Freight market update: Q4 – November 2023

Uber Freight Update sees truckload demand has steadily increased over 2023 and has finally turned positive for the first time in nine months

Heading into the busy holiday season, truckload demand and capacity appear to be normalizing, nearshoring activity to Mexico is rapidly escalating, and LTL tailwinds have arrived. Shippers and carriers must be nimble as they make critical decisions to keep their supply chains moving forward into the new year.

Uber Freight’s Q4 Market Update and Outlook Report analyzes the most pressing trends across the industry to inform key decisions for the holidays and the year ahead alike. Here are the top takeaways as we head into Q4:

Truckload demand turned positive year-over-year for the first time in 9 months​

After hitting the bottom in April 2023, truckload demand has slowly but surely increased over the course of the year. In Q3, it rose by 1.2% and was flat year-over-year. Demand has turned positive for the first time in nine months with the truckload market likely beyond the bottom.

Normalized capacity also seems to be within view as new entrants recede and existing carriers manage their headcount. We anticipate low rates and rising operating costs will put more pressure on carriers, accelerating the rate of supply correction. 

When it comes to truckload employment, we observed a +13,400 increase in September, likely as a result of Yellow’s drivers flooding the trucking market. Although trucking employment is flattening out, large fleets may not continue to absorb excess capacity from failing carriers and owner-operators in the coming months. We expect long-distance truckload employment to drop 3% to 5% year-over-year based on lower carrier revenues and profit margins. 

Shippers should take advantage of abundant capacity to secure low rates ahead of continued market volatility, but remain cautious towards overly aggressive rates, which could jeopardize their service in case the market tightens next year.

Nearshoring activity is driving shipper volume to Mexico

The Mexican government published a new decree in October granting incentives to companies planning to relocate operations to the country. This decree has the potential to attract an additional $18.5 billion in investments in 2024 – a sign that nearshoring to Mexico should be top-of-mind for shippers.​ The main sectors that will benefit from these new policies are automotive, aerospace, agroindustry, pharmaceutical, and electronics. 

The new companies setting up shop in Mexico will require capacity. Communication between shippers and their primary carriers will be key to exploring dedicated fleet options and negotiating volume and rates for 2024.​ It’s a good time for shippers to take advantage of the current soft market. ​

Before the year is over, the holiday rush will also impact nearshoring activity. Carriers may experience operational delays due to weather conditions and driver vacations. We may see a slight rate increase in the spot market in upcoming months due to these variables – meaning shippers should start planning ahead and securing capacity now.

LTL tailwinds are here, following Yellow shutdown

Yellow’s terminals and equipment will be finding a home soon​. Yellow owned approximately 12,000 tractors and 35,000 trailers, and they’re currently working with key carriers to absorb this remaining volume. 

At the same time, individual carriers’ tonnage showed signs of improvement in September due to Yellow’s closure. The LTL market had the excess capacity to absorb Yellow’s volume with relatively few disruptions. ​However, overall LTL tonnage and shipment count is expected to remain at reduced overall levels through the end of the year and into 2024.​ 

With an expected 3-6% contractual increase heading into 2024, shippers should continue to work with their logistics partners to ensure long-term success. Shippers can make the most of their LTL shipping by unlocking network and carrier collaboration, origin optimization, timely freight payment, pricing strategy, and packaging improvements.

How shippers + carriers can head into the new year with ease

Shippers and carriers looking to close out the year with a bang will need to hone in on optimizing their supply chain strategies. Working with a trusted logistics partner can help them secure low rates ahead of continued market volatility, take advantage of the nearshoring boom and incentives that come along with it, and tap into logistics technology to navigate continued LTL volatility.

For a comprehensive outlook of what shippers and carriers can expect in the coming months, see our full Q4 Market Update and Outlook Report here.

*All data is generated by Uber Freight internal indices using a weighted combination of truck and driver availability for supply, and manufacturing output, goods consumption, imports and exports for demand.

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