The historical truckload cycle offers valuable insights into today’s truckload market and helps us anticipate future trends as we analyze the balance between freight demand and supply.
Understanding this cycle is essential for anyone involved in the transportation industry, whether you're a shipper, carrier, or logistics professional. The U.S. truckload sector follows a predictable pattern over time, and our partners at C.H. Robinson have created an excellent visual to help explain this process.
By combining this knowledge with ACT's Class 8 tractor data, you can better forecast where we are in the cycle and make informed decisions about your operations. Let’s break it down:
**Early Cycle: Demand Recovery**
The cycle often starts in a loose or balanced market, where freight demand begins to recover. As demand picks up, capacity tightens, leading to driver shortages. This shift gives more power to carriers, who push rates higher—first in the spot market, then in contracts about six months later. During this phase, Class 8 tractor production is typically low, but load-to-truck ratios and pricing begin to rise, along with order activity.
**Mid-Cycle: Capacity Expansion**
As rates increase, fleet operators see improved margins and are able to attract more drivers with better pay. With stronger profitability, many fleets invest in new trucks and trailers, driving up industry production. Due to the fragmented nature of the market, thousands of companies often make similar expansion decisions at the same time, leading to overcapacity. This stage is marked by high tractor build rates and long order backlogs.
**Mid-Late Cycle: Shippers Take Action**
As freight costs rise, shippers look for ways to cut expenses by increasing productivity and shifting freight to their private fleets. At the same time, the cycle has stretched out, and for-hire freight growth begins to slow or even reverse. This creates a supply-demand imbalance, pushing truckload rates downward and hurting carrier profits. As a result, order rates drop, and cancellations increase.
**Late Cycle: Adjusting to Lower Profits**
Driver shortages become less of a concern (though they never fully go away), and carriers start to scale back equipment spending. Orders are canceled, and acquisition rates decline, gradually bringing supply and demand back into balance. Eventually, freight demand picks up again, and the cycle begins anew.
By understanding these phases, businesses can better prepare for market shifts and make smarter strategic decisions. Whether you’re planning for capacity, managing costs, or forecasting future trends, the truckload cycle is a powerful tool to have in your toolkit.
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