Trucking sector faces rising costs, Part 1

Aluminum is ubiquitous in truck and trailer manufacturing. For example, 6061 alloy extrusions for trailer flooring and structural components are a mainstay for large-diameter presses in the extrusion industry. Forged aluminum alloy wheels for trucks and trailers have become de rigueur for owner-operators and fleets favoring high performance and appearance. Class 8 heavy-duty trucks extensively use extrusions in their cab structures. Medium- and light-duty delivery trucks are increasingly designed for extrusions and sheet to increase fuel efficiency, durability, and safety. And 3003 wide trailer roof coil is a very lucrative market for sheet mills with 60-inch-wide rolling capacity.

Here’s a look at some of challenges facing the industry.

Excess freight capacity

New capacity has flooded the market since 2018. The count of active, for-hire carriers has risen from 138,000 in March 2018 to 212,000 in September, according to SONAR’s Freight Carrier Count Index.

Meanwhile, the American Trucking Associations (ATA) projects only 1.6% growth in 2025 freight volume. This follows two years of declines in 2023 and 2024.

Long-haul truck freight movements, defined as more than 800 miles, have declined sharply, down roughly 30% year over year, according to FreightWaves’ analysis of SONAR data. The decline is attributed to shippers shifting to rail and intermodal services, as well as the growing volume of imported goods flowing into US ports.

Revenues and net income decline

A sampling of major listed trucking firms’ earnings underscores the capacity challenge:

• XPO – net income down 19.4%, six months ending June 30
• Old Dominion – net income down 14.8%, six months ending June 30
• Schneider National – net income up 15%, six months ending June 30
• J.B. Hunt – net income up 4.7%, nine months ending Sept. 30

It’s no surprise that capital expenditures are being reined in. Investment priorities are narrowly focused.

Schneider’s profit out performed the industry because they focused on more dedicated freight as opposed to spot tender rolls. JB Hunt also outperformed their peer group due to a similar focus on dedicated freight.

Tremendous investment in trailers between late-2018 and mid-2021 also has lowered the average age of the trailer fleet, meaning this equipment is still serviceable and not ready for replacement. Dry vans range between 6.8-7.3 years, reefers between 5.4-6.4 years and flat beds between 6.8-7.75 years, according to Act Research, which studies the commercial vehicle and transportation markets.

Tractors on the other hand are older, averaging 12.3 years from various industry sources. Most are built to run 750,000 miles and some make it to 1,000,000 miles. Large carriers are apt to retire trucks between three-seven years or 500,000-600,000 miles. This means carriers are focusing now on bringing their fleet ages down with the capital they are spending.

A good example is XPO Logistics, which has brought their average age of their tractor fleet down from 5.9 years old to 4.1 years between the end of 2022 and 2024, according to the company’s 2025 Sustainability Report. It is also noteworthy that XPO has begun to build their own trailers.

Insurance costs

Insurance costs have been climbing. The American Transportation Research Institute found after a 12.5% spike in truck insurance premiums in 2023, insurance rose an additional 3% in 2024 to $0.102 per mile, a new record high.

The reasons for the growth in premiums include a rapid increase in litigations and size of awards; equipment being more expensive to repair; and highway congestion, meaning that the risk of collisions is higher.

In addition, claims have multiplied as have so-called “nuclear verdicts” where claimants have been awarded over $10 million in damages. The U.S. Chamber of Commerce Institute for Legal Reform estimates that from 2010 to 2019, such awards rose 27.5%. The median award is nearly $25 million, while 1 in 4 auto collisions involving a truck resulted in verdicts of $10 million or more.

Vehicle safety

Regulatory issues can be a two-edged sword for truck/trailer demand. While increasing costs to carriers, they also can spur replacement of trucks and trailers to meet higher safety standards. New regulations are about to be issued that might lead to more replacement.

The Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration have published rules, effective in December, for Automatic Emergency Braking (AEB). This rule would require AEB systems for new commercial vehicles over 10,000 pounds. AEB uses sensors to detect potential forward collisions and automatically applies the brakes if the driver does not react in time. Class 7 and 8 trucks would be required to be equipped with AEB by 2027.

Emissions standards

Another area that led to increased demand for Class 8 OEM is when emissions limits were lowered at both the federal and state level. The present political climate has lessened the impetus for this. In June, President Trump signed legislation overturning EPA rules related to Zero Emission Vehicles (ZEV) and low NOX (nitrogen oxide), except for states like California that retain their own enforcement. States like Massachusetts, which previously adopted the Advanced Clean Trucks rule, have delayed enforcement of ZEV mandates, citing challenges for manufacturers to meet the requirements.

The loosening of emission standards may work against Class 8 truck sales, as it takes away the incentive for carriers to upgrade their tractors to meet higher standards. Carriers will not place orders until there is clarity about what the standards will be.

Weight and size restrictions

The federal government regulates weight limits on the Interstate Highway System. The states limit gross weights of commercial trucks to protect highways. These weight restrictions tend to be positive for aluminum demand from carriers. If gross weights are capped, one means to increase revenue is by lowering the tare weight of the combined tractor/trailer. A tractor/trailer with more aluminum content means a reduced tare weight and higher revenue weight.

There is movement by manufacturing and retail groups to raise the maximum gross weight from 80,000 pounds to 91,000 pounds for conventional truck and trailer combinations. A legislative proposal to raise the federal truck weight limit from 80,000 to 91,000 pounds was introduced by Rep. Dusty Johnson, R-SD. Johnson’s bill, H.R. 3372, sought to establish a 10-year pilot program allowing participating states to voluntarily permit the heavier trucks on interstate highways. It’s supported by various industry groups, including the Coalition for Transportation Productivity, the Shippers Coalition, the American Forest & Paper Association, and some segments of the broader trucking industry. These groups argue that the increase, typically for trucks equipped with a sixth axle, would improve efficiency, reduce emissions by requiring fewer trips, and help address supply chain issues.

If the Trump administration and/or individual states elect to raise permissible weight limits, it might discourage further lightweighting in the short run, as carriers would be gaining 11,000 pounds of revenue weight without having to do anything.

The 12% federal excise tax

The Modern, Clean, and Safe Trucks Act of 2025 (H.R. 2424) is a bill introduced in the U.S. House of Representatives on March 27 to repeal the 12% federal excise tax (FET) on the purchase of new heavy-duty trucks and trailers. As of Oct. 17, the bill has not been passed. It was referred to the House Committee on Ways and Means on the day it was introduced and has been pigeon-holed ever since. The government shutdown hasn’t made matters any better.

According to the bill, the tax adds between $7,000 and $50,000 to the cost of a new truck.

Supporters argue the tax discourages the purchase of new trucks and trailers, resulting in older, less environmentally friendly, less safe vehicles staying on the road. They also say eliminating the tax would lower the cost of advanced engine technologies and zero-emission vehicles, making them more accessible to fleets. This may be a low priority in the Trump administration, but the industry is still looking at ways to deploy more fuel efficient and lower carbon intensity tractors.

The repeal of the excise tax would be a big shot in the arm for Class 8 truck and trailer OEM.

Driver qualifications and impact on capacity

We have all heard about the shortage of truck drivers. This has led to an increase in issuance of non-domiciled Commercial Drivers Licenses (CDL), a commercial license issued by a state to an individual who are legally authorized to work in the US but are not permanent residents.

The proliferation of these non-domiciled CDL brought a huge number of new carriers into the market and has been a major contributor to falling freight rates. Recently, the U.S. Department of Transportation implemented stricter regulations for issuing these licenses, requiring more verification of legal presence and employment status. Concurrently, ICE raids in various states may also be taking out some holders of non-domiciled CDL.

Logic says this may start to reduce the excess capacity in the industry, allowing freight rates to recover. Once revenues improve, carriers may increase capex for both tractors and trailers.