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The freight market is tightening, but not evenly. March brings a mix of modest demand recovery, continued capacity contraction, and growing pressure on rates, with regional and modal shifts driving new pockets of volatility. From truckload to LTL, this month’s update breaks down where the market is moving, what’s driving change, and how to stay ahead as conditions continue to evolve.

Demand Level & Outlook

Where Demand Stands Today

According to trucking ton-mile data, freight demand reached a seasonally adjusted low point in Q2 2024 and has been slowly improving since.

That modest demand recovery, combined with significant carrier exits throughout 2024 and early 2025, helps explain why capacity has tightened even though freight volumes remain historically soft.

To put growth into perspective:

Q3 2025 demand was up just 0.8% year-over-year
Compare that to prior bull markets:
- Q3 2017: ↑ 2.4%
- Q4 2017: ↑ 3.7%

Those past cycles saw rapid demand expansion for 18 months or more. There is currently no evidence of that kind of acceleration heading into 2026.

Supply, Capacity, and Carrier Operating Costs

Capacity & Costs: Tight, But Under Strain

Transportation capacity tightened sharply at year-end. The Logistics Managers’ Index shows capacity fell to a four-year low in December:

Transportation Capacity Index: 36.9
Lowest since October 2021
First contraction since March 2022, when the freight recession began

At the same time:

Transportation utilization rose to 58.2
Transportation pricing increased to 66.7, the highest since January 2025
Pricing sat nearly 30 points above capacity, signaling a tight market on paper

Spot & Contract Market Trends

Contract Rates: Stable, For Now

Contract pricing has been far less reactive than spot markets. Retailers and shippers entered peak season with:

Inventory plans are set months in advance
Elevated inventory-to-sales ratios
A cautious approach to restocking

Post-holiday inventory drawdowns are normal seasonal behavior, not a signal of a Q1 demand surge. With sales largely flat on a price-adjusted basis, there is little incentive for shippers to lock in higher contract rates early in 2026.

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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. Market Update.

Demand Level & Outlook

Where Demand Stands Today

According to trucking ton-mile data, freight demand reached a seasonally adjusted low point in Q2 2024 and has been slowly improving since.

That modest demand recovery, combined with significant carrier exits throughout 2024 and early 2025, helps explain why capacity has tightened even though freight volumes remain historically soft.

To put growth into perspective:

Q3 2025 demand was up just 0.8% year-over-year
Compare that to prior bull markets:
- Q3 2017: ↑ 2.4%
- Q4 2017: ↑ 3.7%

Those past cycles saw rapid demand expansion for 18 months or more. There is currently no evidence of that kind of acceleration heading into 2026.

Supply, Capacity, and Carrier Operating Costs

Capacity & Costs: Tight, But Under Strain

Transportation capacity tightened sharply at year-end. The Logistics Managers’ Index shows capacity fell to a four-year low in December:

Transportation Capacity Index: 36.9
Lowest since October 2021
First contraction since March 2022, when the freight recession began

At the same time:

Transportation utilization rose to 58.2
Transportation pricing increased to 66.7, the highest since January 2025
Pricing sat nearly 30 points above capacity, signaling a tight market on paper

Spot & Contract Market Trends

Contract Rates: Stable, For Now

Contract pricing has been far less reactive than spot markets. Retailers and shippers entered peak season with:

Inventory plans are set months in advance
Elevated inventory-to-sales ratios
A cautious approach to restocking

Market Update.

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Demand Level & Outlook

Where Demand Stands Today

According to trucking ton-mile data, freight demand reached a seasonally adjusted low point in Q2 2024 and has been slowly improving since.

That modest demand recovery, combined with significant carrier exits throughout 2024 and early 2025, helps explain why capacity has tightened even though freight volumes remain historically soft.

To put growth into perspective:

Q3 2025 demand was up just 0.8% year-over-year
Compare that to prior bull markets:
- Q3 2017: ↑ 2.4%
- Q4 2017: ↑ 3.7%

Those past cycles saw rapid demand expansion for 18 months or more. There is currently no evidence of that kind of acceleration heading into 2026.

