Spot Freight Archives

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.

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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Tariff Timeline Driving Demand Disruption

• April 2 – “Liberation Day”:
• 10% universal tariff on all imports (excl. Canada/Mexico), effective April 5
• “Reciprocal” tariffs on 60+ countries (China: 54%, Vietnam: 46%, EU: 20%)
• Announcement of De Minimis elimination for Chinese imports, effective May 2

• April 5 – Import volumes momentarily surge as tariffs take effect

• April 8 – U.S. raises China tariffs to 120%; Chinese-made electronics no longer exempt

• April 9–11 – China retaliates with 125% tariffs, rare earth export bans, and blacklisting U.S. firms

• April 10 – U.S. imposes a 90-day global tariff suspension, but raises China’s rate to 125%

• April 15 (projected) – EU rolls out $23B in retaliatory tariffs

LTL and Parcel Holding Steady as Warning Signs Emerge

LTL cost per shipment rose 1.5% quarter over quarter in Q1 2025, supported by fuel surcharges and GRIs, but faces looming softness tied to industrial slowdown and tariff impact on manufacturing inputs. The PMI returned to contraction in March, signaling a risk of near-term volume erosion.

Carrier Operating Costs Rise Under New Tariff Burden

Parts and Maintenance Costs Climbing: “Bolts, bars, anything with steel” is now significantly more expensive. Even with heavy-duty trucks exempt from direct tariffs, indirect exposure is high. Preventive maintenance is being delayed, potentially leading to increased breakdowns and rental costs.

Tariff-Induced Uncertainty: Companies are stalling investments due to policy whiplash. The White House’s 90-day “pause” came days after declaring tariffs permanent, freezing expansion plans, and curbing capital deployment.

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The State of Tariffs and Their Impact on Supply Chains

U.S. Tariff on Canadian Aluminum (50%)

The U.S. has imposed a 50% tariff on aluminum imports from Canada and a 25% tariff on steel and aluminum imports from most countries. The U.S. produces only 670,000 tons of primary aluminum annually, while it imports over 2 million tons from Canada.

Industries Affected:

Automotive: Higher material costs for vehicle production.
Packaging: Increased costs for aluminum cans and food containers.
Manufacturing: Rising expenses for aluminum-based products.

U.S.-China Trade War Intensifies

The U.S. has added a 20% blanket tariff on top of existing 10% duties on Chinese imports. China has responded with up to 15% tariffs on U.S. farm goods like chicken and pork. The U.S. has also signed a measure allowing for reciprocal tariffs by April 2.

Industries Affected:

Agriculture: Farmers face declining exports and higher storage costs for unsold goods.
Retail & Consumer Goods: Increased costs for Chinese-manufactured goods, affecting pricing and inventory planning.

Carrier Operating Costs and Freight Rates

Despite falling fuel prices, carrier operating costs remain elevated. Long-haul spot market operating costs averaged $1.80 per mile in February 2025, consistent with 2024 levels but still $0.18 per mile higher than pre-pandemic rates in 2019.

Meanwhile, dry van linehaul rates have struggled to keep pace with rising expenses. February spot rates averaged $1.66 per mile nationally, only $0.04 above 2019 levels, reinforcing concerns about profitability for smaller carriers.

Tariff Impact on Carrier Costs

Potential job losses: Rising costs may force businesses to cut logistics

Higher fuel costs: If tariffs disrupt global oil imports, diesel prices may rise despite recent declines.

Increased compliance costs: Carriers will need to invest in updated documentation, customs declarations, and compliance checks.

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Inflationary Pressures from Tariffs

The economic dynamics of tariffs indicate a direct inflationary impact on manufacturers and, consequently, on the freight sector.

•Aluminum: The U.S. imports ~47% of its aluminum, mostly from Canada. Tariffs will increase costs, prompting both importers and domestic producers to raise prices.

•Steel: Only ~13% of U.S. steel is imported, yet past behavior (e.g., 2018 tariffs) suggests that domestic mills will follow suit by raising prices.

Cross-Border Freight: Laredo Sees Capacity Constraints

Rejection Rates & Trade Uncertainty

Laredo, Texas, the largest U.S.-Mexico freight crossing, has seen rejection rates climb to their highest levels since the pandemic era. The Outbound Tender Reject Index rose from a 3.8% average (October–mid-December) to over 6% in late December and remains elevated.

This increase suggests that market tightening is influenced by more than demand, which has been running 10% higher year-over-year. One potential factor is trade uncertainty, as fluctuating U.S. tariff policies on Mexico drive shippers to accelerate cross-border shipments before potential cost increases.

The Closing Gap: Spot vs. Contract Rates

The gap between dry van truckload contract and spot rates (excluding estimated fuel costs) has narrowed steadily over the past 2.5 years. This trend is driven by gradual capacity reduction and slow yet consistent demand growth, reshaping freight dynamics despite going largely unnoticed by market participants.

Contract Rates Begin to Rebound

Most contract rate declines happened in 2023, continuing into late 2024 before rebounding slightly. Leading into peak season (Nov-Dec 2024), the spot-contract spread hovered at 16%, compared to 10-15% in 2029. A key shift in market expectation may be influencing pricing decisions, as stakeholders anticipate tightening capacity.

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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 capacity planning.

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The market is showing early signs of recovery after a prolonged downturn. While manufacturing growth remains sluggish, rising tender rejections and tighter capacity hint at a more balanced, carrier-favorable market on the horizon.

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

Interest Rate Cuts:
- 50 basis points in September 2024.
- 25 basis points in November 2024.
Residential Construction:
- Expected boosts in housing starts and renovations lead to higher flatbed freight demand for materials like cement, lumber, and millwork.
Machinery Manufacturing:
- Rate cuts to enable equipment financing, spurring production of components like screws, nuts, and bolts.

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.

Capacity Decline:
- Dry Van Load-to-Truck Ratio: ↑ 16% YoY to 6.50.
- Reefer Ratio: ↑ 8.67; Flatbed Capacity: ↓ 3% YoY.
- 350 carrier exits per week over two years reduced active capacity.

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

Spot Rates (Current and Forecasted):
- Dry Van: $1.72/mile (+$0.07 YoY); forecast: $1.86/mile.
- Reefer: $2.05/mile (+$0.10 YoY); seasonal rebound expected.
- Flatbed: $1.97/mile (+$0.07 YoY); forecast: $2.07/mile.
Spot Market Share: 15% of total freight volume.
Contract Rate Outlook: Stable now; projected increase of 4–6% in H2 2025.

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