The freight market is currently navigating a period of unexpected flatness and uncertainty, defying many predictions made at the beginning of the year. Experts recently gathered on the Meet Me For Coffee Podcast to assess the mid-year landscape, offering insights into the economic forces at play and what lies ahead for the industry.

The Current State: Flatness and Surprises

Many anticipated a stronger market in the first half of the year. Chris Pickett, Chief Commercial Officer at Flock Freight and an analyst at Picket Research, admits, "the current state of the economy is unexpectedly strong... the freight market unexpectedly flat to neutral." He had been quite bullish in January, expecting a steady march upwards in freight rates based on historical cycles and strong macro indicators like consumption and GDP. However, the one "strange bird" he noted was flat year-over-year U.S. industrial production despite strong consumption. The landscape shifted dramatically with the onset of trade wars, with executive orders leading to additional tariffs on China, Canada, and Mexico.

Jason Miller, the Eli Broad Professor of Supply Chain Management at Michigan State University, echoes this sentiment, stating, "I was quite bullish as well." He had written in December 2024 about significant tailwinds, including expected interest rate cuts that would boost housing. Yet, new housing starts were down 7% year-over-year in May. Miller observes, "Basically what we have right now is a repeat of 2024 from a pricing side." He attributes this flatness almost "100% due to the tariffs and the tariff uncertainty," which has caused new order momentum to "fallen off of a cliff."

Dean Croke, a market analyst at DAT, had a more accurate prediction, foreseeing "fairly flat rates" for the spot market. He noted that despite surges in volume, capacity consistently jumped back in, flattening rates and indicating a market at equilibrium. David Spencer, Vice President of Market Intelligence at Arrive Logistics, highlights that while "pricing this year is the same... this year is definitely not the same," emphasizing the prolonged depressed rate environment and the difficulty in assessing true demand weakness versus pull-forward effects due to tariff volatility.

Economic Drivers and Key Concerns for the Next Six Months

Experts are closely monitoring several economic data points:

• Consumer Spending and Inflation: David Spencer points to the consumer's ability to maintain spending as a key driver of freight demand.
• Manufacturing Activity: While recent data showed a slight uptick in production, new orders remain down, indicating a mixed bag.
• Trade Wars and Geopolitics: Jason Miller cannot "stress enough how big of a trading partner the European Union is" with the United States. He notes the uncertainty surrounding the EU trade situation and USMCA, which could further impact freight demand if a full trade war ensues. The current application of tariffs on non-USMCA compliant finished vehicles, with potential future expansion, adds to the complexity.
• Interest Rates: While there's a strong desire for interest rate cuts to stimulate the economy, David Spencer explains that the data hasn't fully supported them yet. He stresses that "it's really the cumulative effect of cuts over time... that really make a difference."
• Real Estate Market: The housing market remains a concern. Jason Miller details that new single-family starts are down about 7.5% year-over-year. Existing single-family home sales are also significantly down compared to pre-COVID levels, sitting around 4 million units annually versus a historical 5.4 million or even over 6 million post-COVID. This softness directly impacts freight volumes related to appliances and furniture.
• Lack of Demand Generators: Miller struggles to identify sectors that will generate significant freight, citing no containerized import surge, declining fracking rig counts, and potentially pulled-forward auto demand. He also notes the expiration of tax credits for energy-efficient appliances, coinciding with tariffs making them more expensive, creating "poor timing."

Capacity and Profitability in a Flat Market

The capacity side of the market is holding steady, surprisingly so to some. Dean Croke’s analysis of a cohort of 20,000 carriers revealed they lost 14 cents a mile last year, but declining diesel prices have provided a tailwind for smaller operators. He notes that "carriers don't need to go anywhere" financially. Dean emphasizes that while larger fleets face "crushing margins" and contract rates remain flat, many carriers are profitable or breaking even due to savvy decisions made during the pandemic, such as paying off equipment when financing was attractive.

Jason Miller corroborates this, stating that "capacity today is very similar to what it was in 2019." While there's been a reallocation to a larger number of small, young carriers, many who made "dumb things like buying equipment at incredibly inflated prices in 2022" are gone. The remaining smaller carriers often have lower cost structures, allowing them to survive.

Chris Picket points out that the spot market has been "arguably unprofitable for the last six or seven quarters," with marginal costs up significantly while spot rates were down. This, combined with dimming optimism due to the trade war, could force more fleets to idle. However, he doesn't foresee rates going much lower, suggesting a "slow melt up to say a 10, you know, 12% inflationary scenario" if the economic fog clears.

The Fading Peak Season and Supply Side Wildcards

The traditional peak season for the full truckload market seems to be diminishing. Jason Miller states, "I don't think so," regarding a significant peak, suggesting that "we may have seen peak season especially on the import side." The market's equilibrium means that even short-lived disruptions, like storms or road check weeks, can cause spikes, but these are typically short-lived and quickly re-equilibrated.

One significant wildcard mentioned is the investigation into non-domicile Commercial Driver's Licenses (CDLs). David Spencer believes this needs to be watched "really closely as to what impact that could have." Dean Croke and Jason Miller express skepticism about its material impact, arguing that any "chilling effect" has likely already occurred, with affected drivers shifting to areas like drayage where English proficiency is less critical. Miller refers to the ELD mandate as an example of a predicted "sky [falling]" scenario that ultimately had little long-term impact on spot rates.

Advice for Industry Professionals

In this volatile and uncertain environment, experts offer critical advice:

• For all stakeholders:
  
  • Follow expert insights and stay informed.
  • Be flexible in your network and operations.
  • Know your cost structure and make smart decisions.
  • Plan for different scenarios—best, worst, and middle cases.
  • Pursue efficiencies through automation, AI, or general operational improvements.
• For Shippers: "Don't get complacent," warns Chris Picket. While it's a shipper's market now, it won't last forever. Jason Miller adds, "if you act opportunistic now, carriers will remember when that time comes to get their revenge."
• For Carriers: Dean Croke advises to "slow down" and prioritize cost reductions, particularly focusing on speed given diesel's operating cost share. He also stresses "work with people like David in particular to build relationships, try new things... you need to have really good partnerships with good people... to make sure you're in the right place at the right time."
• For Brokers: Jason Miller advises "playing the game, knowing the market better than your rivals."

The general consensus indicates that the freight market will likely remain flat year-over-year for the remainder of 2025, potentially into early 2026, barring unforeseen geopolitical or policy shocks. Adaptation, efficiency, and strong partnerships are paramount for navigating these persistent headwinds.