Trucking Industry Grapples With Q4 Slowdown

Motor carriers experienced a financial slowdown in the final months of 2022, as trends that indicate a return to normalized levels of business for the year ahead took hold, industry analysts said.

“The Q4 results in general weren’t great,” Evercore ISI analyst Jonathan Chappell said.

“Old Dominion [did] a phenomenal job, and Schneider [did] much better than expected. But everyone else was basically in line to worse than expected, for all the reasons that we anticipated coming in — slower volumes, pricing decelerating, etc.”

Chappell noted that carriers expressed optimism for the coming year, as they are anticipating a bottoming of volumes early on, normalization of inventories in the second quarter and a bottoming in pricing midway through the year.

“A lot of optimism about a return to normalcy, and that was the thesis that most investors hung onto,” Chappell said. “It didn’t really matter if you had a great Q4 or a terrible Q4, you were kind of thrown into this bucket of, ‘Things are about to stop getting worse and at least bottom before they start getting better.’ ”

Cowen and Co. analyst Jason Seidl noted that Q4 truckload rates dropped amid easing supply chain congestion and predicts that rates may decline further in the first quarter as carrier bargaining power erodes. He also expects less-than-truckload rates to gradually abate.

“The fourth quarter went about as expected in terms of the commentary that was coming out of both the LTL and the truckload players,” Seidl said. “The outlook remains challenging, but I think — as a group — the truckers were more optimistic on seeing a rebound as early as spring and as late as the back half of the year.”

Seidl noted that some of the Q4 downturn was tied to consumer-related companies that experienced an inventory drawdown, but added carriers are already seeing some of those customers build back inventory.