“Instability.” “Turbulence.” “Uncertainty.” “Seesaw freight demand.” All these are terms used by various economic forecasters to describe the freight market for May 2025.
Also, note that one word appeared in nearly every analysis: “Tariffs.”
No one knows yet exactly how tariffs will impact the economy in general — or trucking specifically — but all seem to agree that they will have an impact.
Tariffs have loomed large in the news in recent months, as President Donald Trump has announced new or increased tariffs on U.S. trading partners to make up for real or perceived unfair market practices by others. In some cases, threats of tariffs have brought negotiations and new trade deals. In others, threatened tariffs have been reduced or delayed as negotiations continue.
The Fed holds steady
The Federal Open Market Committee (FOMC) of the Federal Reserve System, commonly called the Fed, is charged with adjusting targets for the federal funds rate — the interest rate used when banks and credit unions loan reserve balances to other banks and credit unions. The federal funds rate is widely used to determine interest rates for consumer loans.
Despite ongoing protest from Trump, the Fed has held steady on the federal funds rate since December 2024.
The Fed’s goal is to keep inflation at around 2% annually. So far this year, it’s been higher, standing at 2.4%.
Lowering the federal funds rate could stimulate the economy, potentially making inflation worse. At the same time, a stimulated economy creates more jobs and less unemployment, a goal of the Trump administration.
Tariffs tend to increase the cost of goods Americans buy because products produced outside the borders of the U.S. go up in price when tariffs are added. To avoid tariffs, some companies move manufacturing to the U.S., where labor costs are higher.
The Fed is concerned that inflation could rise in coming months, and a rate cut could exacerbate that the rise. However, the group has announced that an interest rate cut is possible at its next scheduled meeting in July.
How well the economy does has a great impact on freight volumes and rates, of course. That’s a problem for trucking companies who are trying to decide whether to invest in additional equipment or stand pat. May freight volumes and rates didn’t pursued anyone to change strategies.
Murky tonnage reports for May
ATA Truck Tonnage Index
The American Trucking Associations (ATA) reported that its Truck Tonnage Index declined 0.1% in May after a small gain in April. The ATA index is mostly comprised of contract freight.
“The seesaw freight demand pattern continued in April, making it difficult to discern any clear pattern in the market,” said Bob Costello, chief economist for ATA. “Excluding the services economy — the largest part of economic activity— the goods market is all over the map, thus impacting freight levels. Construction is soft, manufacturing is up and down, and consumers are cautious.”
Cass Transportation Index
The May Cass Transportation Index for shipments dropped 0.4% from April — and 4% from May 2024. Expenditures are up by 0.8% from May 2024, indicating some upward movement in freight rates. When inflation is figured in, however, the cost of trucking, outside of fuel, has risen more than can be covered by the sparse rate increases.
The Cass report states that rates usually rise in May due to seasonal factors, so the 0.4% decline from April shipments was actually 3.4% lower than expected.
“Visibility remains low and highly dependent on policy developments and legal challenges,” said Tim Denoyer, who is vice president at ACT Research and writes for the Cass report.
In other words, no one knows where the tariff question will finally settle out as Trump changes or eliminates proposed tariffs in some cases and other cases play out through the court system.
“The effects of tariffs have yet to be fully felt, and although freight rates have started to rise, it is still not enough to offset cost headwinds broadly,” Denoyer continued. “The trade war is likely to extend the for-hire freight recession further as higher prices reduce goods affordability and consumer’s real incomes.”
The “silver lining” is that truck sales are declining, indicating that tighter capacity and higher rates are on the way. Unfortunately, those higher rates may be too little and too late for some troubled carriers.
ACT Research Freight Forecast
Writing for ACT’s “Freight Forecast: Rate and Volume OUTLOOK” report, Denoyer described current court cases against the Trump tariffs.
“The ‘major questions doctrine’ is a legal argument the Supreme Court used to limit Biden’s authority on student loans and climate, ruling that federal agencies can’t make sweeping changes without clear congressional authorization,” he said.
In addition, he pointed out, the issue of which tariffs Trump can impose without Congress isn’t likely to be decided by SCOTUS (the Supreme Court of the U.S.) until after the court’s impending three-month off-period. If SCOTUS agrees with appeals, U.S. import tariffs could be greatly reduced, having the effect of raising demand for goods (and increasing available freight).
DAT Trendlines
In the meantime, carriers who depend on the spot freight market didn’t see much improvement in May, according to the DAT Freight and Analytics Trendlines report.
The national average per-mile rate for dry van freight for May was $1.99, just three cents higher than April’s average. Refrigerated freight did a little better, rising from $2.28 in April to $2.36 in May, while flatbed average rates remained stagnant at $2.57.
Overall, the number of spot loads posted on DAT’s load board rose by 5.3% in May from April totals, while the number of posted trucks dropped by 6.8%. That’s a combination that should result in some rate movement but increases proved minimal for the month.
The diesel factor
In May, average diesel fuel prices declined slightly, falling from April’s $3.57 per gallon to $3.50. That’s still $0.32 better than the $3.82 average for May 2024 — welcome news for an industry with tight profit margins.
However, fuel prices have increased in June, while military actions in the Middle East threaten to impact global oil supply, pushing fuel prices higher. An announced cease-fire between Israel and Iran, however, seems to have halted expected increases in crude oil pricing.
The key takeaway? For the foreseeable future, the freight market will continue to dictate cost efficiency and deliberate load selection to maximize revenues. As the old saying goes, relief for the trucking industry could very well be “a day late and a dollar short.”
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
