‘Tis the season for the annual capacity purge

As truckers celebrate the Thanksgiving holiday, the U.S. trucking industry is on the cusp of another tradition: the annual capacity purge.

The annual capacity purge between Thanksgiving and Valentine’s Day occurs each year and includes a significant increase in the number of motor carriers leaving the industry compared to other times of the year.

This seasonal trend, clearly captured in SONAR data detailing net changes in transportation authority (CDNCA), shows a steady increase in net power losses over the period – outpacing newcomers even in the best economic years. The trucking industry has been in an economic crisis for several years, with many carriers’ balance sheets under water due to damage sustained during the Great Recession, the longest economic downturn in transportation history.

This year’s contraction could be more severe than usual.

A seasonal pattern rooted in data

CDNCA SONAR data, which tracks the weekly net changes in motor carrier assets of property transportation authorities by subtracting cancellations from granted authorities, shows a marked decline in net capacity from late November to mid-February. This time frame has seen a significant increase in companies exiting the industry – voluntarily or involuntarily – while new operator start-ups tend to slow down. Even in strong years like 2018 or 2021, the Thanksgiving to Valentine’s window stands out as a pure erosion period.

As I mentioned in my recent X post:

“This is the season to clear capacity. The trucking industry typically experiences net capacity reductions from Thanksgiving-Valentine’s Day. Even in good years, fewer new carriers start up during this period.”

The accompanying graph, taken from CDNCA, visually confirms the increase in power losses, marked by yellow indicators, which is associated with the cleaning season.

Why seasonal migration?

Several factors cause this annual capacity purge. Winter freight slowdowns reduce revenue per mile and reduce carrier profitability. Winter weather, increased maintenance costs and reduced driver availability add to the pressure, pushing marginal operators to the brink.

During the holidays, many truck drivers go home to find that they have lost the desire to return to the industry and deal with the headaches and challenges of being a truck driver, and look for alternative employment.

This will most likely affect employee truck drivers, but their reluctance to return could put a financial strain on operators and further contribute to reduced capacity.

This year has also seen a significant purge of foreign drivers out of the country with no plans to return to the US, leaving the US trucking industry behind. The shift, tied to visa uncertainty and a crackdown on immigration, could accelerate capacity cuts.

Long correction cycle

The industry capacity adjustment phase that continues from 2023 reinforces this seasonal trend.

With trucking company profitability at historically weak levels and truck manufacturing focused on replacements rather than expansion, the Thanksgiving to Valentine period becomes a natural point for deregulation. SONAR tender rejection data always shows a reduction in capacity in late November to mid-January as capacity dries up during this period.

Looking ahead

While the Thanksgiving-to-Valentine’s capacity purge is a predictable annual event, its magnitude in 2025 could change the industry.

The question for the trucking industry is not whether officials will be lost, but how many—and who—will endure the never-ending winter of transportation.

The post ‘Season Annual Capacity Cleanup’ appeared first on FreightWaves.

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Ross C. Ingram

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