Freight Market Trends and Forecasts for Q2 2025

The US freight market is entering a pivotal phase as it seeks to shake off tariff-driven demand uncertainty to resume its cyclical recovery, making progress since late last year. An interplay of inflation, volatile tariff policies, and labor market weakness makes demand conditions difficult to forecast going forward. This blog dives into strategies for navigating the months ahead in an increasingly complex environment for shippers, carriers, and supply chain professionals.‍

A Note from Chris Pickett, Our Chief Commercial Officer 

While Q1 marked the third consecutive quarter of Y/Y inflationary spot truckload linehaul rates, it sure didn’t go as we thought it would. After opening the quarter with rates posting +12.5% Y/Y in late January, the market reversed course to close the quarter at a much tamer +3.0% Y/Y. Though still inflationary, it was a slight step backwards from Q4 2024’s +5.5% Y/Y spot rate close.

We attribute much of the weakness in demand to a surge of executive orders from the new administration, affecting tariff policy, trade, and government spending. Uncertainty around long-term tariff rates has made supply chain planning incredibly difficult, with many firms adopting a “wait and see” approach pending more clarity from Washington. And many consumers, who were stretched to the limit as it was, now face the specter of even higher inflation on top of increasing weakness in the labor market.

We expect this overhang on forward consumption, and therefore freight demand, to hamper but not squash the pace of the market’s cyclical recovery progress. It will no doubt be a bumpy ride until US tariff levels stabilize, but both spot and contract linehaul rates will likely continue to march higher in Q2 regardless, just at a slower pace than expected at the start of the year.  

For shippers, this means freight costs are still climbing, but at an increasingly uneven pace. Compounded with challenges in forecasting both demand and supply in many industries, supply chain flexibility and velocity will be more important than ever for establishing and maintaining competitive advantage. In many ways, these are the times that Flock’s Shared Truckload (STL) model was built for. Shippers get all of the speed and reliability of Full Truckload (FTL) shipping while only paying for the capacity they need. And carriers get to maximize the revenue yield of their fleets in a still tough freight market. So bring on Q2, whatever it has in store for us!

‍The Freight Market Trends You Need to Watch 

Demand Volatility and Capacity Shifts 

• Deferred Consumption: Reluctance to make big decisions at the consumer level amidst macroeconomic uncertainty. Tepid demand could contribute to weakness in industrial production and slower spot rate inflation.
• Slowing capacity exits: Carriers are currently at their lowest end of profitability, but are still somewhat protected by still low diesel prices.  

The Role of Seasonality 

• Rate pullback: Rates pulled back significantly from early January highs. We’ll have to wait and see if this is normal seasonality reactions or something longer lasting. 
• Late rebound: Expect rates to rebound higher by the end of Q2, the magnitude of such to depend on industrial production and capacity demand. 

Macroeconomic Uncertainty 

• Industrial Slowdowns: Major supply chain investment and planning decisions are frozen in the midst of on-again, off-again global tariff posturing. 

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Key Market Insights for Q2 2025 

• Spot rates will slowly rebound. Q1 2025’s close at +3.0% Y/Y was a step backwards for spot TL linehaul rates after two consecutive quarters of inflationary market recovery, but we still predict growth: +8-10% Y/Y in Q2 and +20% Y/Y by the end of the year. 
• Demand indicators continue to diverge. The Cass Shipments Index opened Q1 at -12.4% Y/Y, its lowest print since Q2 2021, but has since revised slightly higher to -7.8% Y/Y. Durable goods consumption, industrial production, and relative inventory levels all remain constructive. ‍
• Tariff impacts are taking center stage on where the economy and freight demand go from here. If the tariff battles settle favorably and quell uncertainty in Q2, we could see a material release in pent up demand and an acceleration in freight rates into the back half of the year.

Shared Truckload Spotlight

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Looking Ahead 

Going forward, expect both spot and contract markets to grind higher, though at a slower pace than previously expected, given the capacity demand risks stemming from US tariff uncertainty and a weakening labor market. However, uncertainty doesn’t need to mean inaction. Shippers will likely experience at least some version of rate inflation in the next quarter as the market flips and truckload costs per mile go up, and the penalty cost of shipping air or otherwise wasting TL capacity with it. Optimizing your network and reducing waste through Shared Truckload is one way to stay nimble. 

A tariff-driven trade policy is creating a ton of uncertainty for Q2 2025. Shippers need strategies focused on flexibility, optionality, efficiency, and proactive data monitoring to thrive in this evolving market. Establishing strategic partnerships, optimizing supply chain operations for resilience, and keeping a close pulse on freight market forecasts will help businesses gain a competitive edge.