Q1 2025 freight market update: Key insights and recommendations for shippers and carriers

As we move into the first quarter of 2025, the freight market is showing signs of change. While some trends from 2024 continue, new challenges and opportunities are emerging. To stay ahead and navigate potential volatility, logistics teams need to be proactive and data-driven. 

One factor shaping the market this quarter is uncertainty around U.S. tariffs on imports from China, Mexico, and Canada. The potential tariffs on imports from Mexico and Canada are under a 30-day pause, which will allow some time for negotiations. A 10 percent tariff on imports from China went into effect on February 4, and China responded with its own tariffs on U.S. coal, gas, and other goods, which went into effect on February 10. This week, the White House announced a 25% tariff on all steel and aluminum coming into the U.S., which takes effect next month. 

To help mitigate risk, some businesses are adjusting inventory strategies and accelerating imports, contributing to shifts in freight demand. Our latest Quarterly Market Update and Outlook Report provides valuable insights to help shippers, carriers, and logistics professionals make informed decisions. This quarter (Q1 2025), we’ll examine the latest trends in U.S. truckload, LTL, and cross-border freight, as well as key factors impacting the global supply chain.

U.S. truckload: Navigating a shifting landscape

There are signs that the U.S. truckload market is shifting. With the ISM Manufacturing Index finally pointing to growth in the manufacturing sector after 26 months of contraction, freight demand might be seeing the light at the end of the tunnel. Coupled with the recent capacity reduction, that could result in gradual tightening over the course of the year.

Spot rates are mirroring last year’s trends, and we expect them to continue falling, following seasonal trends through the first quarter. That said, they are likely to rise gradually afterwards, with various forecasts expecting a 5% to 20% increase in rates year-over-year. Shippers should be prepared for potential volatility and keep mitigation strategies top of mind.

Trucking employment has stabilized and tractor and trailer orders are rising, which indicates a potential recovery, even with weak demand currently. Due to the uncertainty around tariffs, now is the time for shippers to solidify relationships with key carriers.

Our recommendations:

• For shippers:
  • Maintain high first tender acceptance (FTA) rates by establishing strategic relationships with key providers in your network and fostering long-term, collaborative goals.
  • To navigate volatility, partner with strategic carriers to gain cost and price transparency within your network. Create an action plan to address out-of-process lanes proactively.
  • Stay informed about market conditions and adjust your transportation strategies accordingly. Consider diversifying your carrier base and exploring alternative modes of transportation to mitigate risk.
• For carriers:
  • Focus on building strong relationships with shippers who value long-term partnerships and prioritize fair rates.
  • Optimize operations and improve efficiency to maintain profitability in a potentially volatile market.
  • Stay informed about market trends and adjust pricing strategies accordingly.

LTL market: Efficiency and collaboration are key

The LTL market is still experiencing lower demand than last year, with many carriers reporting excess capacity—LTL demand will remain low through Q1 off of a weak Q4. However, carriers are finding ways to maintain profitability by leveraging technology, improving internal efficiencies, and being more selective in the freight they haul.

For shippers, this presents an opportunity to secure competitive rates and build stronger relationships with LTL carriers. General rate increases (GRI) are expected to be below 5%, and  experts at Uber Freight estimate that most negotiations with carriers will land at a 2% to 3% increase. To offset any increases, shippers should look for ways to streamline their LTL procurement processes and work closely with carriers to optimize operations and drive mutual success. 

Our recommendations:

• For shippers:
  • Use the current market conditions to negotiate competitive rates and secure capacity for your LTL shipments. This includes renewing with higher service incumbents and using niche regional or low-cost carriers. 
  • Embrace technology solutions to streamline procurement and improve efficiency.
  • Prioritize best practices, including productive carrier collaboration, data-driven pricing strategies, and packaging improvements.
• For carriers:
  • Seek strategic growth partners with a high degree of tech enablement to help drive cost-out initiatives.
  • Continue to invest in technology and internal efficiencies to maintain profitability.
  • Collaborate with shippers to optimize operations and improve service levels.

Cross-border shipping: Addressing challenges and capitalizing on growth

Cross-border shipping between the U.S., Mexico, and Canada continues to be a significant part of the North American supply chain. However, shippers and carriers need to be aware of the unique challenges in each region. Driver shortages, cargo theft, and economic uncertainty are all factors that can impact cross-border operations.

In 2024, Mexico was the No.1 partner in trade with the U.S., but impending tariffs and rising cargo theft brings uncertainty this year. Shippers should prioritize security measures and mitigation strategies to combat fraud. 

The Canadian economy is experiencing modest growth and Q4 2024 marked the highest freight volumes in the country since early 2023. This signifies the tentative end of the region’s longest freight recession. Shippers should proactively secure capacity and implement network efficiencies to optimize their Canadian operations.

Our recommendations:

• For shippers:
  • In Mexico, prioritize cargo security and implement fraud prevention solutions, including real-time shipment tracking.
  • In Canada, issue full network RFPs and secure capacity at current rates as the market starts to re-balance.
  • For both regions, seek to implement network efficiencies with technology solutions, such as Uber Freight’s Canadian LTL services.
• For carriers:
  • Focus on driver retention and recruitment strategies to address driver shortages.
  • Invest in security measures to protect cargo from theft.
  • Stay informed about economic and regulatory changes in each country.

Looking ahead: Preparing for the unexpected

The first quarter of 2025 promises to be a dynamic period for the freight industry. Shippers and carriers should stay informed about market trends, leverage technology to improve efficiency, and build strong relationships with their partners. By staying agile and proactive, logistics professionals can navigate the challenges and capitalize on the opportunities that lie ahead.

For a more in-depth look at the Q1 2025 freight market outlook, including insights on the global supply chain, warehousing, and sustainability, read the full Q1 Market Update and Outlook Report.