The two biggest questions in any economic downturn are, “How bad will it get?” and “How long will it last?”
When applied to the current freight recession, the answers have been a moving target. Forecasts that once pointed to an easing by late 2024 have shifted repeatedly, with many now pointing toward a modest, uneven recovery stretching well into the first half of 2026.
For carriers, this ongoing uncertainty is compounded by a painful reality: rising operating costs continue to put pressure on margins while freight rates struggle to gain meaningful traction.
The Capacity Conundrum: A Supply and Demand Imbalance
The fundamental issue in trucking is capacity—the “supply” side of the freight-hauling equation. When too many trucks are chasing too little freight, rates fall. Conversely, tight capacity drives rates upward. The good news for the supply/demand balance is that new truck sales are slowing, which is the necessary market mechanism for removing excess capacity.
However, the current cycle is complicated by several distorting factors:
- Regulatory Pre-Buy: Previous EPA regulations pushed many carriers to acquire new trucks ahead of expected price increases and maintenance complexities, temporarily bloating the national fleet.
- Tariff Volatility: Trade policy shifts—including threatened and enacted tariffs—have repeatedly roiled the market. These actions spurred temporary peaks in consumer spending to beat future price hikes, followed by subsequent drops in freight volumes and rates once the spending faded.
Industry Data from August 2025: A Mixed Bag
The latest reports, analyzing August data, continue to show the mixed signals that have defined the market correction.
Capacity Reduction is Underway
Tim Denoyer, Vice President and Senior Analyst at ACT Research, notes that excess equipment purchases (driven by prior regulations and pre-tariff front-loading) and soft freight volumes have kept the truckload market from tightening as quickly as hoped. However, there is a positive signal for future recovery:
“Class 8 tractor production will drop by more than 30% from the first half to the second half of this year, and this reversal will eventually support a recovery in for-hire demand.”
ATA Tonnage Index (Contract Freight)
The American Trucking Associations (ATA) reported a rare second-straight sequential gain in its For-Hire Truck Tonnage Index, which primarily tracks contract freight movement:
- For-hire truck tonnage gained 0.9% in August after a 1.1% gain in July.
Despite this positive momentum, ATA Chief Economist Bob Costello was cautious about the immediate future. “While I’d like to predict a strong rebound in freight levels through the upcoming holidays, I can’t. I believe traditional seasonal patterns are off this year as shippers adjust to tariffs.”
Cass Freight Index (Multimodal Shipments)
The Cass Freight Index for Shipments, which covers all domestic freight modes, including Truckload (TL) and Less-Than-Truckload (LTL), painted a weaker picture of overall activity:
- The Shipments Index was down 1.5% from July and 9.3% lower than August 2024.
- The Index for Expenditures (total dollars spent on freight) also fell 0.4% year-over-year.
Denoyer, writing for the Cass Index, elaborated on the disparity: “The long freight downturn persists, though we note that truckload freight is up in the Cass data while LTL has declined significantly.” This indicates LTL carriers, in particular, are currently struggling with lower shipment counts.
The Inferred Rate Discrepancy
Despite the weakness in volume, one rate metric saw a notable increase: the Cass Inferred Freight Rate Index showed a 9.8% increase in August compared with last year.
Crucially, this surge does not signal a broad rate recovery. Instead, it is largely due to a mix shift where LTL freight (which is typically cheaper per shipment) is a smaller percentage of the overall dollars spent, making the average cost per shipment (which is dominated by Truckload) appear higher.
A Glimmer of Hope: Lower Borrowing Costs
On the broader economic front, one key event occurred in September that could eventually benefit the market:
- The Federal Reserve Board cut its key interest rate by a quarter-point, projecting two more rate cuts yet this year.
Lower interest rates will ultimately reduce the cost of mortgages, car loans, and, most importantly for carriers, truck and business loans. While lower borrowing costs could incentivize new equipment purchases and add capacity (a potential headwind), the long-term goal is to stimulate general consumer and industrial spending—spending-the fuel for all freight demand.
Additionally, some industry leaders are seeing signs of pent-up demand. At a recent FTR Transportation Intelligence seminar, Paul Rosa of Penske Truck Leasing noted that fleets are eager for growth but are simply waiting for clearer signals on volumes and rates before committing to new equipment.
Q4 2025 and Beyond: Patience is Required
What happens for the remainder of 2025? Most economists are predicting slow, uneven improvement. We are currently seeing the necessary market adjustments—capacity is leaving the for-hire market and new truck builds are dropping significantly—which are the preconditions for a recovery.
While seasonal volume spikes leading into the holiday season are expected to be muted compared to historical norms, the foundation for a market turnaround is slowly being laid. For now, carriers should focus on operating efficiently, controlling costs, and securing favorable contract rates as the market correction continues its “glacial pace” toward the next upcycle.