If it feels like your supply chain is being held together by nothing but duct tape and a dream, you’re not alone.
Manufacturing’s still playing hot potato with a hand grenade, truckers are dealing with job cuts and regulators, and the only thing rising faster than rejection rates is the cost of pretending everything’s fine.
Let’s take a deep dive in this month’s freight market update, brought to you by our in-house logistics geeks.
Manufacturing’s slow, ongoing decline
The recession that keeps on rollin’
Manufacturing is in its 25th out of 26 months of contraction, and not in a dramatic, headline-grabbing way, but more like being slowly crushed by a steamroller while the rest of the economy pretends not to notice.
Think of it like this: you own a hardware store. You’re paying $20 for hammers but can only sell them for $13. You don’t want to raise prices because customers will walk, so instead, you just… keep losing money.
Cool business model, right?
And it’s not just a theory. Here’s what the numbers say:
- Input Costs: Up from 31.2% in Dec to 59.8% in May.
- Output Prices: Up from 7.3% to only 29.5%.
That’s a 30-point gap, the widest in the history of the Fed’s manufacturing surveys. Companies are holding the bag and getting scorched.
Job cuts are also happening without panic headlines, but it’s death by a thousand HR memos:
- 78% of firms have hiring freezes
- Early retirements and layoffs are quietly expanding
- Employment index now at 43.8%, pandemic-era levels
Inventory levels across the customer base (retailers, distributors, industrial users) have been flashing “too low” for more than a year. Everyone’s running lean, and when demand finally shows up, there’s a real risk nobody will be ready to meet it.
Manufacturing's mood swings
The fed’s regional roast
If you want to get a feel for how scattered the manufacturing story is, look no further than the regional Fed surveys:
Philly Fed:
- Wild swings: from +44.3 in Jan to -26.4 in April, now -4.0 in June
- Verdict: Like a cat with zoomies: lots of movement, no clear direction.
Empire State (NY):
- Still negative at -6.0
- Verdict: Used to be a reliable bellwether. Now it’s just background noise in a region dominated by finance and imported Pelotons.
Richmond Fed:
- Composite: -12.0
- Shipments: -18.0
- Verdict: With a solid methodology and the closest correlation to national trends, its latest shipment data points to serious Q3 production cuts. We should probably be listening to this one.
Dallas Fed:
- Production: -15.3
- Verdict: Still chained to oil and gas like it’s 1999.
Kansas City Fed:
- Composite: -8.0
- Verdict: Slow, steady decline thanks to uncertain crop markets.
Chicago (CFNAI):
- Manufacturing: -0.28 (3-month average)
- Diffusion index: Only 42% of indicators improving
- Verdict: Midwest is tired. Really tired.
No region is crushing it. Even Richmond’s bad news feels like a win just because it’s honest.
Old trucks are creating tight markets
The rejection rate paradox
Trucking employment is down 1.7% from last May, and Class 8 orders are off a cliff, down 45% YoY. Trailer orders are down too. Used trucks are aging, breakdowns are rising, and nobody’s in the mood to spend on new gear.
But somehow, rejection rates are climbing:
- Vans are back at 7.5%, near highs from earlier this year.
- Reefer and flatbed are following suit.
So, tight capacity, older fleets, fewer drivers, and not a ton of volume. What could go wrong?
Tender volumes are still underwhelming
Demand is flatter than a day-old soda
Tender volumes on SONAR are underwhelming: lower than 2023, barely better than 2018. Flatbed had its moment in Q1 and reefer’s flickering now, but everything’s still below the five-year average.
Even Cass Shipments Index is continuing its three-year streak of sadness:
- Down 5.5% in 2023
- Down 4% in 2024
- Trending down another 2% in 2025
CarrierSource data says shippers got active in Q2, but it feels more like scattered bursts than a real trend.
Final grade: C-
Here’s the bottom line: This market has all the ingredients for a turnaround (import surges, low inventories, rising rejection rates), but no spark to light the fire.
Manufacturers are stretched, consumers are cautious, and the Fed is… complicated.
There’s three ways Q3 could go:
Inventory snapback
- Retailers realize they’re too lean, consumer demand picks up, and boom: restocking frenzy. Prices rise, margins recover, and everyone briefly thinks the recession is over. Don’t get too comfortable.
- Keep an eye on July retail sales and August back-to-school orders. If those pop, buckle up.
Margin collapse
- Manufacturers finally say “enough” and raise prices. Customers say “nah.” Demand falls off a cliff. This one ends with layoffs and a deeper recession.
- Watch for July’s “Prices Received” index jumping above 50 while New Orders falls below 45.
Muddle through
- The Fed cuts rates just in time. Demand doesn’t spike, but it steadies. Margins recover through efficiency, not pricing. This is the Goldilocks scenario. It’s boring, but survivable, like reading through this entire article.
- Look for PMI readings in the 48–52 range over the next few months.
