Page 3 - Market Outlook Q4 2024

Q4, 2024
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Economic Overview

Trailer Industry to Navigate Complex Landscape in 2025

As we approach 2025, several key trends are poised to reshape the Technological Advancements
business landscape across various sectors. The commercial semi-trailer The integration of autonomous driving technologies presents both
industry in 2025 is navigating a complex landscape shaped by several opportunities and challenges. While self-driving trucks promise
critical challenges. increased efficiency and safety, they also raise concerns regarding
job displacement, regulatory hurdles, and the need for significant
Economic and Market Dynamics infrastructure adaptations.
Elevated inventories and cautious fleet investments are leading to
a projected decline in Class 8 truck production, according to ACT The integration of autonomous driving technologies will likely have a
Research’s 2025 Economic of Freight Report. Similarly, trailer demand positive long-term impact on semi-trailer sales due to the increased
remains weak, with anticipated production contractions. Replacement operational efficiency, demand for advanced features, and fleet
demand for specific types, such as refrigerated trailers, offers some expansion. However, in the short- to medium-term, sales might face
resilience, but overall market conditions are expected to improve only headwinds from regulatory uncertainties, high upfront costs, and
later in the year. infrastructure limitations.

Transportation Sector and Freight Trends Manufacturers and fleet operators who adapt quickly to these changes
Freight markets will adjust to a stabilizing but slower-paced environment, — by focusing on advanced, autonomous-ready trailer designs — will
marked by inventory normalization and lingering overcapacity, reports be well-positioned to capitalize on the evolving market dynamics.
the North American Transportation Services Association (NATSA).
Supply Chain and Infrastructure Constraints
Freight demand will see moderate expansion in 2025, following Ongoing supply chain disruptions and constraints are expected to
inventory adjustments across retail and manufacturing. Retailers, persist, affecting production timelines. Gradual improvements are
having stabilized post-pandemic inventories, are adopting slower anticipated only in the latter half of the year as supply chains stabilize,
replenishment cycles, reducing the urgency for freight movement. according to ACT Research.

The truckload market continues to grapple with overcapacity, Workforce Challenges
particularly in the for-hire sector. Private fleets are absorbing increased The industry continues to grapple with a shortage of qualified
volumes, diverting freight from the spot market. Equilibrium is drivers, exacerbated by an aging workforce and high turnover rates.
expected to emerge by late 2025, as inventory corrections and This shortage impacts delivery schedules and operational efficiency,
consumer demand stabilize. prompting increased interest in autonomous vehicle technologies as
a potential solution.
While spot rates show gradual improvement, they remain constrained
by excess capacity. Fleets are holding back on expansion plans, Persistent driver shortages, exacerbated by an aging workforce and
adopting a conservative approach to capital investments. By late 2025, lack of young recruits, remain a significant challenge. Over a quarter
potential increases in e-commerce and retail demand may support a of truck drivers are now over 55, according to the American Trucking
more favorable rate environment. Associations (ATA). The industry contends with high turnover due to the
demanding nature of the job — including long hours and extended
Regulatory Pressures periods away from home, making it less attractive to younger workers
Stricter environmental regulations are compelling manufacturers and who prioritize work-life balance, as well as competition from other
fleet operators to invest in cleaner technologies, such as zero-emission industries, and the costly, time-consuming process of obtaining a
vehicles (ZEVs) The adoption of battery-electric and hydrogen fuel cell commercial driver’s license. Supply chain backlogs have also delayed
trucks is gaining momentum, supported by state and federal incentives. new truck production, limiting opportunities for new drivers.
However, the transition requires substantial capital investment and
infrastructure development.