The trucking industry is undergoing a transformative shift, fueled by market changes, geopolitical factors and evolving consumer behavior.
Werner’s Chairman and CEO, Derek Leathers, recently joined FreightWaves Founder and CEO, Craig Fuller to discuss these current industry trends and look ahead to what is coming next. The duo tackled a full suite of pertinent topics, including the market turn, nearshoring, fraud and the future.
The freight recession comes to an end
Earlier this month, FreightWaves officially acknowledged the end of the Great Freight Recession. Fuller cited SONAR data confirming the market turnaround, including some of the same metrics that enabled him to predict the downturn early.
This aligns with the “up and to the right” market trajectory Leathers reports seeing over the past few months. He attributes this long-awaited shift to the growing carrier attrition—a trend that was delayed during the most recent freight recession.
Freight is a cyclical market, meaning downturns are common and often predictable. However, during the Great Freight Recession, the market behaved completely out of line with traditional expectations. Leathers credits the lasting impacts of the coronavirus pandemic for this anomaly.
“A global pandemic is something completely different, and we probably all underestimated the impact,” Leathers said. “The increase in demand, the wallet share shift between services and goods, and the vast amount of stimulus that a lot of small and mid-size carriers participated in created a cash vault they could dip into for longer than we have ever seen previously during a downcycle.”
According to Leathers, some small and mid-size carriers stowed away as much as $150,000 per truck during the last COVID-fueled upcycle. That money would then be transformative for carriers historically operating on razor-thin margins.
With bolstered margins going into the freight recession, small and mid-size carriers could continue operating longer than expected. This led to a very long attrition cycle and, in response, a lengthened recession that has only recently abated.
How nearshoring is shaping the supply chain
The market’s overdue change happened alongside nearshoring trends and the U.S. presidential election, which Leathers described as positive forces for the trucking industry.
Trade relations between the U.S. and China have been strained for several years. This tension will only continue as the Trump Administration’s expected tariffs take effect over the coming months.
As manufacturers work to move their operations away from China, many have set their sights on Mexico. The country’s proximity to the U.S. and its robust labor force make it a standout contender for companies hoping to streamline their supply chains while keeping costs down.
In 2023, Mexico surpassed Canada and China to become the largest U.S. trading partner. This trend is expected to continue as more companies establish a presence in Mexico and the relationship between the two nations grows stronger.
Werner has a robust presence in Mexico. The company has operated in Mexico for more than 25 years and transports more cross-border freight to and from the country than any other carrier, generating nearly $400M in annual revenue.
Shippers establishing a presence in Mexico should seek out this level of expertise from their carrier partners. Werner understands the unique opportunities in Mexico and has the solutions and expertise needed to navigate potential challenges.
Looking into 2025
Looking toward 2025, Leathers expects the attrition cycle to continue, creating a more stable environment.
“2025 has the opportunity to clearly show that 2024 was the trough and 2025 is the slow climb out,” Leathers said. “As we get further along, I think it gets better from there.”
For shippers, this means now is the time to create a game plan for the flipped market. According to Leathers, a prepared shipper is already looking ahead and considering who their core carriers are and how they can solidify those relationships for long-term growth.
As the industry adapts to the changing landscape, the most successful companies will proactively secure their networks and focus on collaboration.
The post How the end of the freight recession will shape 2025, according to Werner chairman and CEO appeared first on FreightWaves.
