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The short-lived seasonal spike in early July delivered only a brief respite from the stagnant freight market. Seasonal demand caused rates to rise around the Fourth of July holiday, but they quickly slid back, returning to the floor with both spot and contract rates finishing the month flat year-over-year.
On the demand side, activity out of China and Hong Kong drove a sharp import recovery as shippers front-loaded what is typically late-summer retail volume. With inventories still elevated and most seasonal freight already in position, that early push suggests the peak import season, typically seen later in Q3, is already winding down.
Supply remains mostly abundant even as carrier attrition continues. However, there are signs of real challenges that could lead to vulnerable conditions should demand firm up or grow materially. Class 8 tractor orders remain below replacement levels, signaling a likely decline in equipment levels that could tighten capacity in the months ahead. Recent legislation regarding driver English proficiency requirements has also had little, if any, impact on supply conditions.
Looking ahead, fall retail shopping and Labor Day demand may give volumes a slight boost, especially for temperature-controlled freight. But if last year is any indication, the impact will likely be muted. Beyond the near-term, the conditions defining this summer — soft demand, steady supply, low rates and a wide spot-to-contract rate gap — appear set to carry into fall.
Read the full report for a closer look at trends across demand, supply and rates.
July import volumes surged roughly 25% from June, driven almost entirely by shipments from China (44%) and Hong Kong (48%) following the temporary easing of tariffs earlier in the year. Much of that freight moved by rail rather than over the road, which kept truckload demand and rate pressure in check despite near-record volumes at the Port of Los Angeles.
On the domestic side, spot activity climbed sharply — up about 20% year-over-year — while contract volumes remained below prior-year levels. The timing of the import spike pulled typical late-summer retail freight into July, aligning with the seasonal lift around the Fourth of July. Spot activity faded quickly and rates returned to the floor as the month progressed.
With the bulk of seasonal retail imports already stateside, freight demand faces renewed downward pressure through the remainder of Q3. Retail import forecasts point to significant pullbacks through year-end as earlier pull-forward reduces the need for replenishment. New manufacturing orders and the order backlog also continue to contract. While fall retail shopping and Labor Day may give volumes a temporary bump, the gains are likely to be muted.
Tariff policy remains a potential risk, though no immediate changes are expected. For now, steady supply and subdued demand suggest the market will stay soft heading into fall.
Ample truckload capacity kept last month’s demand surge from generating more than short-lived rate volatility. Since the holiday, conditions have eased in line with typical patterns. Van tender rejection rates then followed the usual post-Fourth of July decline, while reefer rejections held relatively stable. Flatbed rejections eased, landing below earlier-year highs but still above year-ago levels.
Van capacity is expected to remain abundant through most of this quarter, with a slight blip possible around Labor Day. Reefer markets are likely to see a modest bump during the same period. Beyond the holiday, persistently weak equipment orders indicate supply could soon begin to tighten, following demand to the downside. If demand were to stabilize and begin to grow, it could expose ongoing capacity reductions.
Spot rates spiked briefly around the Fourth of July but quickly fell back, with all three major equipment types trending down as August began. The spot-to-contract rate gap remained wide, and rail’s absorption of much of the July import surge further limited upward pressure on truckload rates.
Rates should follow typical seasonal patterns through late summer. A modest Labor Day bump is expected, particularly in reefer markets, but any disruption will likely be short-lived. Outside of that, rates across all equipment types are expected to remain flat to down as soft demand and gradual capacity attrition persist.
Inflation held steady in July, signaling minimal impact from tariffs on prices so far. The flat reading has analysts split on its implications for potential interest rate cuts at the Fed’s September meeting. While some investors are pricing in a cut, others expect the Fed to wait for critical jobs data before making a move. Bank of America reported consumer spending rose 1.8% year-over-year — the highest growth rate since January — with gains across both goods and services.
Consumer health should support freight demand in the near term, though higher tariffs may not impact prices until early next year as retailers adjust to new inventory. A meaningful shift in interest rates could also strengthen the housing outlook for 2026.
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