2025 Trucking Outlook
Special Report
“ A change in a freight recession is not a flat line ,” Hammett said .
Hammett also noted that US manufacturing capacity utilization has dropped from its most recent peak in May 2022 , the start of the freight recession .
The seasonally adjusted S & P Global US Manufacturing Purchasing Managers ’ Index ( PMI ) was 48.5 in October , up from 47.3 in September but below the 50 “ no-change ” mark for a fourth consecutive month . The Institute for Supply Management ( ISM ) PMI also remained in contraction , at 46.5 in October .
“ Industrial production is not doing well ,” Hammett said . “[ But ] an upside is the consumer is still healthy .” Hammett sees consumer spending on goods and services becoming more balanced .
“ To really say that the market is turned we ’ re going to have to see manufacturing come back , we have to see housing starts coming back ,” said Vince Paperiello , senior vice president of intermodal at STG Logistics .
For Paperiello , a key indicator that the freight recession is ending will be seeing intermodal containers “ come down off the stacks ” where they ’ ve piled up around the US over the past two years . “ When you see that , we ’ ll be out of the freight recession ,” he said .
‘ Tailwinds for pricing ’
Despite the relative lack of volume growth , truckload spot rates are rising — both sequentially and from 2023 levels — and analysts expect pricing to be climbing by double-digit percentages by this time next year .
“ The consensus is we ’ re off to the races ,” Dean Croke , principal analyst at DAT Freight & Analytics , told the Journal of Commerce . “ There are a lot of tailwinds for pricing .”
“ We ’ re very close to balanced capacity in the market today ; not quite at that balance , but very close .”
Those tailwinds may not be blowing too hard right now , but DAT projects dry-van spot rates will be up 12 % to 15 % year over year in the fourth quarter of 2025 . Contract rates will follow at a lower , slower pace , Croke said .
“ Shippers are expecting moderate contract rate increases in the second half of next year ,” he said . “ Shippers know rate decreases are behind them .”
Jason Miller , the Eli Broad professor of supply chain management at Michigan State University and a Journal of Commerce analyst , said his forecasts indicate spot rates could rise by as much as 20 % by the end of 2025 .
An increase of that size in spot pricing would bring the US Bureau of Labor Statistics ’ long-haul truckload producer price index ( PPI ) — which is closer to contract rates and includes fuel surcharges and other fees paid by
Truckload rates have begun to rise despite ongoing weakness in demand . Shutterstock . com
shippers — up 9 % to 12 %. Since June 2023 , the truckload PPI has moved in narrow range of between 171 and 178 , a difference of less than 5 %.
The speed of improvement in the US freight economy will depend on the impact of interest rate cuts by the Federal Reserve and a manufacturing and housing recovery , Miller said .
“ It will take time for manufacturing activity to pick up ,” he said .
The first quarter is historically the weakest in terms of freight demand . That could change if enough companies decide to frontload spring imports to the US due to concerns over potential tariff increases and a possible second port labor strike on the East and Gulf Coasts .
“ The second half of next year will be the turning of the market ,” Croke said . “ The first half is harder to call .”
An accelerated import schedule could generate more freight in the first quarter but dampen demand in the second quarter , “ like in 2018 , when we pulled forward a lot of imports ahead of tariffs ,” he explained .
Contract rates , which typically lag increases or decreases in spot rates by about six months , are already beginning to rise , he said . Replacement rates in truckload contracts that were flat year over year in the third quarter were up 1 % to 2 % in mid-November .
Tim Denoyer , vice president and senior analyst at ACT Research , said more than a year of soft orders for new trucks has set the stage for capacity to tighten in 2025 , putting upward pressure on pricing .
“ One of the main reasons that contract rates are likely to go up next year is because we need to replace something like 150,000 tractors every year just to maintain the fleet ,” Denoyer told DAT ’ s DATCON 24 conference in late October . “ I think we ’ re very close to balanced capacity in the market today . We ’ re not quite at that balance , but we ’ re very close .”
email : bill . cassidy @ spglobal . com
38 Journal of Commerce | December 2 , 2024 www . joc . com