We will pass the cost of tariffs to the consumers,” said the CEO of AutoZone in a recent Yahoo Finance article. Jonathan Gold, Vice President of Supply Chain and Customs Policy for the National Retail Federation (NRF) agrees, saying, “Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices. A tariff is a tax paid by the US importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”
Path to the Future
Many trucking companies are already implementing strategies that will enable them to recover from the freight recession stronger, more resilient, and better positioned to compete in this highly fragmented industry sector. Some companies like XPO are diversifying service offerings and leveraging technology for operational efficiency and improved customer service. In December 2024, XPO officials reported many strategic improvements.
With the availability of technologies like Transportation Management Solutions (TMS), trucking companies can reduce empty miles, optimize routes, and access actionable business intelligence allowing the carriers to be more agile and flexible to navigate market changes.
