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“We are at a tipping point, where we can’t sustain this rate environment anymore,” Leathers said. “The industry needs a significant rate increase.” (Wex OTR)

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Ongoing weakness in the North American freight market has led to such large production cuts by truck makers that sustained carrier capacity tightness is likely when the next up cycle begins, said Werner Enterprises CEO Derek Leathers, leading to a longer boom than usual.

Freight rates are currently stable but horrible, Leathers told the Wex OTR Summit in San Antonio on Oct. 2, as more carrier capacity remains in the freight market than anyone expected while demand is unlikely to see an uptick soon, particularly with so much GDP growth being driven by the services sector.

“There’s been very, very weak Class 8 truck orders now for pretty extended period of time,” Leathers said during his keynote “State of the Road: Navigating the Economy and Opportunities Ahead” presentation. “That period has been extended long enough now that you don’t fix it overnight.”

North American Class 8 truck orders fell year over year for an eighth consecutive month in August. Preliminary net orders totaled 13,000 units, up 4% month over month, but down 14% year over year, according to the latest FTR Transportation Intelligence data. FTR estimates the August 10-year average is 23,135 units.

Class 8 orders remain weak: 13,000 in August vs 10-yr avg of 23,135 🚛
Fleets extend lifespans, OEMs face pressure, uncertainty looms for 2026.

👉 Full blog: — FTR | Transportation Intelligence (@FTRintel)

Daimler Truck North America, Volvo Group and International Motors had publicly announced production plant job cuts in the thousands by August due to weak orders and sales because of the soft freight market.

The three companies own five of the largest seven Class 8 truck brands — Freightliner, Western Star, Volvo Trucks North America, Mack Trucks and International — and accounted for 71% of retail sales in August, according to Wards Intelligence data. Paccar, parent company of Kenworth and Peterbilt, has not publicly announced any job cuts.

Truck makers have blamed uncertainty due to the Trump administration’s introduction of import tariffs for particular commodities and goods as well as country-specific levels — plus the reciprocal levies — for extending the downturn as long as it has continued, especially when optimism about an upturn was growing as 2024 ended.

“You know, if you take COVID as an example, when those truck makers downsized their production capabilities during COVID out of health precautions and other reasons, it took them nearly two years to get back up to normalized production levels,” Leathers said.

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(Werner Enterprises)

“Well, right now, they’re downsized every bit as much, actually, more in most cases, than they were during COVID. So, it’s a couple of years to build back to even get back to sort of replacement level builds from OEMs,” he told attendees of the inaugural Wex OTR Summit.

So, when carriers start to seek new tractors to replace existing rolling stock — much of which is older than usually the case due to the rate weakness and poor business conditions — then build slots are not going to be available quickly come the first part of the up cycle, the executive said.

Leathers, who also is chairman of the , noted that trucks will be more expensive by then, partly because of tariffs.

“And when you’re refreshing your fleet, you kind of spend 1.5 times the money only to get the fleet back to the age you want, and without growth. If you want to grow and refresh, you’re going to spend about twice as much money as you would during a normal cycle,” he said.

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(Wex OTR)

“And there’s not that money there to be spent because they haven’t made it over the last several years,” Leathers added. “So, as we get to this turn or this turning point, whenever it may occur, it would be my view that you’re going to have a sustained, consistent, tight capacity market for a multiyear period.”

Freight cycles typically last 14 to 15 months, according to Leathers, but the current downswing has gone on for double that.

“It’s the worst one I’ve ever seen. I mean, I honestly, I think it’s the length, probably more than anything, is what’s made it so, so difficult,” he said. “When you’re doing it for three years, it’s hard. There’s only so many holes you can plug, and so I think it’s as bad as I’ve ever seen.”

There have been 17 notable bankruptcies of carriers with more than 250 tractors in the past quarter, he said, adding: “We are at a tipping point, where we can’t sustain this rate environment anymore. The industry needs a significant rate increase.”

Leathers noted that rate increases of 1% to 2% were below the level of inflation.

“So, all it’s doing is keeping them alive, but it’s not giving people the opportunity to expand margins back to a reinvestable level in an industry that is significantly burdened with capital expense,” he said. “We are getting back to where we need to be, but it’s just taken a lot longer than normal to get there.”

When the freight market arrives at that destination is unclear, with Matt Parry, Werner’s senior vice president of account management, warning recently of a bumpy ride over the next 12 to 18 months.

Werner, based in Omaha, Neb., ranks No. 18 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 8 among truckload carriers.