Logistics Market Update: January 2025

January 15, 2025

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.

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Overcoming Labor Hurdles with E-Commerce & Automation

Labor shortages continue to constrain U.S. manufacturing, impacting freight demand across critical sectors such as food production, chemicals, and petroleum. In Q3 2024, 20.6% of manufacturing plants reported labor shortages—an improvement from 46.3% in 2021 but double the pre-2014–2016 average.

    • Food Manufacturing: Accounts for 14.5% of freight ton-miles, with labor gaps risking raw material disruptions.

    • Chemicals and Petroleum: Despite high-capacity utilization, labor constraints persist.

E-Commerce Fuels Short-Haul Boom, Long-Haul Declines

The rise in data center and warehousing projects, paired with the explosive growth of e-commerce, is reshaping freight patterns:

    • Short-Haul Freight (<100 miles): Demand rose 13% year-over-year, driven by e-commerce.

    • Long-Haul Freight (>450 miles): Volumes declined 13% as intermodal rail gained 6% year-over-year.

These shifts reflect how consumer expectations for faster deliveries are influencing supply chain strategies.

Progress Anchors Stability as Ports Embrace New Agreements

Developments like the tentative ILA-USMX agreement and advancements in port automation are stabilizing key ports, ensuring smoother supply chain operations, and reducing disruptions.

Strategic Supply, Capacity, and Cost Considerations

Bridging Gaps as Infrastructure and Fuel Costs Rise

Events like the Baltimore Bridge collapse highlight vulnerabilities in transportation networks. Delays and added costs—projected to reach $92.8 million annually—emphasize the need for infrastructure investments.

Meanwhile, diesel prices remain volatile, with the current national average at $3.503 per gallon. Over seven weeks, fluctuations have resulted in a net increase of $0.012, adding to operational pressures.

Tightening Freight, Rising Rates, Smarter Fleets

Market trends show a tightening freight market with rising contract rates. Fleets are adopting cost-saving measures like remanufactured parts, balancing efficiency with sustainability.

    • New Rate Differential: Positive since August 2024, signaling higher operating costs for shippers.

    • Adaptive Solutions: Reduced lead times and costs through remanufactured parts.

Steady Amid the Storm

Steady Contracts Amid Shifting Rates

While spot rates fluctuate with short-term disruptions, contract rates maintain steady growth:

    • Dry Van Contract Rates: $1.80/mile, up 2% year-over-year.

    • Reefer Spot Rates: Increased to $2.22/mile amid tight capacity.

Strategic Capacity Management

Securing long-term contracts remains vital, particularly in critical lanes prone to seasonal disruptions. Metrics like the reefer Load-to-Truck Ratio (16.58) underline the importance of proactive