Industry Expertise

Rising demand is behind the continued growth of warehousing and distribution services, spurred in large part by e-commerce and the pursuit of “last mile” strategies as companies continue efforts to bring their inventories closer to consumers.

Among freight forwarders, a more defensive strategy dominates current industry thinking. This segment is under pressure, particularly in global air and ocean freight, as trade volumes soften and tariff-driven disruptions along with geopolitical tensions threaten stability. Forwarders are prioritizing risk mitigation over aggressive expansion, consolidating networks, renegotiating carrier contracts, and investing in digital visibility tools to maintain reliability.

In the domestic market, truckload spot rates have risen only modestly, and contract rates remain volatile.^{Disclosure 2} To offset margin pressure, industry players are diversifying into higher-value services such as warehousing, regional distribution, intermodal transport, integrated supply chain solutions, and other offerings that provide greater resilience and customer value.

Chasing services and markets that are expected to grow is one strategy, but risk management should also factor in growth planning at this stage. Today there are several important risk factors shaping leaders’ strategic thinking:

Demand variability and trade volatility reduce visibility into long-term trends. Global economic instability, shifting trade and tariff policies, and ongoing geopolitical conflicts all contribute to difficult-to-predict freight demand.

Overcapacity is applying downward pressure on rates and margins. Capacity exceeds demand in many industry sectors, especially in freight forwarding and global shipping.

Regulatory and compliance pressures will raise costs and require capital investment.

Trucking firms face growing scrutiny around emissions, safety metrics, and advanced systems like speed monitoring and braking technology. At the same time, enforcement is tightening on driver qualifications.

The current softness in demand favors making selective, strategic capital investments that value future flexibility. Modular investments like scalable warehousing, incremental capacity increases, and technological upgrades prevail over aggressive fleet expansion.

Guided by conservative expectations around volume growth, T&L firms are considering appropriate strategies that value flexibility. To help them prepare for future opportunities, leaders are focusing on:

• Investing in advanced logistics technology and AI. Tools and skills that support digitization, automation, and AI will help T&L companies capture the efficiencies needed to compete in most future scenarios. In the spotlight are supply chain visibility, demand forecasting, dynamic routing, and warehouse automation. Investing in systems that allow real-time visibility adds flexibility to shift between air, rail, and road as needed and provide better outcomes for customers.
• Expanding warehousing, distribution, and fulfillment services. Ramping up these capabilities—especially near high-demand population centers—helps support e-commerce, allows reverse logistics, and allows companies to meet faster delivery expectations. Truist can help with the capital needs to finance expansion, including equipment finance, real estate, organic growth, and M&A.
• Diversifying the modal mix. Incorporating rail, barge, and intermodal solutions reduces dependence on truck-only freight. T&L companies will then have more flexibility to respond to cost fluctuations and outperform customer expectations.
• Developing specialty solutions like cold chain. Meeting increased needs for refrigerated and other temperature-controlled logistics over the next decade requires careful planning and investment to build modern infrastructure, pharma-grade capabilities, and data-tracking and monitoring functionality along with improved energy efficiency.
• Pursuing operational efficiency and cost control. Soft freight volumes and pressure on margins persist for T&L firms. In this environment, it’s essential to reduce empty miles for better utilization, optimize your network footprints with strategic warehouse and hub designs, improve load consolidation and asset deployment, and focus on flexible capacity planning.
• Maintaining strategic flexibility. In the past, growth planning for T&L firms typically revolved around fixed, long-term capacity commitments. A more fluid stance better suits current conditions, enabling quick response to changes in regulatory frameworks, trade policies, or demand.

Undoubtedly, the continued T&L recovery and reset that we anticipate over the next several years will not be an easy one. Look for more business transitions as leaders assess whether there’re ready for the upcoming, challenging phase of the industry cycle. Some will decide they’d rather pass the business on to their successors or combine with an acquiring player in the industry. For those who choose to remain, the future holds opportunities—but identifying them quickly and capturing the benefits without excessive risk exposure is imperative.

Also, expect to see more private equity funds flowing into the industry. The slower-than-expected return to “normal” along with uncertainty and the disruption it brings will attract private capital willing to shoulder higher risks and longer investments timeframes for higher returns. As you consider how private equity could fit with your plans, talk to your Truist relationship manager, our T&L Industry Specialists, and our Institutional Capital Group to see how we can help.