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The results of the 2025 holiday season stress test revealed a freight market that is functioning very differently from how it did a year ago.
As severe weather and other seasonal factors drove a strong spike in tender rejections, more freight moved to the spot market and rates rose sharply. Though that pattern is typical of the holiday period, this year, carrier pricing behavior became more aggressive as spot market leverage increased, driving December spot rates to the highest point in several years.
While rates remain elevated on a year-over-year basis, volatility was beginning to subside as of mid-January, but a major winter storm now threatens to interrupt that normalization.
Uncertainty around the storm’s path and potential severity makes its long-term impact on the freight market hard to predict, but widespread ice and snow are likely to create meaningful near-term capacity disruption and rate volatility, particularly in regions not accustomed to such conditions. Pent-up demand could also drive continued cost volatility once conditions improve and delayed shipments reenter the market.
Looking beyond the storm, the market’s holiday response clearly showed increased vulnerability, but a sustained disruption will still require a meaningful demand catalyst or capacity event that occurs in line with elevated seasonal demand, such as the summer peak.
There are several upside demand risks at play as we enter the new year. Greater clarity around tariff and trade policy would deliver the most immediate positive impact to demand, but when that clarity will arrive and to what degree it would benefit volumes is challenging to predict at this point. Beyond that, interest rate cuts, possible stimulus actions, sustained consumer strength and inventory replenishment would all help drive demand on a longer timeline.
That’s why, instead of a sustained disruption, our 2026 outlook calls for continued rate inflation with periods of significant volatility around typical seasonal pressure points. Importantly, while rates are expected to normalize following these surges, they are unlikely to return to pre-disruption levels and will remain elevated on a year-over-year basis.
For more data and insights on the key trends shaping the market as 2026 gets underway, read on.
Demand conditions through December were shaped primarily by seasonal disruption rather than underlying volume growth. As tender rejections climbed during the holiday period, spot market activity increased, persisting into early January before beginning to fade as seasonal pressures eased. Contract volumes have not yet fully rebounded following the holidays, reflecting continued softness outside of disruption-driven demand.
While upside risks exist, the demand outlook for 2026 remains unclear. One possible path forward is that continued tariff uncertainty suppresses demand and helps stabilize conditions. The other is that improved economic conditions, policy shifts or potential stimulus efforts ahead of the midterm elections drive a demand rebound. But with no clear catalyst in place, volumes will remain driven by seasonality for now.
Supply continued to tighten through December as operating costs remained elevated and regulatory scrutiny increased. Winter weather disruptions and drivers taking time off compounded those pressures, contributing to the greatest spot rate volatility seen in several years.
An imminent winter storm is expected to create significant capacity disruptions, though the duration and magnitude will depend on the severity and geographic reach of the storm. Beyond that, without a meaningful demand rebound, supply erosion is likely to continue, leaving the market increasingly vulnerable to even modest demand shocks in 2026.
Spot rates surged in December due to seasonal pressures and shifts in carrier pricing behavior. Notably, reefer rates crossed contract for the first time in two years. Fuel costs also declined sharply and have stabilized at a lower level, providing some all-in rate relief for shippers.
Rates are expected to ease into February and March as seasonal pressures fade, though the scale and duration of any decline will be shaped by the severity and geographic reach of the pending winter storm. More broadly, our forecast calls for increased seasonal rate volatility throughout 2026, with rates remaining elevated on a year-over-year basis following periods of disruption.
Manufacturing contracted further through December as economic uncertainty continued to weigh on business investment. On the consumer side, holiday spending remained resilient. Retail sales outperformed expectations, growing modestly year-over-year even as signs of labor market softening emerged late in the quarter.
Greater clarity around trade and tariff policy will be necessary to unlock the investment needed to jumpstart a manufacturing rebound, and the impact of such a turnaround would likely not reach freight volumes for several months. Beyond that, tariff-related inflation remains the key downside risk for freight demand, while consumer strength, Fed rate cuts, IEEPA rulings and potential government stimulus ahead of the midterm elections present upside risks.
Throughout December, inbound Canadian capacity tightened significantly due to a lane imbalance favoring inbound freight, allowing carriers to push rates higher. Seasonal driver time off and winter weather further constrained supply, impacting rates on intra-Canada shipments.
Elevated trade tensions with the U.S. are expected to continue limiting exports from Canada, creating a demand flow imbalance that could drive ongoing rate volatility on inbound shipments. At the same time, improved trade relations with other global partners should help offset some of that lost export demand as new trade lanes develop. Capacity is expected to remain tight through at least the end of the winter season, while continued regulatory enforcement affecting drivers and driver pools will likely reduce capacity further and apply upward pressure on rates as the year progresses.
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