
Find out what 2025 looks like for the trucking industry
Join us for this webinar Join us on February 13, 2025, at 2 p.m. Eastern, as two leading trucking economic experts discuss all the trucking industry influences in play (micro, macro and political), and give an outlook of what is likely in store in the quarters ahead in 2025. This webinar is brought to you by Valvoline.
Strong consumer demand, declining interest rates, adjustments in capacity, and improved utilization have offered a slightly improved freight environment. However, analysts remain wary of possible market headwinds and uncertainty.
In November, trucking demand (measured by the ton-mile index) dipped slightly after adjusting for seasonal changes, partly due to the late Thanksgiving holiday, said Jason Miller, associate professor of supply chain management at Michigan State University and interim chair of the Department of Supply Chain Management.
Miller suggested planning for various demand levels. He said the best-case scenario is that trucking demand grows steadily throughout 2025, ending the year about 2.5% higher than 2024. This growth would be slower than in past strong years in 2017 or 2014 because of ongoing high interest rates, inflation and low tariffs.
The worst-case scenario, he said, is that demand grows slightly but peaks in the third quarter before slowing to less than 0.5% growth by year-end. Miller noted this could be due to happen if a major trade war and mass deportations worsen inflation, driving the Federal Reserve to raise interest rates by September.
DAT Freight & Analytics’ 2025 Freight Focus report indicated that the market might turn in the second quarter of the year. However, DAT principal analyst Dean Croke noted that as the transportation industry rushed to bring extra imports at the end of 2024, there could be a bigger seasonal slowdown in the first quarter.
If truckload demand continues its slow but steady growth, Croke said that the extra capacity in the market is expected to clear out by Q2. This could push spot rates to rise as demand picks up in April due to produce, building, construction and planting seasons.
However, Croke also pointed out Miller’s observation of a possible trade war caused by higher tariffs on Canada, Mexico and China.
“This might alter the demand trajectory for the worse, especially in automotive,” Croke said.
DAT expects freight demand to stay weak in the first half of the year, but it could improve in the second half as businesses gain clarity on the new administration’s policies.
Still, Croke said that construction and manufacturing remain major challenges as both industries are struggling.
“With capacity exiting at a relatively slow pace, we expect excess supply to weigh on any gradually recovering demand in the first half,” he said.
Assuming conditions would point to a best-case scenario for demand, Miller pegged an increase in spot market rates at 20% year-over-year and an 8% to 12% rise in contract rates for long-distance trucking.
Policy shifts shaping the market
FTR’s senior analyst of rail Joseph Towers said during FTR’s Transportation Outlook webinar that an impact of inflation is expected with the Trump administration’s proposed tariff plans.
“These costs have to go somewhere," he said. "They either must be eaten up in margin or they have to be passed along to consumers."
The impact of tariffs on inflation depends on how high the tariffs are and which products are targeted. If applied broadly, Miller said overall prices for goods could rise by a few percentage points.
“The magnitude of increase will depend on the reliance on imports as well as the extent of wholesaler and retailer trade margins, assuming full tariffs pass through onto buyers,” Miller said.
Tax policy is another area of influence. Parts of the 2017 tax reform, such as lower tax rates for businesses and individuals, are scheduled to expire at the end of 2025.
Craig Decker, managing director at Brown Gibbons Lang & Company, pointed out that if tax cuts expire and people have less disposable income, they will likely spend less, bringing lower demand for transportation across the supply chain.
Extending the tax cuts could stimulate the trucking industry by increasing demand, which would likely raise freight rates in a balanced market. A rise in rates and demand could also spark more mergers and acquisitions, Decker said, with strong carriers seeking strategic acquisitions.
On the other hand, ending the tax cuts could make things worse for the industry.
“We have experienced an exceptionally long period of declining to stagnant rates and increasing cost of operations, and this has been exacerbated by high interest rates,” Decker said. “If these factors were to be combined with lower levels of freight demand, this would result in the continuation of a sub-par rate environment, leading to an increased number of failures and sales of weaker carriers.”