At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry.
Demand Levels & Outlook
Freight Gears Up for a 2025 Comeback
The Federal Open Market Committee initiated interest rate cuts in late 2024, creating conditions for a potential freight market recovery in 2025. These rate reductions aim to lower financing costs, fostering growth in freight-generating sectors such as residential construction, machinery manufacturing, and motor vehicles.
What’s Putting Freight Back in the Fast Lane
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- Interest Rate Cuts:
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- 50 basis points in September 2024.
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- 25 basis points in November 2024.
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- Interest Rate Cuts:
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- Residential Construction:
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- Expected boosts in housing starts and renovations lead to higher flatbed freight demand for materials like cement, lumber, and millwork.
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- Residential Construction:
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- Machinery Manufacturing:
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- Rate cuts to enable equipment financing, spurring production of components like screws, nuts, and bolts.
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- Machinery Manufacturing:
Supply, Capacity & Carrier Costs
Capacity Erosion Amid Stable Volumes
Tender rejection rates rose to 6% from 4.5% in September, reflecting capacity erosion despite stable load volumes.
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- Capacity Decline:
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- Dry Van Load-to-Truck Ratio: ↑ 16% YoY to 6.50.
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- Reefer Ratio: ↑ 8.67; Flatbed Capacity: ↓ 3% YoY.
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- 350 carrier exits per week over two years reduced active capacity.
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- Capacity Decline:
Post-Labor Day rejection rates climbed unexpectedly, with a looming ILA-USMX dispute threatening major port disruptions in 2025.
Contract & Spot Market Rate Trends
Contract Rates Stable—for Now
The freight market is gradually recovering, with spot rates across Dry Van, Reefer, and Flatbed modes showing modest YoY increases and further gains expected by early 2025. Spot rates remain discounted compared to contract rates but are narrowing the gap. Spot freight accounts for 15% of total freight volume, with shippers leveraging cost advantages, especially in the Reefer segment. Contract rates are stable but projected to rise 4–6% in H2 2025 as demand grows and capacity tightens.
Rates by the Number
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- Spot Rates (Current and Forecasted):
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- Dry Van: $1.72/mile (+$0.07 YoY); forecast: $1.86/mile.
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- Reefer: $2.05/mile (+$0.10 YoY); seasonal rebound expected.
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- Flatbed: $1.97/mile (+$0.07 YoY); forecast: $2.07/mile.
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- Spot Rates (Current and Forecasted):
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- Spot Market Share: 15% of total freight volume.
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- Contract Rate Outlook: Stable now; projected increase of 4–6% in H2 2025.