As carriers feel the impact of the weak freight market, the possibility of bankruptcy threatens the stability of companies large and small. In recent years, a combination of factors, exacerbated by events such as the global pandemic and shifts in insurance dynamics, has impacted the market.
Looking at Federal Motor Carrier Safety Administration data on revocations from 2000-2024, Avery Vise, vice president of trucking at FTR Transportation Analysis, noted that revocations net of reinstatements peaked in late 2022 and early 2023. Technically, Vise noted, the first quarter of 2023 was the peak at just over 24,000, but it was only barely more than in the fourth quarter of 2022. Since then, revocations have declined mostly steadily, but they are still higher than seen before the pandemic.
FTR
“The absolute number of carriers exiting is historically high due to the unprecedented surge in the carrier base, especially in 2021,” said Vise. “Even with the large number of carrier failures, through March, the market still has 94,000 more for-hire carriers than it did immediately before the pandemic.”
Unless there are substantial changes in market conditions for small carriers – such as spot rates or diesel prices – the number of carriers leaving the market “likely will continue to ease incrementally but remain elevated” through most of this year, Vise said. “By late this year or early next year, the market should finally have returned to a pattern that is at least close to normal.”
One uncertain factor that could impact the rate of carrier failures is insurance. Based on data from federal government, the costs for commercial auto insurance premiums have been rising for about a year. In March, the Producer Price Index for premiums was up about 2% from March of last year – year-over-year gain not seen since the end of 2019.
