LTL Players Eye Freight Market Turnaround, Industrial Upturn
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Substantial change is expected in the U.S. less-than-truckload sector in 2025, according to market observers and executives, headed by the long-awaited freight market turnaround.
An evolutionary repositioning of the LTL market’s largest player, FedEx Freight; opportunities from recent and further Yellow terminal purchases; and changes to the National Motor Freight Classification system are also all on the slate.
American Trucking Associations projected Jan. 16 that after two years of declines, freight volumes are expected to grow 1.6% in 2025.
“There’s a thing called stagflation. That’s where the economy is shrinking, but inflation is high or accelerating. It’s a terrible place for a broader economy to be. But that’s exactly where we’ve been in trucking. Freight levels down, freight rates down, costs up. That is stagflation. That is a terrible place to be,” ATA Chief Economist Bob Costello said during a December Transport Topics Newsmakers event.
“Things are going to get better in ‘25 than they were in ‘24,” said Costello, adding: “I am not talking about a return to a boom … I’m really talking about normal. And what is normal? Normally, truck freight volumes go up 1.5% to 2% a year.
“LTL is still tough. That’s in large part because the manufacturing base has been a little lackluster,” he said.
Some Top 10 LTL carriers are positive about the coming year’s industrial sector prospects though.
Beasley
“We do expect to see a pickup in the industrial economy. … So, certainly, from a shipment count perspective, we see the opportunity for growth there and then the macro backdrop helping on the tonnage side,” ArcBest Chief Financial Officer Matt Beasley said during a Jan. 31 call with analysts.
“And then we continue to make significant progress on the pricing side as well. And, so, I think those three items coming together — the shipment side, the tonnage side, just as we’ve seen an improving macro backdrop and pricing — I think all of that sets up well for 2025,” said Beasley.
ArcBest ranks No. 12 on TT’s Top 100 list of the largest for-hire carriers in North America, with its ABF Freight division ranked No. 7 among LTL players.
In addition, analysts believe more carriers will start exiting the market, further rebalancing the supply-demand equation. Rates are expected to increase too, particularly in the latter half of 2025.
The back half of the year will also see an uptick in mergers and acquisitions plus big changes at FedEx Freight, with the two somewhat correlated, according to observers.
FedEx Corp. said in December it would spin off FedEx Freight as a separate company. FedEx ranks No. 2 on the for-hire TT100 and FedEx Freight is No. 1 on the LTL carriers list.
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In a Jan. 16 research note, Bank of America analyst Ken Hoexter put FedEx Freight’s primacy in the segment in perspective, illustrating how significant a variable the spinoff is likely to be, particularly with FedEx executives promising a reinvigorated and larger sales team and greater interaction with third-party logistics providers.
FedEx Freight averaged 91,000 shipments/day in its second fiscal quarter of 2025, nearly double that of XPO at 52,000/day and Old Dominion Freight Line (48,000/day), nearly triple Saia’s (37,000/day), and quadruple that of TFI International (22,700/day), Knight-Swift Transportation (21,900/day) and ArcBest (20,200/day).
FedEx Freight was built on the back of the acquisition of Viking Freight and American Freightways over 20 years ago, much the same way fellow industry heavyweight UPS entered the LTL segment with its Overnite Transportation purchase.
TFI International, which bought UPS Freight in 2021, is still on the hunt for more LTL partners in order to reach a more level footing with its peers, according to CEO Alain Bédard. TFI ranks No. 8 on TT’s list of the top LTL carriers.
Urgency among LTL players for deals is likely to be heightened following the FedEx announcement, veteran transportation industry observer Brittain Ladd wrote in a social media post.
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January already saw two of the top 25 players in the space team up. Pitt Ohio Transportation Group on Jan. 6 said it would acquire Weston, Wis.-based Sutton Transport. Pitt Ohio ranks No. 49 on the for-hire TT100 and No. 13 among LTL carriers. Sutton ranks No. 26 among LTL players.
Size matters in the top-heavy LTL space as terminals are required for a successful business.
The exit of Yellow Corp. and redistribution of its assets — including the 169 terminals it owned, many in prime locations — saw major players strengthen their operations.
In the latest round of acquisitions, Estes Express Lines and an affiliate of R+L Carriers paid a combined $192.5 million for eight owned properties and four leased terminal sites in December.
Estes and R+L rank No. 4 and No. 5 on TT’s LTL list. The biggest winner in the first auction was XPO, which ranks No. 3 in the segment.
ArcBest is one company eyeing opportunities in an upcoming terminal auction, Beasley said during the Fort Smith, Ark.-based company’s latest earnings call.
“I think it’s fair to say we’re continuing to follow the Yellow process to the extent that if there are opportunities that make sense in that process for our business for the right price, we’ll look to participate there,” he said.
Saia, which ranks No. 18 on the for-hire TT100 and No. 6 in the LTL arena, already beefed up its terminal network through the earlier auctions, and executives seemed especially pleased during the Johns Creek, Ga.-based carrier’s Feb. 3 Q4 2024 earnings call.
Holzgrefe
“We ended the year with 214 terminals, and now have a national footprint enabling us to provide direct service to our customers in the 48 contiguous states. The record level of real estate investments, we made in 2024 officially positioned Saia as a leading national carrier, allowing us to better service our existing customers, and grow with new customers,” said Saia CEO Fritz Holzgrefe.
Part of the improvement in service from Saia, and its peers, meanwhile, is likely to involve upcoming classification changes to the National Motor Freight Traffic Association’s LTL freight NMFC system.
Unveiled at the end of January and due to go live in July, the changes are intended to minimize incorrect classifications of freight, which can result in higher costs.
The segment will, however, have a good deal less to worry about from tariffs imposed by a capricious Trump administration than the truckload sector, according to TD Cowen analyst Jason Seidl, due to lower cross-border exposure by and large.
