Freightonomics• Dec 11, 2025• 45:00Interview

Freight Market Wrapped | Freightonomics

From Freightonomics

Dr. Zach Rogers•Associate Professor, Colorado State University

Executive Summary

The freight market is ending 2025 with significant volatility, marked by spiking truckload tender rejection rates and an uncharacteristic pre-holiday surge in domestic intermodal volumes, signaling a potential tightening of capacity.
A major macroeconomic shift is underway, with the Federal Reserve cutting interest rates and Chairman Powell expressing more concern for the labor market than inflation, despite an increased GDP forecast.
Data from the Logistics Managers' Index (LMI) reveals a significant inventory rebalancing, with upstream wholesale inventories contracting while downstream levels grow, leading to the first-ever negative warehousing utilization reading.
Looking ahead, analysts predict a significant structural rebalancing in the for-hire truckload market over the next 12 months, driven by economic pressures and increased regulatory enforcement, alongside a broader supply chain shift towards more dynamic, fast-moving inventories in 2026.

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Concerns Raised

Potential weakening of the labor market, particularly job losses at small firms, could suppress consumer demand.
High national out-of-service rates for trucks (22-24%) and widespread regulatory non-compliance pose systemic risks to market stability and safety.
Continued uncertainty in demand forecasting makes companies risk-averse, potentially leading to stock-outs if demand surges unexpectedly.

Opportunities Identified

The predicted structural rebalancing in the truckload market will benefit well-capitalized, compliant carriers as weaker operators exit.
Shippers can leverage the increasing cost-effectiveness and reliability of intermodal transport to optimize logistics spend and network efficiency.
The shift to dynamic, leaner inventories in 2026 creates opportunities for logistics providers who can offer speed, flexibility, and visibility.

Key Themes

Freight Market Tightening

As 2025 concludes, the freight market is showing clear signs of tightening. Truckload tender rejection rates are spiking above 10%, and an unusual pre-holiday surge in domestic intermodal volumes suggests shippers are actively seeking capacity, creating a volatile environment for rates.

This end-of-year volatility indicates that the prolonged freight recession may be nearing an inflection point, forcing shippers to anticipate higher transportation costs and potential capacity constraints heading into the new year.

Macroeconomic Pivot and Uncertainty

The Federal Reserve has pivoted by cutting interest rates and shifting its focus from inflation to a weakening labor market, particularly among small businesses. While the Fed raised its GDP forecast, underlying concerns about employment and consumer spending create an uncertain demand outlook for 2026.

The Fed's policy shift and the fragile state of the labor market are critical variables that will directly impact consumer confidence and spending, which in turn dictates freight demand and overall supply chain velocity.

The Great Inventory Rebalancing

A major inventory correction is occurring across the supply chain. The LMI shows upstream wholesale inventories are finally contracting after a year of being bloated, while downstream retail inventories are growing. This shift has led to the first-ever negative reading for warehousing utilization, signaling an end to the era of excess storage.

This rebalancing indicates that companies are moving from a 'just-in-case' static inventory model to a leaner, more dynamic 'just-in-time' approach, which will increase the demand for responsive and reliable transportation services in 2026.

Regulatory Enforcement and Carrier Shakeout

Increased enforcement of safety regulations, such as English Language Proficiency (ELP) and ELD compliance, is creating an economic imbalance in the trucking industry. Combined with a high national out-of-service rate (22-24%), these pressures are expected to drive a significant structural rebalancing and shakeout of non-compliant or financially weak carriers.

This regulatory crackdown will likely remove capacity from the market, rewarding compliant carriers and forcing shippers to be more diligent in their procurement to ensure they partner with stable, rule-abiding operators.

Intermodal's Growing Appeal

Intermodal transport is demonstrating newfound reliability and cost-effectiveness, evidenced by an uncharacteristic volume spike and its favorable rate spread against truckload on key lanes like Los Angeles to Chicago. Analysts suggest that improved service has rebuilt shipper trust, making rail a more viable option even during time-sensitive periods.

As intermodal becomes a more trusted and economical alternative, it presents a strategic opportunity for shippers to diversify their long-haul transportation mix, potentially mitigating the impact of rising truckload rates and capacity issues.

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Topics

Freight Market Truckload Intermodal Logistics Managers' Index (LMI)Tender Rejection Rates Spot Rates Contract Rates Inventory Management Warehousing Utilization Supply Chain Strategy Macroeconomics Federal Reserve Interest Rates Labor Market Regulatory Enforcement ELD Compliance Consumer Demand

Processed Apr 20, 2026 yt-dlp + mlx-whisper + Gemini