Ongoing uncertainty over trade policy is weighing on shippers’ decisions, prolonging an already extended freight recession, according to the Cass Freight Index for Shipments report.
Freight volume remained under pressure in June, down 0.2% month-over-month. The year-over-year decline in shipments was 2.4% in June, after a 4.0% decline in May.
“The trade war is having a variety of effects, with a few waves of pre-tariff inventory building and subsequent drawing down, but volumes were steady from May,” said Tim Denoyer, the report’s author and ACT Research vice president and senior analyst.
After surging in 13% in 2021 and inching up 0.6% in 2022, the index fell by -5.5% in 2023 and dropped another -4.1% in 2024. “So far, (the index) is trending toward another decline in 2025,” Denoyer said.
The report projects July shipments to decline -5% year-over-year, in line with typical seasonal trends, but the recent uptick in imports could push the decline beyond normal patterns.
June expenditures, which measure total freight spending, fell -1.2% month-over-month in June. The year-over-year increase improved to 2.6%, up from 0.8% in May, marking the third consecutive annual gain after more than two years of declines.
This year-over-year rise was primarily driven by higher rates, the report noted, as shipments fell -2.4%. Denoyer said that rates climbed 5.2% year-over-year in June, influenced in part by a shift in transportation mix, with more truckloads and fewer less-than-truckload shipments.
Cass’ TL linehaul index, which tracks per-mile changes in linehaul rates, rose 0.4% month-over-month in June, partially recovering from a 0.8% decline in May. On a year-over-year basis, growth grew to 1.9% in June from 0.6% in May. “Pre-tariff shipping has not tightened the market balance even as seasonality improved in May,” the report noted.
The index fell -10% in 2023 and another 3.4% in 2024. After rising 1.3% in the first half of 2025, Denoyer noted it appears to be on track for a small increase in 2025.
“The effects of the highest tariffs since the 1930s are very uncertain,” Denoyer said. Although 75% to 80% of freight involves domestically produced and consumed goods, “the impacts on international trade have been and will continue to be significant.”
Looking ahead, freight demand visibility is clouded by policy developments and legal challenges. “The uncertainty has lowered the economic outlook, and pre-tariff inventory building will lead to destocking regardless of the outcome of trade negotiations in the coming months,” he said.
If tariffs continue to push up goods prices, affordability and real income levels could erode further, he added. “With this outlook, the cycle upturn for the transportation industry remains elusive.”
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Manufacturing activity
Despite challenges from weak demand, geopolitical unrest, tariff concern and inflation, economic activity in the manufacturing sector showed signs of improvement in June, according to the Manufacturing ISM Report On Business. The June PMI registered at 49% (a reading of 50 or higher signals growth), a 0.5-percentage increase compared to the 48.5 percent in May.
Production rebounded to 50.3% in June, end four months of contraction. Inventories also improved, reaching 49.2%, driven by a surge in cargo imports ahead of the anticipated reimplementation of the Trump administration’s country-specific reciprocal tariffs in July, which was later pushed to August. The report noted that slower supplier deliveries were offset by better efficiency in moving goods through ports of entry.
Though manufacturing activity improved, Susan Spence, chair of the institute’s Manufacturing Business Survey, said demand remains weak amid trade uncertainty and increased prices.
Key indicators, such as new orders, backlog orders and new report orders, continued to decline month-over-month in June as prices rise, according to the report. Employment in the sector contracted for the fifth consecutive month, as layoffs persisted across the industry.
Ongoing volatility in tariffs continues to be a prominent issue raised by respondents in the comments.
“Business has notably slowed in last four to six weeks. Customers do not want to make commitments in the wake of massive tariff uncertainty,” said a respondent in the fabricated metal products sector.
A respondent from the woods product sector noted that ongoing unrest in the Middle East and uncertainty around long-term tariff policy continue to strain secondary and tertiary sources, driving up material costs. Expenses are now running 6% to 10% higher than projected inflation levels, even though forecasts had already factored in volatility under the current administration.
Another respondent from the computer and electronic products sector commented that tariffs continue cause confusion and uncertainty for long-term procurement decisions. “The situation remains too volatile to firmly put such plans into place,” the executive said.
In contrast, S&P Global’s U.S. manufacturing index indicated a more optimistic picture, rising to 52.9% in June, the highest since May 2022. Chris Williamson, chief business economist at S&P Market Intelligence, noted that growth in output and steady new orders fueled hiring activity and boosted business confidence.
Williamson noted that factories are hiring at the fastest pace since September 2022, partly in response to rising workloads. Yet, some of the growth is tied to inventory building and potential supply disruptions. Factories also reported steep cost increases in June, mainly due to tariffs, and are passing these higher costs to customers.
The key question, Williamson added, is whether this leads to a one-time price adjustment or if it signals a broader return of persistent inflation.
