Wall Street is starting to see early signs of life in the trucking market, and Bank of America says supply-side pressures are finally creating the conditions for rate improvement — even though demand hasn't yet shown up.
On Friday, Bank of America Securities raised its price objectives and earnings estimates for major truckload carriers like Knight-Swift Transportation Holdings Inc. (NASDAQ: KNX), J.B. Hunt Transport Services (NASDAQ: JBHT), Schneider National (NYSE: SNDR), and Werner Enterprises (NASDAQ: WERN), citing tightening capacity and regulatory pressure that's removing weaker operators from the market.
- Knight-Swift had its price target raised from $50 to $57.
- J.B. Hunt's price objective rose from $175 to $208.
- Schneider National’s price objective jumped from $22 to $26.
- Werner Enterprises saw a price objective hike from $22 to $25.
“We see several supply-side catalysts tightening the market,” said analyst Ken Hoexter.
Spot Rates Climb Despite Freight Recession
Dry-van spot rates excluding fuel jumped 3.9% in just one week to $1.61 per mile — their highest level since January. That weekly increase exceeded the seasonal average of 2.6% seen over the past four years.
BofA attributed the unexpected rate strength to growing constraints on trucking capacity.
"Capacity pressure has stemmed from the Administration’s crackdown on English Language Proficiency, non-domiciled Commercial Drivers Licenses, and noncompliant electronic logging devices," Hoexter wrote.
Earlier this week, U.S. Transportation Secretary Sean Duffy pushed to remove nearly 3,000 Commercial Driver's License training providers from the federal registry.
Moreover, the Department of Homeland Security launched aggressive audits across California trucking firms, further reducing available labor and equipment.
Still, demand remains subdued. BofA's Shipper Demand Indicator posted another muted reading of 50, below levels seen in earlier freight recessions.
Capacity is shrinking not just from regulation but from financial strain. More than 20 trucking companies have filed for bankruptcy since September, including 10 Roads Express, the largest U.S. mail hauler, which plans to shut down in January.
"The prolonged freight recession has continued to trigger truckload carrier bankruptcies over the past year," Hoexter said, listing dozens of closures and Chapter 11 filings across the sector.
Market Reactions
Market reaction has been swift. Trucking firms that have managed to stay resilient through the freight recession are now benefiting from a more concentrated landscape, as weaker operators exit and surviving carriers capture share.
- Knight-Swift rose 0.9% Friday and has rallied in 9 of the past 10 sessions, climbing 23% over that stretch.
- J.B. Hunt added 0.7% Friday and has advanced in 10 of the last 11 sessions, up 18%.
- Schneider National rose 2.1% Friday, marking its eighth straight gain and a 25% surge since Nov. 21.
- Werner Enterprises rose 2.4% Friday and has rallied in 9 of the past 10 sessions, gaining 27% over the period.