If the predicted freight increase in 2025 is coming, its progress seems excruciatingly slow. In January, the Cass Freight Index for Shipments fell by 5.3% from December 2024 levels and were 8.2% lower than January 2024. Shipment numbers reached their lowest level since July 2020, according to the Cass report.
The Cass Index for Shipments fell 5.5% in 2023 and another 4.1% in 2024, so beginning the year with another decline isn’t good news. In fact, outside of the low levels during the COVID pandemic, the last time the shipment Index fell this low was during the 2008-09 Great Recession.
Expenditures for spending dropped as well, according to the Cass report, but mostly as a function of lower shipment numbers. Cass reported that freight rates actually rose about 0.5% in January, the fourth consecutive month in which they have done so. However, the increased rates weren’t enough to offset the decline in shipments, resulting in lower overall shipping expenditures.
How do we get the numbers?
The Cass information is compiled from processed invoices from Cass customers and includes freight moved by truck, rail, air, pipeline and other modes, with the majority moved by truck.
“While feeling like a bit of a broken record, we still think private fleet capacity additions are likely the main reason for-hire freight volumes continue to decline,” said Tim Denoyer, vice president and senior analyst at ACT Research and author of the Cass report.
Manufacturers and distributors who depend on for-hire trucking took a beating in 2020 through 2022 as global pandemic shutdowns pushed freight rates to record highs. In response, some increased the size of their private fleets or even started new ones in order to keep as much of their shipping as possible in-house.
Denoyer stated that the trend away from private fleets will return.
“As cost economics reassert their influence, the long-term trend toward outsourcing will eventually return, but the extended 2023 and 2024 downcycle was characterized by an extraordinary post-pandemic insourcing,” he said.
In other words, as the cost of hauling their own freight increases, more companies will be looking for other carriers to pick up some — or all — of the volume.
Unloading freight to other carriers?
That’s already happened with one major retailer. In late January, Walmart Canada announced the sale of their fleet business to Canada Cartage, who will assume deliveries to more than 400 stores located in Canada. The American Trucking Associations (ATA) reported that shipment volumes reported by its membership were unchanged in January from December levels. The ATA report, compiled from member surveys, primarily deals with contract freight.
“After declines in November and December totaling 1.7%, tonnage was unchanged in January” said Bob Costello, ATA’s chief economist. “This outcome is impressive considering the massive winter storm that brought cold temperatures and significant snowfalls to large parts of the country, including those that rarely see such storms. Furthermore, the terrible wildfires in California likely also caused freight disruptions.”
In addition, he noted, “softness in manufacturing and retail sales continue to be a drag on truck freight volumes as well, so the fact tonnage was flat is a positive sign.” FTR Transportation Intelligence reported that retail sales took “a steep dive” in January in the largest monthly decline since March 2023.
“The seasonally adjusted 0.9% drop reflects broader economic shifts, with motor vehicle and parts sales being the primary drag,” Avery Vise, FTR’s vice president of trucking, in a recent podcast. “This decline has significant implications not just for retail, but also for freight demand and supply chain dynamics.”
What else is manipulating the market?
Like Costello, Vise noted that inclement January weather was disruptive to shipping, but he also cited a “pull-forward” effect on vehicle purchases as consumers bought new vehicles out of concern for threatened coming tariffs.
Another factor potentially impacting freight movements is business inventories.
Vise says that wholesale inventory ratios have fallen to their lowest level since June 2022, “indicating a tightening of supply chains amid shifting demand patterns.”
Potential tariffs on goods manufactured in Canada and Mexico could roil the markets in coming months, since all of the major automotive builders have assembly facilities in both countries. While some manufacturing could be transferred to U.S. locations, the impact of tariffs on the automotive industry could be huge. Additionally, tariffs on lumber and other forest products produced in Canada could significantly impact the home improvement market. Spot freight rates got a small bump in January, according to DAT Freight and Analytics.
National average dry van spot rates rose 0.5% over December to remain about even with January 2024 rates. Flatbed spot rates didn’t rise from December levels but were 1.2% higher than they were in January 2024. Refrigerated rates rose about six cents per mile on average and were 2.1% higher than a year ago.
January’s winter storms and California wildfires probably impacted spot rates as truckers were shut down or delayed, reducing available capacity. February results aren’t yet complete, but both dry van and refrigerated spot rates appear to be falling from January levels.
Tariffs are likely to be the biggest factor in freight volumes and pricing for the next few months. Some suppliers are already raising prices in anticipation of tariffs being implemented.
China has already imposed retaliatory tariffs on U.S. coal, farm equipment and liquified natural gas exports, and has already restricted exports of rare earth minerals needed by U.S. manufacturing. China is responsible for 30% of ocean imports to the U.S. and 40% of rare earth imports.
As deadlines loom for tariffs threatened by the Trump administration, actions by other countries could result in reduction or elimination of tariffs.
Both Canada and Mexico have stepped up efforts to curtail fentanyl shipments into the U.S., for example, and Columbia changed its policy on repatriation of citizens who immigrated illegally to the U.S. As negotiations continue, the true impact of tariffs on freight volumes and rates won’t be known for months.
Another potential issue is capacity.
As EPA mandates for 2027 get closer, more carriers will seek to pre-buy equipment, increasing the number of trucks available to haul freight.
In short, while there should be some rate relief in 2025, it’ll arrive too slowly to get excited about.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
