The 3-year US freight recession may finally be ending

• A yearslong recession in the freight market may be ending as the industry returns to growth in 2025.
• Bank of America said its proprietary truck demand indicator is at its highest level since April 2022.
• Spot dry-van rates are up, signaling transport market strength and economic growth.

A three-year recession in the freight market may be finally nearing its end.

Bank of America said in a note on Thursday that proprietary signals suggest the transportation industry is on the verge of entering a period of growth heading into 2025.

"Our proprietary BofA Truck Demand Indicator is at 59.8, its highest level in three years (since April 2022), just a tick below a 60-growth signal level," Ken Hoexter, research analyst at Bank of America, wrote.

Hoexter is also encouraged by the fact that the bank's truck demand signal is above the 54.2 average of the prior three freight recessions that occurred in 2012, 2015, and 2019, and is above the 50 level for the 32nd time out of 38 surveys.

Another indication that the trucking freight market is picking up is an uptick in spot dry-van truckload rates, which have historically been a solid leading indicator of transport supply and demand balance.

Figures from two different data providers show the rates have jumped to $1.90 per mile and $1.67 per mile, which are both above the $1.50 cost per mile and the average rate of $1.53 in 2023 and 2024.

The spot rates began to inflect higher in July and have been up for 25 consecutive weeks.

"The move suggests broad strength, aided by capacity rationalization and inventory normalization and more than just pre-shipping ahead of tariffs, impacts of East Coast port strikes, cold weather/fires, and typical seasonal pre-shipping ahead of Chinese New Year," the note said.

The incoming Trump administration could also provide a boost for the trucking industry through deregulatory proposals and lower corporate tax rates. These could spur business investments, leading to additional freight flows, the bank said.

A rebound in the transportation market could indicate a strengthening economy for investors. A closely followed indicator on Wall Street, Dow Theory, suggests that when transportation stocks and industrial stocks move higher together, it confirms overall economic strength.

The Dow Jones Transportation Average is sitting about 6% below multi-year highs.

For investors, Bank of America suggests buying transportation stocks after they significantly underperformed the S&P 500 by 18 percentage points in 2024.

The bank upgraded UPS to "Buy" and reiterated its "Buy" rating for other transportation companies, including FedEx, Saia, and J.B. Hunt Transportation.

J.B. Hunt, a key player in the freight trucking market, is scheduled to report fourth-quarter earnings after the market closes on Thursday. Investors will be watching to see if its on-the-ground insights confirm Bank of America's positive view. Its third-quarter results showed early signs of a recovery after revenue and income beat analyst estimates.