Supply, Capacity, and Carrier Operating Costs

Capacity & Costs: Tight, But Under Strain

Transportation capacity tightened sharply at year-end. The Logistics Managers’ Index shows capacity fell to a four-year low in December:

Transportation Capacity Index: 36.9
Lowest since October 2021
First contraction since March 2022, when the freight recession began

At the same time:

Transportation utilization rose to 58.2
Transportation pricing increased to 66.7, the highest since January 2025
Pricing sat nearly 30 points above capacity, signaling a tight market on paper

Spot & Contract Market Trends

Contract Rates: Stable, For Now

Contract pricing has been far less reactive than spot markets. Retailers and shippers entered peak season with:

Inventory plans are set months in advance
Elevated inventory-to-sales ratios
A cautious approach to restocking

Market Update.

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Red semi truck with a white trailer, alone on a road with green trees and a pink and purple sky in the background

Demand Level & Outlook

Freight Demand: Weak Overall, but Not Uniform

Broad truckload demand remains soft

The Outbound Tender Volume Index (OTVI) is ↓ 11% year over year
This index captures a wider mix of industrial and capital-goods freight

Consumer-oriented freight is far more resilient:

The Truckload Volume Index (STVI), which is more heavily weighted toward food, beverage, CPG, and shorter-haul freight, is ↓ only 3% year over year
This better reflects the freight mix experienced by large contract-focused carriers

Supply, Capacity, and Carrier Operating Costs

Regulatory Enforcement Emerges as a Meaningful Supply-Side Force

English-language proficiency enforcement and non-domiciled CDL scrutiny could remove up to 5% of industry capacity over time
Analysts agree these measures create a rising floor under rates, but are unlikely to trigger an immediate capacity shock on their own

FTR estimates English-language enforcement may remove roughly 25,000 drivers in the first year, which is notable but not enough to independently tighten the market.

Insurance and Financing: The Wild Cards

Insurance premiums are expected to rise meaningfully in 2026
Financing remains tight, limiting the ability of marginal carriers to refresh equipment
These pressures could trigger a delayed but sharper wave of capacity loss if rates do not improve

Spot & Contract Market Trends

Spot Rates Are Sending Clear Signals

Truckload spot rates excluding fuel increased 8% over a two-week period from November 19 to December 4, a sharper move than seen in the same seasonal window over the past two years. These sudden increases, rather than sustained climbs, have become a defining feature of this market cycle.

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Demand Level & Outlook

Industrial & Manufacturing Demand

What’s happening: Industrial production for equipment (like machinery and electrical tools) has fallen 2.2% since April. New manufacturing orders have moved into contraction.
Why it matters: Reduced production means fewer long-haul shipments of machinery and industrial freight.
Tariffs on imported goods and machinery from China are making production more expensive, discouraging new orders.
Impact: Lower freight volumes from manufacturing and industrial sectors, especially for high-value, long-distance loads.

Tariffs & Trade Disruption

What’s happening:
- Goods from China carry a 10% tariff, with an additional 34% delayed until November 10.
- Tariffs on lumber, furniture, and cabinetry are already active.
- Truck parts may face 25–100% tariffs.
- The overall U.S. tariff rate could reach 20% by the end of the year.
Why it matters: Importers front-loaded shipments earlier in the year to avoid tariffs, leaving later volumes lower.
Impact: Softer import-driven freight in the second half of the year, especially at ports and intermodal hubs. Higher costs ripple through domestic supply chains.

Supply, Capacity, and Carrier Operating Costs

Carrier Supply & Market Exits

What’s happening: More trucking companies exited than entered the market in Q3. Trucking employment is down 3.1% from last year.
Why it matters: Small carriers are struggling to absorb higher costs and are leaving the market, reducing total capacity.
Impact: Tightening capacity could stabilize or slightly increase rates even without stronger demand.

Regulations & Labor

What’s happening:
- A new FMCSA rule may remove up to 194,000 non-domiciled CDL drivers.
- Immigration enforcement is leading some drivers to exit the industry.
- Visa rule changes and the drug and alcohol clearinghouse continue to reduce the driver pool.
Why it matters: Fewer available drivers limit capacity, especially in southern and border regions.
- Impact: Tighter capacity raises spot rates in affected regions.

