Key insights
- Truist reports improving freight market conditions, citing rising tender rejection rates, load-to-truck ratios, and spot rates. Capacity is contracting, and manufacturing activity is expanding, as indicated by the ISM Manufacturing PMI. Truist maintains buy ratings on ODFL, XPO, ARCB, CHRW and RXO, suggesting positive outlook for these freight and brokerage companies. This points to a moderately bullish signal for the transportation sector and potentially the broader market due to improved economic activity.
Investing.com -- Freight market indicators continued to improve through February and into March, with capacity exiting the truckload market and manufacturing activity stabilizing, according to a Truist analysis released Monday.
Tender rejection rates averaged 13.9% in February, up from 13.1% in January, and reached 14.3% through March 15. These figures compare to 5.3% in February 2025 and 5.9% in March 2025, highlighting tighter truckload capacity conditions.
Load-to-truck ratios also improved, with the DAT ratio averaging 9.13 in February, up from 8.23 in January. This compares to 4.73 in February 2025 and 4.82 in March 2025.
National average spot rates increased to $2.41 per mile in February from $2.32 per mile in January, and averaged $2.43 per mile through March 15. These rates compare to $2.03 per mile in February 2025 and $1.99 per mile in March 2025.
Industry capacity contracted modestly, with total truck fleets down approximately 1.0% year-over-year in February. Fleets operating between one and six power units decreased 1.3% year-over-year. This segment represents more than 85% of total industry capacity.
Regulatory enforcement tightened during February, with more than 3,000 trucks taken out of service for failing to comply with English Language Proficiency requirements, representing a 41% increase compared to January.
Manufacturing activity remained in expansion territory during February. The ISM Manufacturing PMI registered 52.4% in February, compared to 52.6% in January, marking the second consecutive month of expansion. The New Orders index stood at 55.8%, compared to 57.1% in January.
Truist maintains buy ratings on Old Dominion Freight Line (NASDAQ:ODFL), XPO (NYSE:XPO) and ArcBest Corporation (NASDAQ:ARCB), viewing these carriers as positioned to benefit from improving industrial activity and rising shipment weights.
The firm also maintains buy ratings on freight brokers C.H. Robinson (NASDAQ:CHRW) and RXO (NYSE:RXO), and a hold rating on Landstar System (NASDAQ:LSTR).
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