Read just about any economic forecast lately and one word pops out: Uncertainty.
The good news is that inflation seems to be under control; it was reported at 2.3% for the 12 months ending April 30. The Consumer Price Index rose 0.2% in April, according to the U.S. Bureau of Labor Statistics.
The bad news is that no one can say with certainty how tariffs, both those imposed and those threatened by the Trump administration, will ultimately impact the economy.
While the 2.3% inflation rate is close to the Federal Reserve’s target rate of 2%, the group declined to reduce the current 4.25%-4.5% federal funds rate at its May 7 meeting.
In short, the federal funds rate is the rate at which banks loan money to each other. Lowering the rates would impact home loans and financing for equipment — but doing so could also spur inflation.
Jerome Powell, chairman of the Fed, expressed uncertainty: “It’s really not at all clear what it is we should do.”
Analysts believe Powell and the Fed want to better determine the impact of Trump tariffs on the economy before reducing interest rates further.
“The economic climate feels a bit like trying to mow your lawn under water — slow, murky, and full of hidden obstacles,” noted analysts at FTR Transportation Intelligence in a May 12 release.
Tariffs could have an unsavory impact on freight.
Tim Denoyer, vice president and senior analyst at ACT Research, believes higher tariffs worsen the freight recession.
“With 20%-25% of U.S. surface freight involved in international trade, tariffs are set to extend the for-hire freight recession,” he wrote in late April. “We expect higher cost equipment as a result of tariffs to eventually tighten capacity and help end the long for-hire freight recession.”
ACT’s findings are published in its most recent Freight Forecast: Rate and Volume OUTLOOK report.
Tariffs could increase the cost of new trucks, which would eventually impact the number of trucks hauling freight. A reduction in capacity might be just what’s needed spur freight rates on an upward trajectory — but it won’t happen overnight.
In the meantime, Trump has temporarily suspended planned tariffs on both Canada and Mexico; he’s also announced breaks for the automotive industry. Initially, Trump’s planned tariffs against China, where some parts and components are manufactured, were as high as 145%, but a May 12 agreement between the two countries has temporarily lowered them to 30%.
Small companies feel the heat.
FTR also reported survey results from the National Federation of Independent Business (NFIB) Small Business Optimism Index, which fell below its 50-year average in April. The release, written by FTR’s CEO Jonathan Starks, also mentioned that 34% of small firms are leaving jobs unfilled, and only 18% plan to increase spending on capital improvements, signaling a deeper pullback in confidence.
“Big business may dominate headlines, but the real story of economic health is often told through the lens of small firms,” he wrote. “With sentiment slipping, hiring plans fading, and investments on hold, small businesses are signaling caution.”
Low rates, declining shipments continue.
The impact on truck freight has been continued low rates and declining shipments. The Cass Freight Index for Shipments showed a 0.4% increase in April over March, but a 3.6% decline in shipment numbers compared with April 2024. The Cass Index for expenditures showed a small increase of 1.2% from last April.
“The trade war is having a variety of effects on freight volumes, with significant decreases due in May and June in international volumes, but likely a rebound in Q3 due to the recent 90-day U.S./China trade deal,” said ACT’s Tim Denoyer, who writes for the Cass Index.
The Cass Indexes are compiled from data from Cass customers and includes trucking, rail, pipeline, ship and air shipments, with trucking making up the majority.
The American Trucking Associations’ (ATA) Truck Tonnage Index declined by 0.3% in April after dropping 1.5% in March. Like many other analysts, Bob Costello, ATA’s chief economist, also blamed uncertainty in the market.
“Unfortunately, a recovery that was expected this year hasn’t transpired as the industry deals with a freight market in flux from tariffs and softening economic indicators,” he said.
The ATA Index is built through surveys of its member carriers and leans heavily towards contract freight.
Over at DAT Freight and Analytics, national average van spot rates fell by 0.5% in April from March rates but were 0.5% higher than in April 2024. Reported at$1.96 per mile, a half-percent increase from April a year ago represents about a penny, far short of the amount needed to offset increased operational costs.
Refrigerated spot rates didn’t move much either, rising 0.4% compared with March rates but falling by the same amount, about a penny a mile, from April 2024 rates. Flatbed rates showed the most improvement, rising by 1.9% from March rates to $2.57 per mile, 1.6% higher than April a year ago. That increase is only about four cents per mile, however.
The Commercial Vehicle Safety Alliance (CVSA) International Roadcheck had its usual impact on freight rates.
During this year’s Roadcheck, conducted May 13-15, spot rates rose for the week because of the number of independents who shut their trucks down to avoid inspection. Those who elected to run freight enjoyed a 6.1% increase in dry van rates and a 2.6% increase in refrigerated rates. Flatbed rates were not positively impacted.
Diesel prices drop.
The good news for trucking is the reduction in price for diesel fuel. According to the U.S. Energy Information Administration, the national average price for diesel in April ended April at $3.51 per gallon, about fifty cents less than the price in April 2024.
At 6 miles per gallon, fuel expense would be about 8 cents per mile lower — a welcome savings for struggling truckers. However, fuel surcharges would also be reduced, offsetting the savings for many operators.
The future remains uncertain.
The Fed is scheduled to meet again on June 11 — and, once again, a reduction in interest rates is not expected.
Meanwhile, tariffs will remain at the forefront of economic predictions. It’s anyone’s guess how severely the trucking industry will be impacted, both by increased equipment costs and fluctuations in the freight market.
Carriers that weather the storm will do so with effective cost control measures and load planning that takes advantage of lanes with the best rates.
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.
