Loadsmart’s Look Ahead: An Analysis of Key Freight & Economic Indicators to Watch in January 2025

As usual, in this Monthly Market Update, we will (a) provide a brief update/analysis of the truckload market and (b) present a compelling economic analysis to provide a macroeconomic view on the state of the freight market. 

Full Truckload Market Overview 

Loadsmart’s top 30 spot rate forecast

Our model predicts that spot rates will decrease by 1% in January 2025, driven by seasonal trends.

• This decline aligns with the typical cooling-off period in the first quarter - the quiet season - driven by reduced shipping demand. Rates should increase again in July, following their regular seasonal movement.
• Incremental rate gains of ~10% YoY are forecast for most months as the market moves toward a more balanced supply and demand dynamic, though a sustained rate upcycle is unlikely.
• The lingering uncertainty around the new tariff policy - its targeted industries, scope, and aggressiveness - makes us skeptical of a sustained upcycle in TL in the first half of 2025, mainly because recent data shows that the pull-forward spending spree driven by the anticipated tariff impact has been limited. Consumer spending has maintained a steady growth trajectory since the beginning of 2024, and retail inventory-to-sales ratios remained constant in the second half of 2024.
• We expect higher TL demand in 2025 from manufacturing and housing activity; see the analysis below.

Macroeconomic indicators we are monitoring

Capacity Correction has slowed amid favorable conditions for carriers

• The freight market’s capacity correction is taking longer than expected. As Figure 1 shows, based on the 2023 trend, the market was on track to reach equilibrium by June 2025. However, capacity correction slowed down in 2024, especially after Q1. Under the current trend, the freight market is expected to reach an equilibrium only after the first half of 2026.

Figure 1

• The number of active carriers dropped by 5.8% YoY in 2023 but declined only by around 3.5% YoY in 2024. Favorable factors such as low fuel prices and depressed truck prices have helped keep carriers stay afloat and should continue to do so in 2025. The EIA forecasts diesel prices will dip below the $3.70 per gallon mark in the first half of 2025, providing further relief to carrier operational costs -  as Figure 2 shows.

Figure 2

• However, favorable financial conditions might be offset by looming regulatory challenges. The Clearinghouse II, which went into effect on November 18, is expected to revoke the CDLs of more than 170,000 drivers who do not comply with Clearinghouse rules, according to FMCSA. We expect Clearinghouse II to push non-compliant drivers out of the market slowly throughout 2025, as small fleet owners conduct driver checks once or twice a year.
  
  

Manufacturing activity recovery is long overdue, but it might be on its way

• The ISM Manufacturing PMI showed that manufacturing activity contracted again in December, though at a slower pace, rising from 48.4 in November to 49.3, as seen in Figure 3. 
• Gains in new orders and production drove the increase. But the import and inventory indexes also improved - although remaining in contractionary territory - evidencing companies' recent efforts to build stocks and mitigate potential future tariffs' impact.
• This is the second consecutive increase in the index, which rose from 46.5 in October to 48.4 in November and 49.3 in December,  signaling that manufacturing is close to a long overdue recovery, which could serve as a tailwind for the truckload (TL) market in 2025.
• The cyclical behavior of the PMI suggests that an upcycle has been overdue since February 2024. Elevated interest rates and ongoing policy uncertainty are likely constraining its development. But we expect manufacturing to gain momentum once we move to a better macro backdrop.

Figure 3

Housing and remodeling

• Housing data suggest that new construction activity will likely remain suppressed by persistently high mortgage rates and affordability, while housing completions and remodeling should expand this year. 
• Construction job openings were down 39.2% YoY, but Residential Construction Spending rose 3.1% YoY in November, indicating that the sector prioritizes existing projects and renovation.
• According to the latest Leading Indicator of Remodeling Activity (LIRA), remodeling activity should rebound by Q2 2025, as seen in Figure 4, another bullish indicator for the TL market in 2025.

Figure 4