Spot & Contract Market Trends

Overall: The market remains supply-driven, not demand-driven. Freight volumes are flat, but rates are rising slightly due to tightening capacity.
Dry Van: $1.70 per mile nationally, steady but firming in the Midwest and southern border regions.
Reefer: $2.07 per mile, up sharply in Texas border markets due to immigration enforcement.
Flatbed: $2.07 per mile, stable but stronger in the Southeast.
Contract Rates: Mostly flat, with shippers still holding leverage in negotiations.
Impact: Spot rates are rising in certain lanes because of capacity constraints rather than increased demand.

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Labor Market

BLS will revise March 2025 employment down by 911k jobs (manufacturing ↓95k, wholesale trade ↓110k, professional/business services ↓158k).
Jobless claims are higher than 2023–2024 but still better than 2014–2016.

Tariff Pressures by Country

India: 25% emergency tariff on top of 25% existing , 87% of India’s exports to the U.S. are impacted tariffs.
Brazil: 40% emergency tariff on top of 10% base.
South Africa: Reciprocal tariffs 31%, metals/steel already facing 50%.
Canada: 35% reciprocal tariffs, especially autos, steel, and inputs.

Tariff-Driven Cost Pressures

Steel & aluminum tariffs increase van trailer prices ↑ 16–28%.
Other heavy-duty trailers (flatbeds, dumps) ↑ 17–30%.
Class 8 trucks & tractors ↑ 15–24%.
Raw material costs overall ↑ 9–12%.
Additional non-USMCA and reciprocal tariffs add 1–6% across segments.
Rising material costs from tariffs are pushing up the price of both trucks and trailers. Fleets are cautious, waiting for clarity before committing to new purchases.

Current Market Signals

Regionally, produce and holiday shipping are creating localized tightness, but it isn’t enough to offset the broader softening.

Seasonal forces are visible. Reefer load-to-truck ratios are elevated (9.26 loads per truck) and flatbed volumes spiked (22.02 loads per truck) with construction, yet both sectors still saw rates fall by $0.03/mile. This shows how trend pressure is overpowering seasonal lifts.

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Demand Weakness Extends

Freight demand remains under pressure, with July marking the 30th consecutive month of shipment declines per Cass Information Systems. Shipments fell 1.8% month-over-month (↓1.7% seasonally adjusted) and 6.9% year-over-year, the steepest annual decline since January. Volumes have now contracted for three straight months, reflecting persistent weakness across freight markets.

Outlook

Tariff impacts: Ongoing steel/aluminum tariffs now cover $320B in imports, including truck trailers and industrial equipment. These are likely to create cost-push inflation and dampen demand in key freight-heavy industries.
Economic drag: Trade uncertainty and weak housing construction continue to weigh on freight activity.
Capacity shift ahead: Cass notes that lower commercial vehicle production and manufacturing job losses

Capacity is Tightening Modestly

Driver employment remains unstable.

Bureau of Labor Statistics: trucking employment ↑ 4,000 jobs in July after losses in May/June. Swings are driven by tariff timing; import frontloading creates short bursts of hiring, then pullbacks. With front-loading largely done and tariffs raising consumer prices, more driver job losses are likely.

Carrier Operating Costs

Equipment prices climbing with tariffs.

Tariffs have already added 2–4% to new tractor prices, with further increases likely. That makes fleet renewal/expansion harder to justify.

Fuel squeeze.

U.S. diesel averaging $3.81/gal (↑ slightly). Higher prices cut into margins, especially for small carriers lacking strong fuel surcharge recovery.

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A Front-Loaded Year with Fading Momentum

Q1 2025 truckload volumes were buoyed by a 19% quarter-over-quarter spike in freight-moving imports, as shippers rushed to bring in goods ahead of anticipated tariffs.
That activity has since cooled: dry van volumes are forecast to fall 0.9% YoY in 2025, and total truckload volume is expected to remain flat for the year.
While manufacturing activity was strong early in the year, it is now slowing, reducing its contribution to freight demand. The goods transport sector, excluding services, is expected to grow by only 2.5% in 2025, and most of that growth is already behind us.

