A freight market upcycle could begin as soon as late in the first quarter of 2025, according to the OOIDA Foundation’s January freight market update.
But concerns remain even with signs pointing in the right direction, according to Andrew King, the Foundation’s director of operations.
“While there are positive things occurring, such as capacity finding an equilibrium, which has helped to push rates modestly upward, we’re still waiting for manufacturing activity to increase and for the housing market to bounce back,” King said. “The next upcycle appears on the horizon. However, tariff and monetary policies could curtail – or even derail – trucking’s recovery.”
The full Foundation freight market update is available online.
Van market
The market demand index increased more than normal in December, likely due to winter storms. The largest increase came in the South-Central region.
There was drastic improvement in the spread between the spot rate and three-year moving average, but more movement is needed to reach parity. That could come in the next month or two, the Foundation said.
Additionally, sales and inventory ratios are heading in a positive direction.
Household appliances have been performing well since late 2023, while furniture appears poised to turn a corner as well.
Flatbed market
Ratios were more favorable for carriers operating in the Southeast and Northeast regions.
The flatbed composite index rose for the second consecutive month following adjustments but was still below the three-year average.
While the Federal Reserve started to reverse its monetary policy by issuing rate cuts in September 2024, it will take several months to see the effect of this, as rates don’t directly impact mortgage rates and inflation continues to be a problem.
Building materials, garden equipment and supplies dealer inventories were 8% above 2019 levels. This was a significant headwind for future freight demand, as demand overall remained low.
Reefer market
An increase in freight and a sudden drop in capacity resulted in a 26% month-over-month increase in the market demand index.
Spot rates improved and have increased year-over-year, incredibly close to positive territory.
According to the U.S. Department of Agriculture, carriers in the Mexico-Arizona region experienced the greatest increase in pay per mile month-over-month, while all regions experienced decreases in volumes.
“We don’t believe this data is accurate,” the Foundation said. “Instead, there appears to be some sort of error in USDA’s reporting.”
Capacity levels were mixed across the country, with availability the tightest in the Pacific Northwest.
Trucking market
Winter weather is driving significant spot activity in January, according to the Cass Shipment Index.
“Lower Class 8 supply over the past several months supports a return to rate increases in 2024; the capacity additions to come will be considerable,” Cass said.
Trucking employment numbers overall decreased.
New Class 8 sales increased, while new orders declined.
The Logistics Mangers’ Index showed transportation is continuing its upward trajectory.
The average diesel price has declined year-over-year for 22 straight months, which has been one of the few silver linings for owner-operators.
Preliminary used truck prices turned positive year-over-year for the first time in 25 months.
Freight market
Wages and salaries grew slightly, and the Consumer Price Index moved upward in December.
Manufacturing activity excluding pharmaceuticals and computers and electronics once again increased month-over-month.
Demand improved as companies prepared for 2025 with the benefit of the election cycle ending.
Output was positive, and inputs were still accommodating future growth, with inventories and imports improving marginally.
“Expect increased pricing in the low, single-digit range through 2025 due to new U.S. railroads that have labor agreements and inflationary pressure,” C.H. Robinson said.
Railroads are confident spot prices will jump dramatically in the second half of 2025. LL
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