2025 Freight Trends Report

Consumer Confidence 

The Consumer Confidence Survey from The Conference Board, which reflects prevailing business conditions and likely developments for the months ahead, posted its highest monthly value since mid-2023 in November, which is a rise of 8.4 points from September. This was the largest 2-month gain since early 2021. The survey also showed a growing number of families are expecting a better financial situation in the next six months [Fig.1]. The consumer confidence reading became reality in economic performance indicators such as retail sales. 

Consumer Spending 

Consumers sustained their spending growth in the latter half of 2024 and are expected to demonstrate continued resilience in 2025. Retail sales increased 0.9% from October to November and increased 4.1% on an annual basis. Additionally, year-over-year growth in real personal consumption expenditures (another data set to highlight consumer spending) on goods increased every month in 2024 and is expected to continue to grow.  

Consumers remained willing to spend their discretionary dollars on dining out, too – in a positive sign for consumer confidence and spending. October and November sales at restaurants and bars increased, outpacing higher prices in the sales totals. Bar and restaurant sales were 1.9% and 4.2% higher for October and November, on a year-over-year basis.

As consumers feel better about their finances and spend more, especially on goods, more freight is created, and the market will tighten. This is expected to be one of the largest influencers of freight activity in 2025. 

Interest Rates & Inflation

Moderating inflation and signs of labor market weakness continue to suggest rate cuts from the Federal Reserve. The Federal Reserve cut interest rates by 25 basis points in December 2024, but future rate decisions will become more uncertain, particularly should elements of fiscal policy renew inflationary pressure. Additionally, The Bureau of Economic Analysis (BEA) published in October that inflation-adjusted disposable income increased more than 3% during each month of 2024, rather than by between 1-2% like earlier releases the data suggested. This places the disposable income growth trend closer to pre-pandemic norms and supports purchasing power for consumers.

Inflation is impactful to the freight market because it decreases the purchasing power
of consumers. When consumers buy less because of higher prices or decide not to make a purchase because of the expectation of a tighter budget in the future, it provides downside risk to freight demand. U.S. monetary policy tightened to slow the rate of inflation and improve price stability. The U.S. inflation rate is gradually decreasing, moving closer to long-term policy expectations set by the U.S. Federal Reserve. If market conditions continue to allow for the loosening of monetary policy, it will support more robust consumer spending and could provide growth in domestic manufacturing and industrial production, which drive freight demand.

Shippers should monitor inflation, interest rate changes, and consumer spending, as these heavily influence freight demand.  With stronger consumer financial health expected to boost freight volumes, shippers must adapt to changing conditions, collaborate with carriers, and optimize supply chain strategies to seize opportunities and stay competitive.

Trade

Trade policy, particularly tariffs, will remain a focal point in 2025. Economists largely agree that increased tariffs could elevate inflation by driving up consumer prices. While there’s speculation that negotiations may replace the drastic tariff increases currently proposed, the possibility of significant hikes – such as a 60% tariff on Chinese imports under consideration – cannot be ignored. Projections from Morgan Stanley suggest these tariffs could raise U.S. consumer prices by 0.9% while Goldman Sachs estimates a smaller impact of 20 percentage points. These potential changes place added pressure to adapt sourcing strategies, either by sourcing from different countries or increasing domestic production to mitigate cost impacts.

Taxes

Tax policy is another critical area of influence. Portions of the 2017 tax reform, including reduced rates for businesses and individuals, are set to expire at the end of 2025. Although this policy is already baked into current strategies, its extension or cessation could shape longer-term freight demand and investment decisions. With a divided Congress—Republicans narrowly holding the House and retaking the Senate—there is a stronger likelihood of alignment with the administration’s proposed agenda, including modifications to tax regulations and trade policies.

Labor

Labor also plays a defining role in freight dynamics, as highlighted by the recent East and Gulf Coast port strikes. The tentative agreements have provided temporary relief, with resolved disputes on wages extending contracts until January 2025. However, automation continues to be a contentious issue that could resurface, creating renewed uncertainty. For now, operational disruptions remain limited, with proactive measures like front-loading reducing vessel backlogs. Should future strikes coincide with critical periods, such as peak shipping seasons, greater impacts on freight movement may emerge.

Sustainability

West Coast carbon programs are gaining momentum, even in the face of past federal opposition from the Trump administration and a Republican-controlled Congress. These initiatives not only highlight the leadership role of these states but also present both challenges and opportunities for industries navigating the transition to a low-carbon future.

Policy & Regulatory Outlook

Below is a timeline of policies, regulations, and events in the United States that may be impactful to transportation networks.

• Q4 2024: Washington State cap-and-trade repeal on the ballot (rejected)
• Q4 2024 - Q1 2025: California LCSF updates
• Q1 2025: Oregon to reinstate cap-and-trade program
• Q1 2025: New York cap-and-trade system expected
• Q1 2026: California Climate Accountability Act – Scopes 1&2
• Q1 2027: California Climate Accountability Act – Scope 3

Elevate your vetting process

Strengthen your vetting process by conducting thorough background checks on the trucking companies you partner with. Verify their reputation, financial stability, and operational history, and review drivers' backgrounds for any potential security risks. Additionally, consider adopting an asset-based carrier identification solution that features
only trusted carriers.

Cultivate meaningful relationships with carriers

Develop strong, open communication channels with carriers to enhance transparency and detect potential threats to your freight. Secure documentation early in the process.

Audit and monitor performance

Regular audits and continuous monitoring of trucking companies’ performance, especially their adherence to cargo security standards, can help ensure they meet required safety protocols. This ongoing oversight is crucial for preventing lapses in security and ensuring timely, secure deliveries.

