Uncertainty about tariff wars and economy impacting truck sales and freight rates

While the public is concerned about instability in the stock market due to the Trump administration’s policy on tariffs, the trucking industry is focused on another area — freight.

As pointed out in an April 22 report from ACT Research, 20% to 25% of U.S. surface freight is involved — one way or another — in international trade.

Tariffs, and the threat of adding or increasing them, can bring growth American manufacturing and create more jobs domestically. However, those results aren’t guaranteed, and they can take months or years to happen … if they happen at all.

In the meantime, nations who trade with the U.S. introduce retaliatory tariffs or take other actions to protect their own industries.

Freight industry ‘in the crosshairs’

There’s an immediate impact, too.

“As Q2 begins, retail sales are still brisk as consumers snap up pre-tariff prices, but freight demand fundamentals face major self-inflicted tariff headwinds,” said Tim Denoyer, vice president and senior analyst at ACT.

“We expect a few more months of brisk demand for pre-tariff goods followed by a tariff adjustment period with lower goods demand,” he continued. “Freight is very much in the crosshairs of the trade war.”

If retail sales are “brisk,” it should result in freight increases as retailers restock their inventories.

If that’s happening, the numbers for March didn’t show it.

Tonnage down

The Cass Freight Index for Shipments indicated a 3.5% decline from the March 2024 index and no change from February numbers. When seasonally adjusted, meaning that March numbers are typically better than February’s, shipment numbers declined 2.1%.

The Cass Index for Expenditures showed better results, with total expenditures declining 2% from last March but increasing 2.8% from February. Cass results, compiled from billing information from Cass customers, include shipping by truck, rail, pipeline, ship, air and other modes of transportation.

“We expect a few more months of brisk demand for pre-tariff goods, followed by a tariff adjustment period with lower goods demand,” said Denoyer, who writes for the Cass Freight report.

As other nations make deals in response to Trump tariff demands, the impact on freight levels could be reduced or eliminated, but the end result is uncertain for now.

For-hire tonnage

The American Trucking Associations (ATA) reported that its For-Hire Truck Tonnage Index fell by 1.5% in March compared to February. ATA compiles its index based on reports from its members, who primarily haul contract freight.

Bob Costello, ATA’s chief economist, credited robust auto production for keeping the index from falling even further.

“Overall in the first quarter, tonnage increased marginally from both the fourth and first quarters of 2024,” Costello said. “While the gains were not strong at half a percent and less, it was the first time that the quarterly average increased both sequentially and from a year earlier in two years.”

His conclusion?

“That tells me that the freight market did in fact turn around in the first three months of the year despite an uncertain outlook,” he said.

Spot market

The news wasn’t any better in the spot market, according to DAT Freight & Analytics.

In March, dry van spot loads increased by 10.9% over February and were 22.2% higher than March 2024. Unfortunately, the additional loads didn’t help rates much. Average spot rates for dry van fell 2.6% from February and were just 0.5% higher than March 2024 rates.

Refrigerated rates fell by 0.9% from February and by 1.7% compared with March 2024. Neither dry van or refrigerated rates have shown improvement so far in April.

Flatbed spot rates remained even both month over month and year over year for March, despite large gains in load numbers compared to posted trucks. As capacity leaves the marketplace, fewer trucks may be posted that are looking for loads, increasing the load to truck ratio without an increase in freight.

Truck capacity declines

Truck capacity — the “supply” side of the trucks/freight equation — continues to decline as fewer trucks are purchased monthly.

A large potential problem was to be the pre-buy, where carriers bought additional 2025 and 2026 model year trucks to head off expected price increases for the 2027 models.

Because of the Environmental Protection Agency’s announcement that emissions standards scheduled to go into effect in that year will be “revisited,” the expected pre-buy may have far less impact — if any at all. Without knowing the extent of EPA revisions, it’s impossible to predict, but orders for new trucks have been declining for months.

Volvo Truck recently announced a workforce reduction of 800 employees, citing fluctuating demands and the impact of tariffs imposed by the Trump administration. Other manufacturers will certainly follow suit if orders for new trucks continue to decline.

Tariffs imposed on parts manufactured in other countries could also drive up prices, further depressing the new truck market.

For freight rates to begin rising, and without a drastic increase in freight levels, the capacity of the trucking industry has to come down. Reduced production may not look good for truck manufacturers, but it’s necessary for the freight hauling-industry to return to a more profitable status.

In March, ACT’s For Hire Trucking Index: Fleet Capacity showed a capacity increase of 4.0 points, indicating that the capacity of the industry grew in that month after several months of decline. The ACT report noted, “Steel and aluminum tariffs, reciprocal tariffs and tariffs on China will directly add to the cost of tractors and trailers.” Fleets looking to avoid those cost increases may have added capacity in March before the increases.

Diesel prices falling

If there’s good news for the industry, it’s that diesel fuel prices have been falling. The national average price for a gallon of diesel for the last week of February was $3.69.7 compared with the last week of March ($3.59.2) for a decline of 10.5 cents.

The national average has fallen another 5.8 cents so far in April.

Whatever the end result of Trump tariffs, it will take months — perhaps years — before the full effect is known.

The wild fluctuations in the stock market show how investors are reacting, and it’s reasonable to conclude that trucking will react as well.

Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.

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