Truckload Market Update: 1Q2025
With Q4 behind us, the freight market continues to show signs of recovery. The quarter followed a typical peak season pattern, with spot rates and tender rejections rising, even though overall volumes remained lighter than the previous year. January held onto those higher spot rates through two winter storms, but rates are now trending downward as the market settles into the usual Q1 slowdown.
Contract rates remain lower than last year, but they’re expected to climb in the coming quarters as RFP cycles reset and spot rates pick back up. Right now, the market is holding steady, with tender rejections reaching more balanced levels despite lower shipment volumes. While seasonality seems to be back, a full recovery — marked by increased spot rates and rising contract rates — likely won’t happen until at least the second half of 2025.
Let’s take a closer look at where we’ve been and where we might be headed.
Rate trends and fuel costs
Contract linehaul rates ended 2024 lower than in 2023, with van rates down 0.6% and refrigerated rates down 2.7% year-over-year (YoY) in Q4. However, contract rates appear to have reached their cycle floor and are expected to start rising gradually in the coming quarters. Generally, contract rates trail spot performance by 60 to 90 days.
Spot rates began recovering in Q3, with van spot rates rising 5.2% YoY in Q4. Growth was moderate in October and November (1.7% and 1.3%, respectively) before jumping to 4.8% in December. Refrigerated spot rates followed a similar pattern, up 4.7% YoY in Q4, though December's growth was more subdued at just 0.5%.
Fuel prices have also stabilized. Diesel prices, which had been declining throughout 2024, are now about 6% lower than this time last year and 15.8% lower than in 2023. This drop translates to a roughly $0.05 per mile cost reduction in spot rates.
Capacity supply and freight demand
Total operating authorities remain elevated compared to the start of the previous freight cycle in Q2 2020. However, the pace of authority revocations has slowed. FTR data suggests new carrier entries are increasing, while major carrier failures are tapering off.
Historically, the end of the year sees higher levels of carrier exits, and upcoming revocation data could further impact capacity. However, capacity appears to be stabilizing as YoY pricing conditions improve, exits slow, and new carrier authorities rise.
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Source: Federal Motor Carrier Safety Administration
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Analysis: FTR Transportation Intelligence
Broker market trends
Brokers continue to face operating challenges despite spot rate growth. FMCSA data shows that active property broker operating authorities declined 10.8% from 2023 and 17.7% from their 2022 peak. Rising operating costs and lower rates may drive further broker and carrier exits. However, disruptions can be minimized by working with financially stable brokers who understand market cycles and internal costing.
Freight volumes and tender rejections
Outbound tender volumes, as reported by Sonar, fell below 2023 levels in December, reversing the previous trend of YoY volume expansion. 1Q25 volumes are expected to follow normal seasonal trends, with increases likely in the spring.
Sonar’s Tender Reject Index rose above 5% in Q4, spiking due to end-of-year holiday capacity disruptions. This could indicate a more balanced freight market despite lower YoY volumes. Rejection rates historically dip in January due to softer shipping volumes but remain above 5% as of this report. It remains unclear whether this increase is due to weather disruptions or if shipper routing guides are showing signs of stress due to a rising market.
Generally, rejection rates in the 5% - 8% range indicate a more balanced market. Additionally, rejections could rise if spot rates continue to show YoY growth and extended contractual agreements negotiated at the rate floor become less attractive.
Imports
Current import ocean TEU volumes are higher than the past four years but are expected to decline as foreign exporters pause operations for the Lunar New Year holiday. With the East Coast port labor agreement finalized, potential disruptions appear to be resolved. Meanwhile, tariff policies contributed to increased imports in late Q4 and early Q1, with future volumes depending on trade policy developments.
Economic indicators to watch
The Institute for Supply Management reported a December Purchasing Managers Index (PMI) of 49.3, marking the ninth consecutive month of contraction. However, the New Orders subindex, a leading indicator of manufacturing health, remained in expansion territory for the second straight month.
Tim Fiore, chair of the ISM PMI survey, said, “U.S. manufacturing activity contracted again in December but at a slower rate compared to November. Demand showed signs of improving, while output stabilized, and inputs stayed accommodative.”
Retail inventories were stable in October and November at 1.32, down slightly from the August-September level of 1.33. Inventory levels remain in the optimal range, with shippers leaning toward a “just-in-time” fulfillment strategy.
Key takeaways
- Spot rates are up year-over-year, with contract rates expected to follow.
- Seasonal trends have returned, with softer volumes and lower rates in Q1 before produce season begins in Q2.
- The supply-demand balance is stabilizing, with tender rejections suggesting a more balanced market despite lower YoY volumes.
- Manufacturing remains subdued, and retail inventories are at manageable levels, though inflation risks tied to federal trade and monetary policy persist.
- While conditions are improving, the freight market is still recovering, with stability dependent on broader economic factors.
By understanding these market trends, businesses can better navigate current conditions and prepare for shifting demand patterns in the months ahead. Our full truckload team is here to help you succeed no matter what the market is facing. Contact us today for help with your next shipment.
About ArcBest Truckload
ArcBest Truckload delivers reliable freight shipping solutions for businesses looking for a dependable full-truckload shipping partner. Our best-in-class truckload brokerage service, MoLo®, backed by our robust asset-based network, ensures customers have the capacity and flexibility to manage their national, regional and cross-border shipments efficiently.