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.
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.
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.
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.
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.
Keep pulling the thread on Dr. Zach Rogers.