Demand for both truckload and less-than-truckload shipping will remain weak heading into 2008 and pricing for both modes is expected to continue down. In a recent research note to clients, Bear Stearns analysts said "our sense is that truckload industry operating ratios are likely not to improve generally much before 2009 as demand remains weak through at least the first half of 2008 and over-capacity remains rampant a bit longer, with [increased] pricing lagging yet another four quarters."

On the LTL side, Bear Stearns points out that FedEx Freight's move earlier this year to reduce its fuel surcharge continues to put pressure on other LTL carriers. The analyst firm says LTL carriers remain concerned about weak tonnage and "deteriorating pricing" through early 2008. FedEx's CFO, Alan Graf, said recently "We expected the economy to improve in the late summer or early fall. We are holding or increasing our market share, but are nowhere near the volumes that we had planned for."

Graf also said FedEx is cutting capital spending on its trucking business until conditions improve.

In an October note on truckload carrier Knight Transportation, Morgan Keegan analyst Chaz Jones said, "We believe challenging truckload fundamentals that have persisted over the past 12 months will continue to remain lackluster through the first half of 2008."

Bob Costello, chief economist of the American Trucking Associations, is pessimistic about the near-term demand for trucking.

At a conference in October, Costello said the trucking outlook has been dimmed by the housing slump and slow manufacturing growth. Another factor in the near-term outlook is that the fall freight season no longer offers the huge spike in demand that it once did, Costello said.

Costello said within the truckload segment, the loads are up for large carriers but down significantly for small carriers due to a concerted effort by large truckload carriers to get out of very long-haul freight, leaving those loads to smaller carriers.

Bear Stearns said trucking firm bankruptcies were increasing, but remained "surprisingly benign" given the current market for trucking. The main differences between the current slump in trucking demand and past slumps? Increased use of fuel surcharges and freight brokers that help smaller carriers find loads.