With 20%-25% of US surface freight involved in international trade, tariffs are set to extend the for-hire freight recession. While recessionary effects of the trade war are still to come, we expect higher cost equipment as a result of tariffs to eventually tighten capacity and help end the long for-hire freight recession, according to the latest release of the Freight Forecast: Rate and Volume OUTLOOK report.
“As Q2 begins, retail sales are still brisk as consumers snap up pre-tariff prices, but freight demand fundamentals face major self-inflicted tariff headwinds. The pre-tariff inventory stocking period will soon reverse, and consumption will fall as prices rise,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “We expect a few more months of brisk demand for pre-tariff goods, followed by a tariff adjustment period with lower goods demand. Freight is very much in the crosshairs of the trade war.”
“The trucking industry also faces considerable supply shocks related to new US government policy. Both equipment and labor supply are affected, and this is likely to press truckload rates up after tariffs take their toll,” Denoyer concluded.
Freight Forecast Report Overview
The monthly 58-page ACT freight forecast provides analysis and forecasts for a broad range of U.S. freight measures, including the Cass Freight Index, Cass Truckload Linehaul Index, and DAT spot and contract rates by trailer type. The service provides monthly, quarterly, and annual predictions for the TL, LTL, and intermodal markets over a two- to three-year time horizon, including capacity, volumes, and rates. The Freight Forecast provides unmatched detail on the freight rate outlook, helping companies across the supply chain plan with greater visibility and less uncertainty.
ACT Research Overview
ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.
Additional Resources
While the outlook is fraught with uncertainty and recession risks are rising, we highlight a silver lining for the for-hire freight market. Elevated uncertainty is starting to turn the tide of private fleet capacity additions after a long for-hire downturn, according to the latest release of the Freight Forecast: Rate and Volume OUTLOOK report.
“Even the EPA low-NOx standards initially promulgated by the first Trump administration planned to go into effect in 2027 are now under review,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “The significant private fleet prebuying in preparation for these rules in recent years is set to end or even reverse as tariffs hit, which is likely to reduce equipment supply. While the freight demand outlook is lower, trade and regulatory turmoil are also supply shocks, which we expect to lead to freight rate inflation later this year.”
“Shippers added to safety stocks in anticipation of tariffs, and deteriorating consumer fundamentals due to elevated uncertainty suggest the for-hire freight recession will persist near term. Consumers made extra pre-tariff purchases as well, and are likely to pull back on spending as they anticipate higher inflation.
The long for-hire freight recession already led US Class 8 tractor sales below replacement levels in the first few months of 2025, so capacity is finally tightening after significant expansion in recent years. This isn’t helping the for-hire market yet, but freight demand should still increase seasonally in the coming months, and tighter capacity should mitigate the negative effects on freight demand from the trade war,” Denoyer concluded.
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