When Will the Great Freight Recession End? Strategies for Carriers To Survive the Storm

With the ongoing delay in freight rate recovery, the KSM Transport Advisors (KSMTA) team has launched a new article series containing practical recommendations designed to help carriers “level-set” in any market environment. The need to “prepare to thrive” has become a powerful mantra, reminding us and our clients to stay focused and resilient, even in the face of significant challenges.

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News Flash: The three year-long Great Freight Recession (GFR) is NOT over. The leading indicators that caused FreightWaves to declare the end of the GFR in November 2024, and the resulting carrier optimism is now in the rearview mirror.

Three years of hammered freight rates and high inflation on everything trucking has resulted in an industry attitude of resignation rather than recovery. The fundamental pressures that defined the Great Freight Recession – excess capacity, weak spot rates, and persistently high operating costs – remain entrenched.

Shippers continue to enjoy the upper hand, leveraging ample truck availability to keep contract rates low, while spot market volatility offers little in the way of sustained upside for carriers. Insurance premiums, driver pay, and equipment costs remain elevated, squeezing already thin margins. At the same time, cash reserves are dwindling as operating losses erode those reserves.

The carrier optimism seen at the start of 2025 has now faded, replaced by a more sober reality: without significant capacity contraction or a meaningful shift in freight demand, the road to recovery remains elusive. The industry’s hopes for a rapid turnaround have been tempered by ongoing economic uncertainty, continued consumer spending shifts, and stubbornly high interest rates that weigh on freight-dependent sectors like construction and manufacturing.

Thankfully, carriers have numerous strategies at their disposal to navigate these challenging times. However, some critical actions are often overlooked or reserved as a last resort. The reality is that the time for hesitation has passed; survival requires immediate and decisive action. Here are a few to consider:

Financial Engineering: Preserve Cash and Extend Liquidity

To maximize cash reserves and extend financial runway, carriers need to scrutinize every expense to identify essential costs and eliminate or defer all non-critical spending. It’s essential to determine the necessary cash runway for at least the next 12 months and adjust accordingly. Strategies to achieve this include:

• Restructure Equipment Payments – Request payment deferrals with lending partners or, at a minimum, interest only for an applicable period. Negotiate extended terms to reduce short-term cash outflows.
• Optimize Working Capital – Assess liquidity structure from current working capital facility as it relates to advance rate on collateral and covenant requirements
  • Negotiate increase in the advance rate on collateral
  • Negotiate eliminating covenants based on liquidity
  • Consider move from an ABL facility to a factoring facility which has no covenant requirements
• Renegotiate Supplier Contracts – Secure better terms (both price and payment intervals) with fuel providers, maintenance vendors, and insurance companies.
• Cut Non-Essential Expenses – Eliminate or defer discretionary spending while maintaining critical operations.
• Financial Statements and Benchmarking – Regularly analyze financial performance with timely prepared internal financial reporting. Compare key metrics against industry benchmarks to identify areas for improvement and ensure financial discipline. Credible sources of industry benchmarks include the TCA Profitability Program, ATRI, and KSMTA’s very own FreightMarks^™.
• Actively Manage Cash – Actively managing cash flow using a financial model is critical to maintaining stability and profitability. A well-structured model (13 weeks at a minimum) helps forecast cash needs, ensuring the company can cover major expenses like vehicle registrations, license tags, insurance renewals, fuel costs, driver pay, and maintenance without disruptions. By incorporating these predictable costs into the model, the company can plan for lump-sum payments, avoid cash shortages, and optimize working capital.

Operational Engineering: Evaluate Existing Capacity and Utilization To Reduce Financial Losses and Slow Cash Burn

To mitigate financial losses and extend cash reserves, carriers must focus on optimizing operations and eliminating inefficiencies. Key areas to evaluate include:

• Local Trucks – Assess whether these tractors and drivers are genuinely contributing to profitability or if they serve more as a convenience for drivers and operations staff. If they are not improving margins, consider consolidating or reallocating assets to higher-yield operations.
• Drop Trailers – Evaluate whether the use of drop trailers increases efficiency and reduces driver downtime enough to justify their cost. If the expense outweighs the operational benefit, consider alternatives such as optimizing live loads or adjusting freight contracts to improve trailer utilization.
• Driver Domiciles – This is a complex but critical issue. Begin by mapping driver home locations and identifying those who live outside your primary freight network. Replace these drivers with those who reside within the network to improve operational efficiency and reduce unnecessary costs. Do not make exceptions based on tenure, loyalty, or perceived productivity – out-of-network drivers erode margins and add unnecessary expense.
• Profitability by Operation – If the financial reporting system provides meaningful profit and loss analyses by operation, use them. Prioritize the allocation of equipment, personnel, and other resources based on profitability. Apply the financial strategies outlined in the “Financial Engineering” section above to each operation, ensuring that underperforming areas either improve or are reevaluated for potential downsizing or restructuring.

