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Fleet Margins Set to Shrink Again in 2025, CSCMP Finds
The annual report from the Council of Supply Chain Management Professionals predicts significant challenges for the trucking industry in 2025, especially for for-hire fleets. Carriers, shippers, and analysts anticipate that spot and contract rates will not recover, while operational costs are expected to rise. The profitability of owner-operators remains dangerously low, with little improvement noted over the past year. This situation is largely attributed to tariffs imposed during the Trump administration, particularly on steel and aluminum imports, which complicate the recovery path and dampen demand due to increased costs for basic goods and a weakening export market.
The ongoing trade policies have led to a revised global GDP growth forecast, with the OECD projecting U.S. GDP growth at a modest 1.6% for 2025, coupled with inflation rates anticipated to rise to 3.2%. Concerns also extend to the impact of potential new tariffs on heavy-duty trucks, which could exacerbate existing price increases and weaken demand for commercial vehicles.
Despite a slight recovery in carrier profitability observed in 2024, current market conditions suggest that significant improvements are unlikely in 2025. As freight demand shows signs of stagnation due to lack of growth drivers like manufacturing and consumer spending, trucking companies face strategic challenges. They may need to delay replacing aging fleets or absorb high capital costs, complicating operations further.
Experts indicate that focusing on service level improvements rather than further rate squeezes might better support the health of the industry. Overall, while shippers are cautiously refraining from pushing for lower rates, the volatility in the transportation sector underscores the need for adaptive strategies as the industry navigates these tumultuous economic waters. Anticipating a possible uptick in 2026 may help stakeholders prepare for future opportunities amid these current challenges.
The trucking industry is facing significant challenges due to existing tariffs and geopolitical tensions, which have negatively impacted demand and pricing. S&P Global Mobility forecasts a 9% increase in retail truck prices, potentially leading to a 17% decrease in new commercial vehicle demand for 2025. Carrier profitability was already at its lowest since 2010 in 2024, and the average spot rate for dry van shipments has declined by 1.5% year-on-year. Expectations for rate improvements in 2025 have been dampened due to fierce competition and stagnant freight demand, attributed to a lack of growth catalysts in the economy. Fleets may be compelled to keep aging vehicles longer, increasing maintenance costs, or incur high capital expenditures for replacements. Analysts suggest that shippers are prioritizing service levels over rate reductions, but without renewed growth in transportation activity, prospects for the market remain bleak.
From a transportation expert's perspective, the unfolding scenario underscores the importance of addressing the underlying issues that affect freight demand and carrier sustainability. There is a critical need for strategic initiatives that foster industry growth, such as investing in technology and infrastructure that enhance efficiency and reduce costs. As the industry navigates through these turbulent times, collaboration between shippers, carriers, and policymakers will be essential to create a more resilient transportation ecosystem.
The ongoing trade policies have led to a revised global GDP growth forecast, with the OECD projecting U.S. GDP growth at a modest 1.6% for 2025, coupled with inflation rates anticipated to rise to 3.2%. Concerns also extend to the impact of potential new tariffs on heavy-duty trucks, which could exacerbate existing price increases and weaken demand for commercial vehicles.
Despite a slight recovery in carrier profitability observed in 2024, current market conditions suggest that significant improvements are unlikely in 2025. As freight demand shows signs of stagnation due to lack of growth drivers like manufacturing and consumer spending, trucking companies face strategic challenges. They may need to delay replacing aging fleets or absorb high capital costs, complicating operations further.
Experts indicate that focusing on service level improvements rather than further rate squeezes might better support the health of the industry. Overall, while shippers are cautiously refraining from pushing for lower rates, the volatility in the transportation sector underscores the need for adaptive strategies as the industry navigates these tumultuous economic waters. Anticipating a possible uptick in 2026 may help stakeholders prepare for future opportunities amid these current challenges.
The trucking industry is facing significant challenges due to existing tariffs and geopolitical tensions, which have negatively impacted demand and pricing. S&P Global Mobility forecasts a 9% increase in retail truck prices, potentially leading to a 17% decrease in new commercial vehicle demand for 2025. Carrier profitability was already at its lowest since 2010 in 2024, and the average spot rate for dry van shipments has declined by 1.5% year-on-year. Expectations for rate improvements in 2025 have been dampened due to fierce competition and stagnant freight demand, attributed to a lack of growth catalysts in the economy. Fleets may be compelled to keep aging vehicles longer, increasing maintenance costs, or incur high capital expenditures for replacements. Analysts suggest that shippers are prioritizing service levels over rate reductions, but without renewed growth in transportation activity, prospects for the market remain bleak.
From a transportation expert's perspective, the unfolding scenario underscores the importance of addressing the underlying issues that affect freight demand and carrier sustainability. There is a critical need for strategic initiatives that foster industry growth, such as investing in technology and infrastructure that enhance efficiency and reduce costs. As the industry navigates through these turbulent times, collaboration between shippers, carriers, and policymakers will be essential to create a more resilient transportation ecosystem.
Vehicle Guru