VOLUME INDEX:
The Volume Index decreased 1.0 point in December to 51.0, seasonally adjusted (SA), from 52.0 in November. Despite the economy continuing to exceed expectations, particularly consumer spending, for-hire volumes have yet to find meaningful purchase out of the trough. While freight is growing broadly, two years of private fleet capacity additions have diminished for-hire carriers’ slice of the freight pie. Additionally, while the retail sector is healthy, interest rate sensitive sectors like manufacturing and construction are sluggish. Tighter financial conditions are likely to slow volumes in these sectors, despite support from hurricanes and wildfires.
With tariffs looming on the horizon, a pull forward in freight is likely in the coming months, likely spurring activity above seasonal norms. However, the scope, scale, and timing of tariffs will determine the impact for freight.
PRICING INDEX:
The Pricing Index increased 3.8 points m/m in December to 55.3 (SA). Truckload spot and contract rates are now rising, albeit modestly compared to recent cycles. FMCSA’s updated driver rules that came into effect in November may have also been a factor, with DAT equipment postings falling ~33% y/y in December.
If they continue, recent Class 8 order trends suggest ongoing capacity additions, so the for-hire market will likely remain hamstrung with lower and a more gradual improvement in rates.
While we see modest positive momentum for freight rates in the coming months, the modest downturn in equipment sales to date suggests the recovery may remain muted.
CAPACITY INDEX: 
The Capacity Index was essentially flat, down 0.3 points m/m to 49.7 in December, from 50.0 in November. Approaching three years of weak profitability, for-hire carriers aren’t in the position to add significant new capacity. Given the current volume and rate environment, we would anticipate for-hire capacity additions to remain at replacement levels, leaving the index at or around 50.
While improvements in freight demand and rates are not yet enough to justify capacity expansion, conditions are no longer dictating contraction.
DRIVERS:
The Driver Availability Index increased 3.5 points to 56.3 in December, from 52.8 in November. Over the past 15 months, the index has moved in a narrow range of “easy” readings.
December marks the 31st consecutive month the index has been at or above 50. A large factor begetting for-hire driver availability is likely the 4-5% market share grab by private fleets the past two years. Struggling owner-operators turning in their operating authorities have also provided a steady supply of experienced drivers for fleets. Additionally, high interest rates, which have sapped construction and industrial demand, is also likely contributing to the sustained availability of drivers.
A tighter driver market, which could come from the long cyclical lag from lower rates, the baby boomer retirement wave, or mass deportations, would press truckload rates higher.
FLEET PURCHASE INTENTIONS: 
Fleet purchase intentions fell 13 percentage points (pps) m/m, with only 46% of respondents planning on buying new equipment in the next three months, below the 52% historical average for December. As our survey responses show this month, after two, now going on three, years of strained profitability, the appetite for new equipment remains suppressed at replacement levels. The most recent data for Class 8 tractor orders continue to suggest private fleets expanding. As a result, for-hire fleet purchase intentions are likely to remain muted.
SUPPLY-DEMAND BALANCE:
The Supply-Demand Balance grew at a slower rate in December, at 51.3 (SA), from 52.0 in November, as the slower growth in freight volumes outweighed the slight contraction in capacity.
Private fleet expansion, which is not captured in this indicator, has resulted in a longer period with the market close to balance than in past cycles. Consumers remain robust, and inflation is in relatively good shape for now. But sustained high interest rates could dampen demand in construction and industrials and may limit volume improvement in the near term. A slowdown in private fleet growth is likely and should lead to further improvement in the for-hire market balance.
PRODUCTIVITY INDEX: 
(miles/tractor)
Fleet productivity decreased 0.5 points m/m to 47.1 (SA) in December as volumes fell more than the decline in capacity. In general, productivity has been challenged by overcapacity in the for-hire market but should improve with volume increases and slowing overall capacity growth.