Wait 'til next year—again

The basics, essentially, are unchanged: The freight market is currently in a prolonged recession, but the challenging demand outlook, heading into its third year, now faces significant headwinds from trade policies—just when the industry had expected a rebound to kick in.

“There’s a lot of freight demand that was pulled forward into the first half of this year—that is pulled from the future—so we’ve got some paybacks to come, in addition to demand destruction,” ACT Research Vice President and Senior Analyst Tim Denoyer said. “The freight outlook is not wonderful on the supply side.”

Freight and rates, adding up to carrier profits, drive new equipment purchases, of course.

And considerable uncertainty, particularly regarding trade policy challenges and regulatory shifts, continues to baffle fleets and their equipment manufacturers, especially in the trailer and Class 8 truck markets, as the session’s market-specific experts explained.

Indeed, tariffs have emerged as a dominant force for the industry, directly reducing demand by making goods more expensive for consumers and businesses. Studies indicate that U.S. consumers and businesses bear approximately 80% of these tariff costs. The resulting inflation on goods directly translates to a reduction in the volume of goods shipped, diminishing the need for trucks and trailers.

“Once the trade-war headwinds are essentially baked in, which we expect over the next few quarters, we should be able to start the recovery,” Denoyer said.

Trailers: Low demand, lingering inventory

The trailer market is currently marked by subpar demand, weak carrier profits, and an absence of freight rate traction, explained Jennifer McNealy, director of research analysis and publications. Recent ACT surveys of fleets and OEMs reveal negative sentiment across general business conditions, demand, and labor availability. While there’s quoting activity, it isn’t translating into actual orders.

“It’s challenging, and looks like it’s going to be challenging for a while,” McNealy said. “We need more clarity. We need less chaos. We need lots of capex. We need people to just start buying some trailers.”

OEMs are reporting an average price increase of 7% for January 2026 compared to January 2025, with approximately 68% of this increase attributed to tariffs. OEMs are attempting to absorb some of these costs, but this is unsustainable in the long run. This price hike, combined with already strained finances of fleets, makes new trailer purchases a difficult proposition.

Fleet behavior confirms this challenging environment:

• 80% of surveyed fleets are not planning to purchase new trailers at all this year, with many only considering buys for specific lanes or customer requests, or for reducing overall capacity.
• Some fleets are opting to replace TRUs on existing trailers rather than investing in new trailers entirely, highlighting efforts to control costs.
• There’s a concern that increased fleet efficiencies—as companies optimize operations to “ride the wave” of low demand—may lead to a permanent change in demand levels and equipment life cycles.

McNealy shared a few of the fleet comments from the survey, and the outlook isn’t optimistic. Replied one fleet: We are not ordering trailers this year, and at this time, have not started discussing trailers for next year, most likely we’ll only buy trailers for a specific lane or need.

Additionally, trailer backlogs are under pressure, with the July 2025 backlog-to-build ratio at 4.2 months, significantly below the long-term average of 5.74 months. New orders have been consistently low, falling below 10,000 units in recent months. While cancellation rates improved from 3% in July 2024 to 1.8% in July 2025, they still remain elevated.

The reefer van market is particularly challenged, experiencing “unprecedented levels of fleet age.” The average age of the reefer fleet in 2025 is 6.5 years, exceeding its previous high of 6.4 years in 2011. This is due in part to overcapacity in the dry van market bleeding into reefer, pushing rates down, and the fact that reefers are roughly three times the price of dry vans, making them a more difficult investment.

“The rules seem to have changed—nobody understands what the rules of the game are anymore,” McNealy said, referring to a potential reset in the industry baselines, particularly in the trailer segment. “What is normal? What’s a new normal going to look like?”

Class 8 forecasts

The outlook for Class 8 trucks has also been lowered, with a 12% reduction in the 2025 build forecast and a 29% reduction for 2026 since the March forecast. Tariffs and policy changes have particularly impacted the vocational market, which saw a strong outlook disrupted and pre-buying efforts “stopped cold” in March 2025 due to regulatory uncertainty.

A key development for the truck market is the reversal of private fleet capacity expansion, explained Carter Vieth, a research analyst at the firm. Day cabs, often used by private fleets, now constitute only 37% of Class 8 tractor orders, down from 47% during the 2022-2024 expansion. Additionally, used day cab prices are underperforming used sleepers, and there’s evidence of a “liquidation” of day cabs in the used market, primarily from private fleets. This shift is seen as a positive sign for the for-hire market, as freight will eventually flow back, driving rates higher, likely in the second half of 2026.

However, for-hire carriers continue to face “generationally weak profits,” with large publicly traded truckload carriers experiencing their 12th consecutive quarter of year-over-year margin decline. Net profit margins in Q2 2025 were at 2.8%, comparable to 2010 levels, making new equipment purchases unfeasible for many.

Clarity, recovery?

The overarching sentiment is that the industry is in a “cure for low prices era,” where current low prices and demand destruction are expected to eventually build pent-up demand, leading to a recovery. However, this recovery is not expected in the immediate future. Freight rates are unlikely to rise before the full impact of the trade war is better understood and accounted for. A stable rate outlook is projected for the next 12 months, with a recovery expected in late 2026 and 2027. For trailers, a significant rebound to 300,000 units isn’t projected until 2028.

Key factors that could accelerate recovery include improvements in freight demand and rates, more favorable interest rates, and clarity on tariffs and the business environment. Political risks remain substantial, including decisions on 232 tariffs and the EPA’s Clean Truck regulation, which could significantly influence future market dynamics. While the short-term outlook remains challenging, a recovery is ultimately anticipated in the longer term, driven by capacity tightening and pent-up demand.

“We do think, from a medium-term perspective, freight’s not going to turn around tomorrow, but we think by the time we get to next year, it’s going to drive that recovery that we’re expecting in the back half of  ’26,” Denoyer said.