Freight Network Engineering: Improve Freight Quality To Reduce Financial Losses and Slow Cash Burn

Frequent readers of KSMTA’s FreightMath^™ News are familiar with our ongoing discussions on optimizing freight networks for profitability. At KSMTA, we leverage our FreightMath platform to analyze and engineer carrier freight networks. However, carriers can take immediate actions to improve operating margins by implementing the following strategies without FreightMath:

• Define Your Freight Network – Conduct a thorough analysis of your freight patterns and establish a clear geographic area in which your trucks will operate. Once defined, enforce it. Avoid making exceptions that gradually expand the network beyond its profitable boundaries. If you’re consistently running outside your core lanes, you likely have excess capacity. Additionally, ensure that out-of-network drivers, as discussed in the “Operational Engineering” section above, are addressed to maintain efficiency and profitability.
• Double Down on Sales and Business Development of Direct Customer Freight – Focus on selling outbound freight from your key markets exclusively to destinations within your defined freight network. While the rates you secure may not be ideal in the short term, consistency in shipper-controlled “head haul” freight will drive overall rate-per-mile improvements.

Market fluctuations are inevitable, and when rates rebound, carriers with established direct shipper relationships will have the first opportunity to negotiate higher rates. Being the incumbent gives you pricing leverage when demand strengthens.

While most costs should be scrutinized and reduced, sales and business development should be the exception – this is the time to double down on securing direct freight relationships that will sustain your network through the downturn and position you for long-term success.

Manage Your Broker (Spot) Freight Holistically: Control the Freight, Control the Margin

The Great Freight Recession has driven a major shift in shipper behavior, increasing reliance on third-party intermediaries and brokers – just as we saw in 2019. Before the downturn, carriers moved 10-15% of their loads via brokers; now, that number has climbed to 20-35%. When viewed collectively, brokers are the largest “customer” for most carriers.

Despite this, brokered freight is often managed at the lowest levels of a carrier’s organization by employees who lack formal training in negotiation or network management. Their primary goal is simply to cover a truck, not maximize margins. Brokers know this and exploit it to improve their own profitability.

At KSMTA, we’ve worked with multiple clients to elevate the quality and profitability of brokered freight, and the results have been encouraging. Here’s how to take control and protect your margins:

• Appoint a Director of Broker Improvement – Designate a dedicated individual responsible for ALL brokered freight hauled on company assets. This person should:
  • Enforce broker profitability optimization strategies
  • Have full authority to accept or reject broker loads
  • Provide ongoing training and accountability for all employees who interact with brokers
• Coach Employees on These Critical Broker Load Considerations – You can’t expect people to know what they haven’t been taught. Reinforce the following as non-negotiable when evaluating broker offers:
  • Prioritize Network Fit – Only accept brokered loads that align with your defined freight network. Avoid broker freight that pulls trucks into unprofitable or out-of-network lanes – it often takes multiple brokered loads just to get those trucks back where they belong.
  • Use Spot Freight as a Backstop – Brokered freight should fill gaps in your network, not dictate where your trucks run. It should be used strategically to fill backhauls, reduce deadhead, and improve asset utilization.
  • Leverage Market Data – Stay informed on rate trends in key lanes (KSMTA uses DAT) to avoid bidding too low just to keep trucks moving. Accepting loads at unsustainable rates lowers market expectations and reduces future profitability.
  • Build Relationships With Reliable Brokers – Not all brokers are created equal. Develop partnerships with those who consistently provide freight in your core lanes and offer stability in volatile markets.
• Require Broker Load Logging – Every employee who interacts with brokers must record every brokered load in a centralized system (such as KSMTA’s Spot Check Tool). Each log entry should include:
  • Date the load was offered
  • Broker contact information
  • Mileage (using Mile Maker or PC*Miler)
  • Offered rate
  • Negotiated rate
  • Margin, including deadhead
  • Whether the load was accepted or rejected

This is NOT optional. Your director of broker improvement will use this ledger to:

• • Review decisions and enforce accountability
  • Coach employees on negotiation and margin improvement
  • Prevent brokers from exploiting the weakest link in your organization

While brokered freight remains a necessary tool to balance networks, it must be managed strategically, not reactively. Carriers who take a structured, disciplined approach will mitigate margin erosion and maintain long-term sustainability.

Take Control, Adapt, and Survive

In this environment, survival depends on decisive action. Carriers who proactively manage their finances, optimize operations, and adapt their business strategies will not only endure the challenges of the Great Freight Recession but emerge stronger and more competitive when the industry recovers.

The carriers who control their costs, their network, and their freight will control their future.

Final Thought: These Actions Are Ongoing, Not One-Time Fixes

All of these actions should be embedded in the DNA of a well-run trucking company’s daily operations. The urgency stressed above is clear – if you aren’t already implementing these practices, start now.

To learn more or discuss any of the ideas shared above, please contact a KSMTA advisor via the form below.