Our Take: ATA’s Bob Costello Says Supply, Not Demand, Is the Only Near-Term Fix

The American Trucking Associations’ (ATA) Chief Economist Bob Costello has long been the industry’s clearest voice on market conditions, and his address at the 2025 Management Conference & Exhibition (MCE) was a much-needed splash of cold water. While trucking companies have spent years hoping for a sudden surge in demand to end the "freight recession," Costello’s sobering takeaway is that the market won’t get better until the industry rightsizes itself through supply reduction.

The report from Trucking Dive highlighted five key points from Costello’s speech, but the central, unavoidable truth is this: We are in a sustained period where the supply of trucks and drivers drastically outweighs the available freight.

1. The Pain of a Three-Year Recession

It’s been three brutal years for many carriers. The "unprecedented times" Costello referenced are defined by a crushing economic mismatch:

• Costs are soaring: Trucking firms’ operating costs (excluding fuel) are reportedly a staggering 26% higher than their revenue per mile.
• Consumers are cautious: Inflation has made households more conservative, with the top 20% of earners driving two-thirds of the spending—a pattern that shows underlying economic fragility.
• Tariff Trouble: The looming specter of high tariffs, including those on heavy-duty truck imports that could add $10,000 to the cost of a new rig, threatens to escalate operating costs even further and disrupt global supply chains. Costello’s warning that we are only in the "bottom of the second or top of the third inning" of tariff impacts is chilling.

2. The Supply Paradox

The crucial insight from Costello is that the recovery will not be driven by demand, at least not "anytime soon." The industry has waited on the sidelines for the consumer to start spending freely again, but the economist argues that relief will only come when capacity finally leaves the system.

In 2020 and 2021, driven by pandemic-era freight rates, thousands of new authorities flooded the market. That supply has been "painfully slow" to exit, despite the collapse in rates.

The good news (if you can call it that) is that the market is finally seeing signs of correction:

• Fewer Drivers: Non-local trucking employment has declined nearly 7% since its 2022 peak.
• Fewer Authorities: Federal Motor Carrier Safety Administration (FMCSA) operating authority data suggests a contracting employment picture.
• Regulatory Pressure: Policy changes—like stricter English language proficiency and non-domicile CDL enforcement—will further tighten the operational landscape, leading to necessary capacity reduction.

3. Adapting to Survive: The Need for Efficiency

In an environment where operating costs are dramatically outpacing revenue, efficiency is no longer a goal—it’s a matter of survival. Every hour a truck spends waiting for a tow or sitting in a repair bay is an hour of lost revenue and increased stress on the thin margins.

This economic pressure is fueling the increased demand for services like mobile semi truck repair. Carriers are increasingly turning to a trusted mobile mechanic because they offer a faster, often cheaper, alternative to traditional shop visits. Cutting down on dead time and keeping trucks rolling efficiently is a core strategy for the fleets that will survive this painful rightsizing process. The ability to utilize a mobile mechanic for routine maintenance or emergency roadside service directly translates to lower operational drag, helping carriers endure the worst of the freight recession.

4. The Path Forward: Consolidation and Contraction

Costello’s message is clear: Stop looking for the silver bullet of increased consumer spending. The market must heal itself through consolidation and contraction. High operating costs will inevitably accelerate the failures of businesses that can no longer sustain negative margins.

While this means hardship for many, it is the only viable path to restoring the supply-demand balance necessary for sustained, profitable rates. The industry has been stuck in a holding pattern, hoping the good times would return without sacrificing capacity. Costello’s MCE address serves as the official confirmation that the painful process of rightsizing is not just underway—it is the prerequisite for the next upward cycle.

For the carriers that manage to survive this cycle, embracing efficiency with services like mobile semi truck repair will be their competitive edge. For the rest of the industry, the next few quarters will remain a tough economic test, proving that sometimes, the only way to move forward is to first get smaller.

Read the full article here.