Trucking industry readying for 2025

The trucking Industry prepares for 2025 by focusing on service and yield management.

For the trucking industry, 2024 was a challenging year. Freight demand and rates decreased, while operating expenses increased by 25% for trucking companies, according to the American Trucking Associations (ATA). At the same time, the industry was navigating regulatory issues and the need for tort reform to address “nuclear verdicts,” a term referring to jury awards of more than $10 million in damages for tucking accidents, even if the carrier was not totally at fault. For an industry with razor-thin margins, these difficult conditions led to many trucking companies closing their doors in the past year.

According to the Federal Motor Carrier Safety Administration (FMCSA) data, there was a 10% drop in the number of motor carriers in 2024. During the first half of 2024, nearly 10,000 motor carriers closed, according to Truckinfo.net. These included long-term carriers, like Arnold Transportation Services, a 92-year-old company that filed for Chapter 7 bankruptcy in May 2024. Tony’s Express, a 70-year-old California trucking company closed its doors, also in May 2024.

What Does 2025 Hold in Store for the Trucking Industry?

The Bureau of Transportation Statistics (BTS), a government agency that collects, analyzes, and publishes information about the transportation systems in the US predicts that 2025 will be another challenging year for the trucking industry due to economic conditions and evolving market dynamics.

The BTS report states that “As we enter 2025, the US economy is a modest slowdown, with GDP growth projected to moderate to 2.0% year-over-year. This deceleration reflects the cumulative impacts of tighter monetary policy, higher interest rates, and more cautious consumer spending.”

The ATA has a more optimistic outlook for 2025, stating, “It seems like we hit bottom in the freight market earlier this year, 2024, and we are slowly climbing out of the freight market hole. Volumes are finally improving.”

Some carriers are making aggressive plans to be successful in 2025, regardless of headwinds they must navigate including regulatory requirements, potential tariffs that may impact global trade, and ongoing advocacy for tort reform to address costly jury settlements and increased insurance rates.

Regulatory Environment to Change with New Administration

One of the more challenging regulatory requirements for the trucking industry in 2024 remains a concern in 2025. The Environmental Protection Agency (EPA) rule regarding Greenhouse Gas Emissions (GHG3) standards mandates that by 2032, 25% of new long-haul vehicles and 40% of heavy-duty short-haul and medium-duty vehicles be at zero emissions.

Even more troubling for the trucking industry is the latest California Air Resource Board (CARB) Advanced Clean Fleets regulation, which mandates that trucking companies operating in California must begin a phased-in approach to zero-emission vehicles with a significant upfront investment in new electric trucks, which are more expensive than traditional diesel trucks. Electric trucks may also have limited range compared to diesel trucks, potentially impacting long-haul operations and causing more frequent charging stops. There is also the cost of building a charging infrastructure to consider.

The ATA recently called on the nation’s heavy-duty truck and engine manufacturers to abandon their agreements with California regulators and focus on working with the new presidential administration to reopen the GHG3 to revise it with achievable, national standards.

Concerning regulatory issues in general, the ATA stated that it hopes the Trump administration will do what the first Trump Administration did, which the ATA said was looking at all the regulations that are on the books, seeing what works and what doesn’t, and eliminating burdensome regulations.

Even more troubling for the trucking industry is the latest California Air Resource Board (CARB) Advanced Clean Fleets regulation, which mandates that trucking companies operating in California must begin a phased-in approach to zero-emission vehicles with a significant upfront investment in new electric trucks, which are more expensive than traditional diesel trucks. Electric trucks may also have limited range compared to diesel trucks, potentially impacting long-haul operations and causing more frequent charging stops. There is also the cost of building a charging infrastructure to consider.

ATA to Continue Advocacy for Tort Reform

Additionally, in 2025, the ATA will continue to advocate for tort reform by working with state trucking associations to push for legislative changes at the state level, primarily focusing on limiting liability in lawsuits against trucking companies through measures like caps on damages and promoting the recognition of comparative fault, all aimed at reducing high insurance costs for motor carriers and creating what the ATA describes as “a fairer legal system for the trucking industry.”

Proposed Tariffs Could Impact Global Trade

While the trucking industry is somewhat optimistic about the regulatory environment in 2025, shipper groups, like the National Retail Federation (NRF), are concerned about the potential for higher tariffs with trading partners. The NRF recently released a study showing that American consumers could lose between $46 billion and $78 billion in spending power each year if new tariffs on imports to the US are implemented. And another concern is that the widespread levying of tariffs could trigger inflation and a contraction in consumer spending that collectively could undermine the US economy. For the trucking industry, which is just emerging from a “freight recession” a possible dip in consumer spending could trigger another unwanted dip in freight movements and driving another freight recession.

Preparing for 2025

Trucking companies prepare for 2025 with strategic investments, and cost controls

From yield management to strategic investments, trucking companies are making plans to be successful in 2025, despite any headwinds they may need to navigate.

In a recent Old Dominion Freight Line press release about Q4 earnings, Marty Freeman, president and CEO stated, “We have achieved consistent, cost-based increases in our yield metrics, excluding fuel surcharges, by remaining committed to providing our customers with superior service at a fair price. We remain confident in our ability to win market share and increase shareholder value over the long term.”

For XPO, 2024 was a time for strategic investments and significant growth in its footprint. The company opened 20 new service centers across the country from Nashville, Tennessee to Columbus, Ohio to Indianapolis, Indiana in 2024.

“We view these new service centers as investments in our next decade of growth, positioning us to capitalize on the eventual rebound of the freight markets. In the short term, they allowed us to quickly expand capacity in markets where we had outgrown old facilities, said Tim Staroba, president of the XPO East Division.

The company also made strategic investments in proprietary technology to operate even more efficiently and effectively for customers. Staroba said, “For example, we use machine learning to optimize linehaul routes, create more fuel-efficient transportation plans and nimbly respond to unexpected changes, like weather-related disruptions,”

XPO has also launched several new Premium Services like Must Arrive By Date (MABD) shipping to major retailers. The company has also expanded its cross-border service to and from Mexico to the significant rise in customer near-shoring.

These initiatives, in addition to a larger sales staff, are working. XPO added 8,000 new local customers across North America through the third quarter of 2024.