ACT Research has posted its monthly For-Hire Trucking Index, indicating continuing decreases in many of the areas tracked. The ACT For-Hire Trucking Index is a monthly survey of for-hire trucking service providers. ACT Research converts responses into diffusion indexes, where the neutral or flat activity level is 50.
VOLUME INDEX:
The Volume Index was soft for a fourth straight month, at 41.5 seasonally adjusted (SA) in June, down from 42.5 in May as tariff-related effects, particularly early-April tariffs which were quickly lowered, and ongoing overcapacity prolong the downcycle in for-hire volumes. Volumes should improve in July and August following the tariff reprieve, but the pull-forwards in freight demand in the first half of the year will result in paybacks.
Goods spending outpaced real income growth in 1H, suggesting even these soft volumes were supported by credit. And after surging 7.7% y/y in April, goods spending slowed to 3.7% in May, hinting at the beginning of the post-pull-forward decline. On the positive side, the recent slide in used tractor day cab prices suggests the private fleet insourcing phenomena may be starting to reverse.
PRICING INDEX:
The Pricing Index decreased 3.6 points m/m in June, to 44.2 (SA) from 47.8 in May. With tariff-free tractor inventory being snapped up quickly and set to run out soon, US Class 8 tractor sales were more than needed in Q2, delaying the capacity attrition needed to tighten supply.
U.S. tractor sales should slow once tariff-free inventory is snapped up, but two factors remain impediments to improved pricing: 1) Overcapacity remains, demonstrated by soft spot trends in the typically seasonally strong months of May and June; 2) Tariffs. While more capacity exits are still required to turn the freight cycle, demand is needed as well. Goods inflation from tariffs will likely weigh on volumes later this year, making a strong recovery unlikely in 2025.
CAPACITY INDEX:
The Capacity Index increased 0.4 points m/m, to 46.8 in June from 46.4 in May, but capacity continued to decline overall. Publicly traded TL carriers’ profit margins remain near to the lowest levels since 2009, and on top of that, steel, aluminum, and parts tariffs have added thousands to the cost of a tractor. As result of challenging operating conditions, trade/economic uncertainty, and equipment cost increases, many fleets are opting to significantly reduce capital spending in 2025.
DRIVERS:
The Driver Availability Index tightened 3.0 points, to 47.9 in June from 50.9 in May, marking the first time in 38-months that the index has indicated a deteriorating driver supply.
After three years of weak rates/profitability and for-hire volumes, cost-cutting measures are beginning to take drivers and driving schools out of the market. Given the duration of the downturn, current uncertainty, and a weaker freight outlook due to tariffs, we would expect the driver market to continue to tighten in the near term. While a tighter driver supply is a potential catalyst for a new cycle, demand is needed too. Given the inflationary impacts of tariffs on goods, and the post-pull-forward effects, weaker goods demand will likely offset some of the effects of tighter supply.
FLEET PURCHASE INTENTIONS:
Fleet purchase intentions rose 15.6% m/m in June, with 43% of respondents planning on buying new equipment in the next three months. While a six-month high, it remains well below the 54% long-term average. With multiple rounds of price increases this year adding thousands to new tractor prices, and with fleets running on older-than-normal equipment, the incentive to snap up tariff-less Class 8 tractors still in inventory may have contributed to the m/m jump in buying sentiment. Overall, buying sentiment is expected to remain below the long-term average as we enter the 13th quarter of a for-hire downturn, compared to the six-to-eight quarter historical average. Fleets are cash strapped, and many are delaying or foregoing new equipment purchases altogether.
SUPPLY-DEMAND BALANCE:
The Supply-Demand Balance decreased in June to 44.4 (SA), from 46.1 in May, on a decline in volumes and an uptick in capacity. The recent drop in demand, as tariffs went into effect, resulted in a looser market balance. Near-term demand will likely improve, but then the payback period after multiple pull forwards in freight is poised to begin. Even with modest pass-through, the inflationary effects of tariffs will likely lead to more goods demand softness in the months to come.
The supply-demand balance is likely to remain at, or below, 50 in the near term, as lower demand related to the impact of tariffs counters the declines in capacity.
PRODUCTIVITY INDEX:
(miles/tractor)
Fleet productivity decreased 16.3 points m/m, to 47.6 (SA) in June, after capacity loosened back to baseline levels following the artificial tightness in May due to Roadcheck.
The ACT For-Hire Trucking Index is based on a survey of carriers measuring degree and directional changes in operational statistics in diffusion indexes (readings > 50 show growth and readings < 50 degradation).