State of Freight• Dec 18, 2025• 59:43

The State of Freight: A Look Back at 2025

From State of Freight

Julia Becker

Executive Summary

The freight market is experiencing an unexpectedly sharp holiday peak season, with truck tender rejections reaching 11.9% and spot rates spiking, indicating a significant tightening of capacity.
Shippers have adopted a defensive, 'just-in-case' inventory strategy, leading to the first-ever contraction in warehouse utilization, which creates the potential for a future supply chain 'whiplash' if demand rebounds.
A structural shift in freight patterns is evident, with long-haul truckload volumes declining by 25% while short-haul volumes have grown by 11%, reflecting the rise of e-commerce fulfillment and intermodal's increased share.
Significant macroeconomic and regulatory uncertainty, including the Fed's focus on the labor market, the upcoming USMCA review, and increased driver enforcement, is suppressing business investment and complicating 2026 forecasts.

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Concerns Raised

Persistent weakness in business investment despite positive GDP growth.
High uncertainty surrounding the upcoming USMCA trade agreement review, which is stalling investment.
The potential for a supply chain whiplash effect if cautious inventory strategies prove insufficient for a demand rebound.
Softening in the home building sector, which serves as a bellwether for flatbed freight demand.

Opportunities Identified

Carriers are regaining significant pricing power in the spot market due to tightening capacity.
The structural growth in short-haul and local freight (up 11%) presents a durable opportunity for carriers focused on regional and final-mile delivery.
Mid-sized fleets can achieve better ROI by investing in back-office AI and automation rather than autonomous driving technology at present.

Key Themes

Freight Market Volatility & Capacity Crunch

Despite relatively soft overall demand, the trucking market is exhibiting significant volatility. Spiking tender rejections and spot rates suggest that a protracted downturn has forced substantial capacity out of the market, making it highly sensitive to seasonal surges and other disruptions.

This signals a potential end to the prolonged shipper's market. Carriers are regaining pricing power, which will directly impact transportation budgets and upcoming contract negotiations for 2026.

Shifting Inventory & Demand Patterns

Shippers are moving away from just-in-time models, leading to contracting warehouse utilization while inventory costs remain high. Concurrently, freight networks are adapting, with a marked decline in long-haul truckload volumes (-25%) and a robust increase in short-haul, local freight (+11%).

This reflects a fundamental change in supply chain design, driven by e-commerce fulfillment and risk mitigation. It alters network needs, favoring regional and final-mile carriers over traditional long-haul operators.

Macroeconomic & Policy Uncertainty

The broader economic outlook is clouded by mixed signals. While inflation is cooling, the Federal Reserve is now more concerned with labor market dynamics, and business investment remains a negative contributor to GDP growth. Uncertainty around the USMCA trade agreement review is causing businesses to delay investment and adopt cautious import strategies.

These external factors create significant headwinds for the freight industry, making forecasting difficult and suppressing demand for capital-intensive goods, which impacts sectors like flatbed freight.

Regulatory Headwinds & Carrier Viability

Increased regulatory scrutiny is actively constraining carrier supply. Heightened DOT enforcement on issues like English language proficiency and the potential for increased ICE funding are creating higher barriers to entry and pushing smaller, less-compliant carriers out of the market.

This trend will likely lead to a more consolidated and professionalized carrier base but also contributes to higher operating costs and, ultimately, higher freight rates for shippers in the long term.

The Pricing Disconnect

A lag exists between operational reality and strategic pricing within carrier organizations. Operations teams are rejecting low-paying tenders and capitalizing on the high spot market, while pricing teams remain in a defensive, volume-preservation mindset, hesitant to raise contract rates.

This internal disconnect highlights the challenge carriers face in adapting to a rapidly turning market and presents a temporary window of opportunity for shippers to potentially lock in favorable contract rates.

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Topics

Freight Market Trucking Spot Rates Contract Rates Tender Rejections Capacity Utilization Supply Chain Management Inventory Strategy Logistics Economic Outlook Federal Reserve Policy Inflation USMCA Regulatory Compliance Short-Haul vs. Long-Haul

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