Ensure compliance and certifications

Make sure your trucking partners comply with relevant security certifications, such as C-TPAT (Customs-Trade Partnership Against Terrorism). Companies with C-TPAT certification are typically more stringent in their security measures, reducing the risk of theft and fraud.

Leverage technology

Leverage tracking devices and other technologies to monitor factors like temperature and light within trailers. Alerts generated by unexpected changes can serve as early indicators of potential security breaches.

On the policy front, legislative initiatives will continue to play a crucial role in mitigating cargo theft risks. Laws such as the Household Goods Shipping Consumer Protection Act and the proposed Safeguarding Our Supply Chains Act represent major advancements toward a secure logistics environment. These regulations equip authorities with the necessary tools to enforce compliance and protect legitimate businesses from fraud.

By implementing these strategies and leveraging legislative measures, shippers can effectively safeguard their operations against cargo theft and secure a more resilient supply chain in 2025.

Freight Demand

We expect sustained year-over-year growth to begin in May 2025. Our 12-month Freight Demand Indicator Forecast projects an average increase of 1.4% compared to the previous year. This suggests growth in the quantity of truckload and intermodal shipments will return near its 1% annual trend experienced prior to the pandemic.

We expect demand to either decline or experience minimal growth through April 2025, averaging -0.5% during this period. However, beginning in May through the end of our forecast, we expect continuous growth with an average increase of 2.6%.

Intermodal

Intermodal traffic, which accounts for approximately half of all rail activity, is expected to continue its robust growth trajectory into 2025. Carloads rose year-over-year every month since November 2023. Throughout 2024, intermodal volumes consistently remained within 3% of the five-year average, reflecting stability in this mode of transport. There are multiple factors that contribute to the persistent growth of intermodal volumes.

• As the freight market remains at its low point and linehaul rates are attractive to shippers, shippers are utilizing intermodal to find cost savings and establish new partners in this mode of transportation to solidify its position in the market as volume increases and the market turns. Converting to intermodal on lanes above 750 miles could see savings of 5-25%.
• Service has improved across rail networks, taking away the largest disincentive to utilizing intermodal. Even with intermodal volumes increasing, rails have been able to keep service levels better than they historically have. This is positive as the freight market turns, intermodal service levels could hold up and provide more benefit for shippers using this mode.
• The long-term decline in coal volumes, which fell over 13% in 2024, has created increased rail capacity for intermodal and other carload types—a trend expected to persist. Railroads are compensating for the loss of coal freight by expanding intermodal services to maintain train utilization. This downturn in coal is attributed to lower natural gas prices and a temporary industrial production slowdown, with further pressure stemming from widespread decarbonization efforts.
• Shippers can drastically reduce their carbon emissions by utilizing intermodal. Switching from truckload to intermodal can reduce emissions by 50-70% on long haul shipments.

Capacity

The capacity ratio, which highlights the relationship between freight demand and available capacity in the market, remained at its floor in 2024 – due to lower freight demand and sustained capacity. Although we’ve experienced a prolonged downturn, capacity was slow to exit the market. This is likely due to the record profits during the prior market upturn supporting carriers through the extended downturn. The market is expected to tighten in 2025, with our forecasted capacity ratio curve indicating a 2.4% increase compared to the previous year. In 2024, lower freight demand and elevated capacity caused truck orders and sales to remain subdued and not exceed replacement levels.

Linehaul Rates

The mix of contract and spot rates is normalizing, trending toward a 75-25 split that is expected to hold steady until the freight market begins its anticipated turn. Spot rates gaining a larger share of shipments could serve as an early indicator of this market shift.

We are observing a consistent decrease in the contract market (both dry and reefer), of approximately 3% year-over-year. We expect these growth rates to stabilize before turning positive at the start of 2025, with sustained positive growth anticipated to commence in May 2025. This gradual recovery aligns with broader market dynamics, where steady growth is projected throughout the year, barring any major disruptions that could lead to sudden rate spikes. A potential East Coast port strike on January 15th presents a significant risk to forecasts. The likelihood of a strike seems high, especially after President Trump expressed support for the International Longshoremen’s Association (ILA) and its opposition to automation. The end of 2024 showed a tightening in regional markets due to seasonal demands. Additionally, rising concerns over potential trade tensions with China have prompted shippers to accelerate freight movement in the coming months. This trend is expected to have the greatest impact on the western regions of the U.S., potentially sparking a quicker recovery in the freight market and driving year-over-year growth sooner than projected.

Intermodal linehaul rates remained relatively flat throughout 2024 (raising 1.9% from January 2024), however, they declined roughly 8.5% from 2023 average levels. We expect rates to rise by 2.6% year-over-year as volumes continue to compete for space on the train and the freight market turns.

Breakthrough Forecasts: Full Year 2025

With assumptions that the growth rate will accelerate throughout 2025, our projections for the full calendar year are as follows:

		3.2% Dry van contract rates
		9.0% Dry van spot rates
		3.1% Refrigerated contract rates
		5.8% Refrigerated spot rates
		2.6% Intermodal rates

Forecast Accuracy

Breakthrough updates our freight forecasts on a monthly basis in our Freight Advisor to provide updated perspectives based on recent market moves and account for market shocks. In addition to these updates, we provide the accuracy of our forecasts.
 
Analyzing the prior 12 months of forecasts, you can see how accurate we are on 1-month, 3-month, and 6-month intervals. We believe it is important to provide forecast accuracy to allow shippers to use our perspective and outlook to their full advantage.