Truck Leasing Task Force blasts lease-purchase programs

(Source: The Federal Motor Carrier Safety Administration’s Truck Leasing Task Force)

The Federal Motor Carrier Safety Administration’s Truck Leasing Task Force (TLTF) delivered a scathing report on lease-purchase (LP) programs managed by motor carriers in the trucking industry. The TLTF’s findings described the programs as tools of “fraud and driver oppression,” arguing that LP programs have a detrimental impact on individual drivers, the trucking workforce, and national transportation safety.

The report highlighted that approximately 5.7% of the 3.5 million interstate CDL drivers are affected by predatory lease-purchase programs, with over 200,000 drivers experiencing significant financial and professional harm. The TLTF found no substantial evidence supporting the claim that lease-purchase programs are a viable pathway to truck ownership, noting that “driver success is rare enough that programs seem designed to ensure failure for the overwhelming majority of drivers.”

One challenge according to the report is that lease purchase drivers take home less pay than company drivers. When looking at labor cost comparison and driver compensation as a percentage of total revenue the report notes, “Lease-purchase drivers in this case earned less than 1/3 of the average per mile compensation in the industry. To be clear, that is not less than 1/3 of the compensation of the best-paid employees, that is 1/3 of the average.”

Another issue is that LP programs rarely end up with the driver owning the truck. According to the TLTF, “less than 1 in 100 drivers who participate in a lease-purchase end up owning the truck.” In another instance, in litigation cases reviewed by the TLTF, lease-purchase drivers were found to earn as little as 11.3% of their generated revenues. The report added, “lease-purchase contracts appear to be drafted with only the motor carrier’s profitability and mitigation-of-risk in mind,” the report states, highlighting the exploitative nature of these agreements.

Key recommendations from the task force include an outright ban on lease-purchase agreements. Recognizing the challenges of such a ban, TLTF also proposes enhanced congressional oversight, stringent record-keeping mandates by the FMCSA, and targeted audits by the Department of Labor to ensure compliance with labor regulations. Additionally, the report advocates for greater transparency in contract terms and the development of educational materials to inform drivers about the pitfalls of these programs.

Knight-Swift reports Q4 growth but costs from acquisitions and rapid growth prove a drag

Knight-Swift Transportation reported its fourth-quarter performance with operating income reaching approximately $78 million, a 326.4% increase year-over-year improvement. Total revenue for Q4 was $1.9 billion, reflecting a 3.5% decrease compared to the same quarter in 2023. This growth was primarily driven by a 16% improvement in the truckload segment which recorded a 92.2% adjusted operating ratio, a 170 basis point improvement y/y, and 340 bps higher than Q3.

The improvement in the truckload segment operating ratio came despite lower revenue. FreightWaves’ Todd Maiden wrote, “truckload revenue fell 4.4% year over year to $1.1 billion as average tractors in service declined 6% to 22,208 units, which was partially offset by a 1.7% increase in revenue per tractor (excluding fuel surcharges).”

Knight-Swift continues to overhaul its U.S. Xpress fleet which it acquired in July 2023. Maiden adds, “that operation has shifted to a terminal network approach with shorter lengths of haul but higher revenue per mile. An annual run rate of $180 million in cost synergies has been achieved, but there are more opportunities available as it continues to swap out leased equipment for owned assets. Miller also said the unit has a sizable rate opportunity given the recent changes.”

CEO Adam Miller commented, “while current freight market conditions have been choppy, we are encouraged by customer sentiment, seasonal spot rate progression, the continued erosion of capacity, and early bid season activity — all of which point to a more balanced market than we have seen in roughly three years.” Miller added that so far in bid season, the company is asking for mid-single-digit rate increases, which is an improvement from the low to mid-single-digit range it was asking for in Q3.

The company also significantly expanded its LTL network despite challenges in the LTL segment due to integration costs from the acquisition of Dependable Highway Express, which provided 14 terminals. 37 terminals were added organically, totaling a combined 1,430 doors, representing over 30% growth.

Market update: Trailer orders up in December but underwhelming orders season

December saw a notable increase in U.S. trailer net orders according to data from FTR Transportation Intelligence and ACT Research. FTR reported net trailer orders rose 11% month-over-month to reach 25,334 units—the highest monthly total since October 2023. Year-over-year, orders grew by 7%. Despite this uptick, the overall 2025 order season remains underwhelming, with total trailer net orders for September to December 2024 decreasing by 32% compared to the previous year, averaging just 18,994 units per month.

Dan Moyer, senior analyst of commercial vehicles at FTR, noted that one reason for lower trailer orders came from fleets focusing on buying tractors instead. Moyer said, “in 2024, North American Class 8 net orders rose 11% y/y while U.S. trailer net orders declined by 27% y/y. For-hire fleets (and, probably, private fleets, too) have prioritized investments in new power units over trailers, likely driven by reduced profitability or shifts in trade cycles. This trend looks like it is continuing as North American Class 8 net orders are up 8% y/y during the 2025 order season so far while U.S. trailer net orders for the same period fell 32% y/y.”

ACT Research’s preliminary data showed an increase in net trailer orders by approximately 3,500 units from November to December 2024, totaling 24,300 units, though this figure remains 3% lower than December 2023. Jennifer McNealy, director of CV market research and publications at ACT Research, added in the report, “this brings full-year 2024 activity to 163.5k units, competing against a better 2023 order environment (236k) and fuller backlogs. That said, December’s net orders of -3% are an improvement when compared to Q4’s -24% or the full-year drop of 31%, meaning the worst of the downturn is clearly in the rearview mirror, and while not ‘good,’ indicated movement toward ‘better.’”

SONAR spotlight: Rare winter storms bring potential for atypical seasonal spot rate gains

Summary: The first weeks of the year historically bring declines in dry van spot market rates, but a rare severe winter storm impacting parts of South Texas and the Gulf Coast, and extending through the Florida Panhandle brings the potential for higher rates. As it stands, the current trend for daily and weekly spot rates is downward movement. The SONAR National Truckload Index 7 Day Average fell 6 cents per mile all in w/w from $2.52 on Jan. 13 to $2.46. The NTID, which is the daily movement in spot rates that feeds the NTI 7-Day Average, trended down six of the past seven days, suggesting further spot rate declines in the short term. The development to watch will be if heavy snowfall, a blizzard in the Gulf Coast and icy roads are enough volatility to raise rates, or if capacity shifting to avoid the brunt of the severe weather depresses rates in larger markets.

For carriers and their drivers, the challenge is that winter storm warnings are in areas that are less prone to snowfall, with many drivers preferring to operate below I-40 to avoid the cold and winter weather. Based on week-over-week changes, it appears outbound tender rates are falling to a greater extent in markets directly affected by or adjacent to the winter storms, as carriers accept more tenders to cover the cost of repositioning assets out of affected markets. The Dallas and Fort Worth markets are a good example, with Houston and Austin, Texas, posting tender rejection rate increases while Dallas and Fort Worth see rapid declines relative to the size of their markets.