The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
It is no secret that the logistics industry is facing a challenging landscape characterized by low freight rates and excess capacity. This situation is a result of several factors, including the lingering effects of the pandemic-induced demand surge, geopolitical tensions and a slowdown in global economic growth.
Carriers have been plagued by high operating costs, according to the recently published 2024 Council of Supply Chain Management Professionals “State of Logistics Report,” while lackluster demand and the capacity glut have made it hard to charge the kinds of rates that would allow them to protect their margins. Operating costs have mainly been affected by elevated fuel, labor and insurance costs as well as growing costs of regulations. One example is the new emissions standards that are impacting cab costs in a major way. So far carriers have not been able to relay these costs to their customers.
This has resulted in a loss of capacity in U.S. logistics. According to the Federal Motor Carrier Safety Administration, we saw a decrease of 10.7% in freight brokers and 7.6% in asset-based carriers from December 2022 to March 2024. We are not seeing any improvements in this trend. Just this past week, U.S. Logistics Solutions, a Texas-based logistics company with 500 truck drivers, abruptly ceased operations. This incident highlights the challenges faced by smaller carriers in the industry.
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