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May data showed continued seasonality in a freight market that remains in somewhat of a holding pattern. Aside from temporary volatility as supply contracted around Roadcheck Week, the narrative of the last few months held true: low volume, persistently strong supply and spot rates that settle as quickly as they spike.
While we don’t anticipate a near-term demand disruption significant enough to trigger sustained inflationary conditions, several variables could shape the market’s trajectory through the remainder of peak season.
First, while it’s challenging to predict a precise outcome, the pending court decision on the legality of elevated U.S. tariffs could prove to be a critical turning point in the ongoing trade war. The impact of increased U.S.-China tariffs has started to materialize in the data, particularly on the import side. That said, the recent reduction of some tariffs has temporarily eased pressure, and forward-looking import data—on orders placed but not yet shipped—suggests a volume recovery may be on the horizon.
However, economic headwinds are also a key factor, as rising prices have led to cooling consumer spending that could put demand at greater risk of faltering.
Meanwhile, resilient carriers are supporting strong supply levels amid ongoing volume declines, limiting upward rate pressure even as spot activity briefly increased last month. If sluggish demand and elevated capacity levels persist, it could limit any upside market potential in the coming months.
New and forthcoming regulations from the Federal Motor Carrier Safety Administration—such as identity verification and English proficiency requirements—might also begin to reduce available capacity, though the exact timing and impact of the changes remain uncertain.
With the May market test behind us, all eyes now turn to how conditions will shape up amid these variables ahead of the Fourth of July holiday.
For a closer look at what’s happening across demand, supply and rates, keep reading.
Spot activity increased during Roadcheck Week, though it was largely due to reduced capacity on the road versus surging demand. Otherwise, volume trends remained soft. Load volumes declined on both a year-over-year and two-year basis, extending the persistently weakening demand trends throughout this spring.
Import volumes also dropped sharply from April to May, driven primarily by the initial round of high tariffs on Chinese goods, which slowed inbound shipments and pushed total import levels well below early-year benchmarks. The result was a quieter May than normal, even after adjusting for seasonality.
While brief periods of volatility should continue as peak season marches on, near-term demand is expected to remain under pressure through the end of the quarter. However, recent import order activity has led to at least a short-term recovery in volume, with the potential for further gains in June and July if overseas ordering patterns continue.
Even so, domestic demand faces additional headwinds. Manufacturing activity contracted for the third straight month, with production, new orders and backlogs all trending down. Combined with elevated prices and cooling consumer spending, these trends suggest limited upside for freight volumes in the coming months.
Normal seasonal supply trends also continued to play out in May and early June. Van and reefer load-to-truck ratios and rejection rates rose during Roadcheck Week—both month-over-month and year-over-year—and remained elevated through Memorial Day before easing as capacity returned to the market. Meanwhile, the flatbed market has finally cooled from recent peaks.
Supply levels should hold steady through at least the end of the quarter. While some tightening is possible in the lead-up to July Fourth, market conditions will likely mirror those seen around Roadcheck Week and Memorial Day.
However, with new truck orders trending below replacement levels as private fleets and other carriers continue to dial back investment amid ongoing demand uncertainty, supply could face challenges if volume surges back later this year.
Truckload rates followed normal seasonal patterns in May. Weekly rate data showed a similar trend to last year, with elevated late-month activity giving way to softer conditions in early June as the urgency around Roadcheck Week and Memorial Day subsided.
Still, with tender rejection rates fading toward 2024 levels and only regionalized seasonal demand surges making an impact to rates, national trends continue to reflect the broader narrative of weakening volumes and ample capacity.
July Fourth falling on a Friday this year will create a short shipping week that could drive significant volatility ahead of the holiday weekend. Given the prevailing market narrative, though, any rate increases will likely fade quickly as conditions normalize and enter a period of seasonal softening through July and August.
The only near-term variable that could delay that downturn is CVSA Operation Safe Driver Week (July 13–19), which may reduce capacity if enforcement is particularly strict this year.
Notably, fuel prices have also climbed 20% over the past month, and further increases could follow if the conflict in the Middle East escalates.
Economic conditions remained stable through May. Inflation ticked up slightly and led to higher prices, but the labor market was strong enough to stave off sharp spending declines. However, softening manufacturing and uncertainty around trade and monetary policy point to a muted economic outlook.
Labor market strength should continue to support consumer health through the end of the quarter, but if other downside risks continue on their current trajectory, freight volumes could be negatively affected.
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