Tariffs Are the Central Disruptor

U.S. effective average tariff rate has risen to 20.6% pre-substitution, the highest level since 1910. After substitutions in sourcing/import behavior, the effective rate remains 19.7%, still the highest since 1933.
Tariffs implemented so far in 2025 are forecast to reduce U.S. real GDP growth by -0.9 percentage points this year and shrink the long-run size of the U.S. economy by 0.5%, or $135 billion annually.
The average U.S. household will lose $2,800 in purchasing power in 2025 due to higher consumer prices stemming from tariffs.

Shrinking Labor Pool and Excess Equipment

The market continues to struggle with a capacity overhang, despite signs of structural tightening:

Truck capacity declined by 2.2%
Carrier attrition is trending at a 1.7% annual rate
Class 8 truck orders dropped 45% year-over-year, suggesting fewer equipment investments ahead
Drivers per truck fell to 0.93, and non-driver staff levels declined 6.8%

Cost Shocks Around the Corner

Although not an immediate operational cost, looming tariff changes threaten to further disrupt carrier economics:

A 25% tariff on Canadian and Mexican imports could suppress new truck sales by 17% in 2025.
Steel tariffs have pushed cold-rolled steel prices up 9.4%, increasing the cost of truck manufacturing and repairs.

These upstream effects will likely be passed downstream, contributing to long-term operating cost inflation.

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Canadian Tariffs Surge: A Hidden Shock

While China has dominated the headlines, Canadian imports are bearing the brunt of new tariffs under the current administration:

•Average monthly tariffs in 2024: $34M
•March & April 2025 tariffs: $660M and $675M, a 19.5x increase
•June is expected to surge again due to 50% tariffs on steel/metal

Top affected categories

•Unwrought aluminum: $123.7M
•Auto parts: $67.5M
•Finished vehicles: $52.2M

Operating Costs: Inflation Without Pricing Power

Stagflation Strains Margins: Carriers face the worst of both worlds, flat volumes and rates paired with rising costs. This stagflationary environment has forced many into cost-deferral decisions that may backfire long term (e.g., delayed maintenance, equipment replacement).

Insurance a Top Pressure Point: Premiums are skyrocketing due to increased litigation and nuclear verdicts (claims >$10M). Carriers are also contending with cargo theft risks, including sophisticated scams like identity manipulation and double brokering.

Supply & Capacity: A Market in Contraction

Carrier Exits Hit New High: In April 2025, 7,474 trucking companies exited the market, a 12-month peak and a 26% increase from March. Weekly revocation rates remain elevated, with more than 1,500 carriers losing authority each week.
New Entrants Defy the Trend: Despite exits, new carrier authorities rose 48% month over month in April. Seasonal optimism and the lure of an eventual rate rebound keep new players entering the market, though many may be underestimating the financial headwinds.

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Back-to-School Shipping May Provide Demand Boost

The market could see a short-term lift as retailers ramp up orders ahead of the back-to-school season. The 90-day pause in tariffs between the U.S. and China is encouraging importers, especially small to mid-sized retailers, to move quickly while trade conditions are favorable.

Bookings for U.S.-China freight are already up 50% week-over-week. Experts expect higher volumes to hit West Coast ports by late June, just as the produce season peaks. This will likely increase demand for trucks and trains to move goods inland, putting upward pressure on spot rates. While many carriers have lowered Q2 expectations, this import surge could lead to stronger-than-expected results.

Policy Wildcards

The English Language Proficiency (ELP) mandate could sideline thousands of drivers if strictly enforced, potentially cutting capacity and pushing rates up by 15%, per analysts.

Tariffs Amplify Equipment and Parts Inflation

•Equipment costs are expected to rise by low single-digit percentages, according to Werner, particularly if the 30% U.S. tariff on Chinese imports persists beyond the temporary rollback.

•OEM pricing is fluid, but used truck values remain strong, providing a partial hedge.

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