State of Freight – January 2025:
Not All That Glitters is Gold
Remember watching Looney Tunes and seeing Wile E. Coyote run off the cliff but not actually fall until he realizes there’s no ground under him? We’re basically living in the freight equivalent of that.
Things look stable from a distance:
- Factories are still working.
- Trucks are still moving.
- GDP is still growing.
But get closer, and the reflections warp like a funhouse mirror.
Let’s dive into the new reality of American logistics in this month’s freight market update, brought to you exclusively by our in-house team of transportation geniuses.
And for My Next Trick
The most dramatic swing in import demand since the Global Financial Crisis happened in plain sight last year, and it barely made a ripple in mainstream coverage (probably because it was too busy trying to make Odessa A’Zion famous).
- Real goods imports plunged from a year-over-year gain of 15% in Q1 to a 3% decline in Q3.
- That’s an 18-point reversal in just two quarters.
Why? A surge in non-monetary gold shipments distorted the official trade deficit, giving the appearance of improvement. But when you strip that category out, the goods deficit actually widened by 11%.
Trucks don’t haul bullion. They haul goods. And the goods market fell through the floor.
Manufacturing Didn't Get The Memo
If manufacturing were a guy at a party, he’s still upright and holding a drink, but he’s also scanning for the exit and hasn’t said anything in 20 minutes.
December’s ISM Manufacturing PMI reading landed at 47.9, its lowest point of 2025. That would normally suggest contraction, but the details tell a more nuanced story. Production stayed in expansion territory at 51.0, and customer inventories were marked as “too low” for the fifteenth month in a row.
Meanwhile, regional sentiment is all over the place. The Philadelphia Fed’s index sits deep in the red, but six-month expectations are sky-high. Kansas City was the only district showing current expansion, but it too has cooled.
Mayday for Middle Mile
The freight market is no longer moving together. Local and regional freight is holding up. Long-haul is in freefall. But the map still looks the same, which makes it all the more confusing:
- Long-haul TL (LOTVI): down 26% year over year
- City/local TL (COTVI): down just 1%
Import volumes are the lifeblood of long-haul moves. When they dry up, so does the entire middle-mile cascade, from port to transload, from distribution center to regional hub. That part of the network has thinned out, and the result is a market where two lanes running through the same state can tell you completely different stories.
That’s the bifurcation. Same trucks, same highways, different realities.
Capacity Confusion
At first glance, capacity looks like it’s correcting. Since January 2023, more than 20,000 fleets have exited the market. But if it feels like the exit hasn’t made a difference, that’s because much of the capacity that entered during the pandemic boom wasn’t real in the first place.
Between 2017 and 2022, fleet authorities grew by over 50%, but driver employment only increased by 10%. That mismatch tells you everything. Most of the “growth” was in single-truck operations or shell authorities with no drivers attached. The capacity was on paper, not on the road.
Today, employment has returned to 2017 levels, but the fleet count remains elevated by nearly 67,000 authorities. That’s why we’re seeing higher utilization among active carriers while the spot market still feels dry. The people actually moving freight are working harder. The ghost fleets are just sitting there, inflating the metrics.
There’s been a lot of noise about enforcement tightening the market, particularly around non-domiciled CDL holders and shell authorities. But that’s not what’s driving recent capacity shifts. If it were, we’d see driver exits and fleet revocations moving in lockstep.
Enforcement is relevant, but it’s not today’s story. It’s a 2027 problem, when demand comes back and the bar to reenter is higher.
The Return to Rail
When there’s no need for speed, rail wins. Domestic intermodal volumes surged to multi-year highs, a clear sign that shippers are prioritizing cost over urgency. Freight is still moving. It’s just moving slower, cheaper, and with fewer touches.
Shippers are consolidating what used to be split moves. Rail picks up the longer legs, and that forces a new ecosystem: fewer truckload shipments, more drayage at either end, and tighter market conditions that reflect strategic pivots instead of broad strength.
The Christmas Miracle is Over
One of the stranger dynamics in late 2025 was how fuel prices and rejection rates moved in opposite directions. Diesel dropped nearly 40 cents per gallon between mid-November and the end of the year. Normally, that kind of fuel price relief puts downward pressure on spot rates. Instead, linehaul pricing found unexpected tailwinds.
Tender rejections climbed past 13% by Christmas, the highest level in years, and spot rates jumped in response. But like most holiday-driven movements, the bounce didn’t stick. Rejection rates quickly fell in January, and the broader market settled into a familiar pattern.
The Economy Grew, but Not Because of What You'd Think
U.S. GDP rose at an annualized 4.3% in Q3, beating expectations and helping to fuel the illusion that the economy is powering ahead. But the numbers don’t say what people think they say.
The real growth came from a swing in trade balance (caused by the earlier import collapse), a surge in service-sector spending, and increased government outlays.
What matters for freight is this: productivity rose, but employment didn’t. Manufacturing employment dropped another 8,000 in December. Trucking transportation lost 22,000. These are the jobs that lead to shipments, and they’re still missing.
We've Reached The Bottom, but The Ground is Uneven
The chaos of 2025 left a freight market that’s strangely calm on the surface but full of unresolved tension underneath. Destocking is largely complete. The tariff-fueled front-loading spree is behind us. But the next move, whether it’s a demand resurgence or another retreat, hasn’t shown up yet.
Here’s what we’re watching in Q1:
- First, the January PMI reading (due February 3) will help gauge whether manufacturing sentiment is turning a corner. A reading above 48.5 would suggest destocking has run its course, while anything below 46 could indicate further contraction.
- Second, import volume trends will be key. If the Import Ocean TEU Index (IOTI) begins to rebound, it may indicate shippers are rebuilding safety stock, which is a sign of confidence and forward planning. If volumes continue to fall, it means the market is still waiting, and the air pocket hasn’t closed.
- Third, the spread between long-haul and city freight volumes will offer clues about how quickly the freight economy is rebalancing. A narrower gap between LOTVI and COTVI would signal long-haul freight is stabilizing. A persistent 20+ point divergence means the bifurcated market (strong final mile, weak middle mile) is sticking around.
- Finally, watch for whether rail volume levels off or retreats. If domestic rail remains elevated, it’s a sign cost-conscious shippers are still avoiding trucking’s middle mile. If it drops, urgency may be creeping back into supply chains, and that could pull some freight back onto trucks.
- First, the January PMI reading (due February 3) will help gauge whether manufacturing sentiment is turning a corner. A reading above 48.5 would suggest destocking has run its course, while anything below 46 could indicate further contraction.
Until then, the freight market isn’t in crisis, but it’s not in control either. It’s somewhere in between, and that’s often where the weirdest things happen.
