Soft US Freight Demand and Economic Uncertainty Restrain Truckload Pricing

A Slow Start to 2025 for Freight Demand

Hopes for a resurgence in US freight demand in 2025 are dimming as economic uncertainty and potential trade disruptions weigh heavily on the market. Just two months into the year, factors such as inflation, sluggish consumer confidence, and new tariffs on Canadian and Mexican imports are tempering expectations for a significant rebound.

Truckload Pricing Faces Headwinds

US truckload rates—both spot and contract—are rising but at a slower-than-expected pace. Without a major boost in demand, the trajectory of these increases is likely to remain gradual. Market analysts suggest that absent a sudden economic shift, rate growth will continue to lag behind previous cycles.

Tariffs expected to take effect in March are exacerbating existing economic pressures, adding to inflation concerns, and cooling sectors that typically drive freight volumes. While US manufacturing has shown some resilience, the overall industrial landscape remains subdued, indicating that any freight recovery could be prolonged and uneven.

Consumer Sentiment and Economic Pressures

One of the biggest uncertainties in the freight market is consumer behavior. Recent reports show declining consumer confidence, with the Conference Board recording its largest monthly drop in sentiment since 2021. Similarly, the University of Michigan’s Consumer Sentiment Index fell 10% in February, signaling cautious spending habits.

Third-party logistics provider RXO has observed a trend of consumers deferring big-ticket purchases while prioritizing spending on services. This shift has softened demand for goods transportation, further slowing freight activity. Meanwhile, home mortgage rates remain above 6%, discouraging home buying and related freight movement in the construction sector.

US Economic Growth Slows

A deceleration in US economic growth is evident in recent data. The S&P Global US Composite Flash Purchasing Managers’ Index (PMI) fell from 52.7 in January to 50.4 in February, reflecting sluggish expansion. While manufacturing output increased for the second consecutive month, much of this activity is attributed to companies trying to get ahead of potential tariffs rather than sustained demand growth.

Shippers Retain Pricing Power

With freight volumes still underwhelming, shippers continue to hold the upper hand in pricing negotiations. Inventory levels remain high, reducing the urgency for new orders. The so-called “pandemic trucking cycle” has ended, but the transition to a more balanced rate environment is proving slow.

“The trucking market is in a slow, gradual grind toward equilibrium,” said Chris Caplice, chief scientist at DAT Freight & Analytics. “Unless there is a significant shift in freight demand, we are not going to see rapid changes.”

Tariff Uncertainty Adds to Market Volatility

A major unknown for the freight industry is the impact of new tariffs. Set to take effect in March, 25% tariffs on imports from Mexico and Canada, along with a separate tariff on aluminum and steel, could disrupt supply chains and alter trade patterns. Some manufacturers have ramped up production ahead of these tariffs, temporarily boosting freight demand, but whether this will translate into long-term volume increases remains to be seen.

Market Recovery May Take Longer

Despite expectations of a stronger freight market by mid-year, some executives now believe meaningful improvements may not materialize until late 2025. TFI International CEO Alain Bédard noted that many customers see a pickup in demand only towards the end of the year, leaving current volumes at recessionary levels.

“We’re still in a very deep freight recession,” Bédard said. “The volumes are not there.”

Other industry leaders, including J.B. Hunt Transport Services, remain cautiously optimistic. While they expect truckload rates to rise, they acknowledge that pricing improvements may unfold gradually over multiple bid cycles rather than in a single season.

Outlook for 2025

The freight industry remains in a holding pattern, waiting for economic indicators to turn more favorable. While some positive signs exist—such as incremental gains in manufacturing and expectations of higher truckload rates—many challenges persist. Rising costs, shifting trade policies, and cautious consumer spending will continue to shape the trucking landscape in the months ahead.

For now, shippers remain in control, and trucking companies must navigate a complex, uncertain environment as they look toward the future.