The cost for shippers via motor carrier declined 0.7% year over year between 2023 and 2024 in the U.S., driven by rate pressure and excess capacity, as trucking companies struggled with stagnant demand, according to the 2025 State of Logistics report presented by Kearney and CSCMP on Tuesday.
Korhan Acan, lead author of the report and one of partners at Kearney, said during the report launch in New York that the industry had expected a much steeper rate collapse in 2024, but that didn’t fully materialize. While spot and contract rates did decline, they were already so close to the operating costs of many owner-operators.
“Even at the rate of 2023 we were getting very close to operating costs of an owner-operator. So what that means – and this was evidenced by many owner-operators that I knew – is [that] below a certain rate per mile, they’re not going to operate their trucks. They’re just going to park them and wait for the storm to pass. And that is what primarily happened,” he said.
Rates drop, but not enough to clear capacity
While there was downward pressure on rates throughout 2024, it “did not make a big dent in the actual rate,” Acan said. Spot and contract rates declined, but not dramatically. As a result, overall motor carrier expenditures among shippers fell by just 0.7%, mainly due to those modest rate reductions. Among motor carriers, less-than-truckload (LTL) and private fleets maintained more stability in pricing, while full truckload lagged behind.
The data from the report shows that full truckload (FTL) transportation costs dropped by 5.3% year-over-year, from $408.7 billion (all figures USD) in 2023 to $387.0 billion in 2024. This followed an even sharper 16.6% drop the previous year. Meanwhile, LTL costs increased slightly by 3.1%, rising to $66.0 billion in 2024, while private or dedicated carrier costs rose 2.5%, reaching $541.4 billion.
The Dry Van Truckload Linehaul Index showed a 1.5% decrease in pricing. Spot rates dropped below $2 per mile, reaching about $1.96 in April 2025, compared to $1.99 per mile in April 2024. Contract rates declined by 2.4% to around $2.40 per mile in April this year, down from $2.46 the same time last year.
Meanwhile, carrier profitability fell to the lowest level since 2010, Acan said.
“In my conversations with shippers, the majority told me that pushing carriers below the $2 mark is not going to be healthy — it’s going to start to cause some performance issues,” Acan said. “That’s why I think contract rates stayed somewhat relatively over that $2 mark.”
Even so, profitability dropped sharply, especially for smaller fleets. “We are very close to [the operating cost] at the $2 mark, and that’s why the profitability doesn’t leave a lot of room for the operator,” he said.
While some carrier exits did accelerate, based on surveys like Morgan Stanley’s Shipper Index, the expected wave of closures didn’t fully materialize. “The anticipation was that at these rates, carrier exits would have been greater,” Acan said.
The report echoes that trend, noting that carrier capacity remained elevated through 2024, despite some early signs of rationalization. Sustained low freight rates, combined with rising costs — particularly for insurance and maintenance — placed added financial pressure on smaller fleets. But the pace of exits was not significantly high compared with previous downturns.
“This resilience highlights a key reality: while capacity rationalization is occurring, it has not meaningfully shifted market rates,” the report states. Persistent weakness in freight demand continues to limit any significant upward movement in pricing, even as carriers face elevated operating costs.
At the same time, M&A activity fell for the third straight year, in both volume and value, he added.
Tariff threats to raise truck costs and suppress demand
Looking ahead, the threat of new U.S. tariffs on commercial vehicles imported from Canada and Mexico could further strain motor carriers. More than a third of commercial vehicles for U.S. fleets are sourced from these two countries. A proposed 25% tariff on trucks from Mexico could raise the cost of a new tractor by up to $35,000, according to the report.
S&P Global Mobility projects that such tariffs could cause a 9% spike in new truck prices, potentially reducing 2025 demand for new commercial vehicles by as much as 17% in 2025.
The report also noted that rail carriers could benefit if market conditions shift. There is an estimated $50 billion in longhaul truck freight — for commodities compatible with boxcar or intermodal transport — that Class I railroads could convert to rail, depending on future capacity and shipper behavior.
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