Tariff volatility is showing an ongoing impact on both the U.S. economy and the national drayage market, according to ITS Logistics’ July ITS Supply Chain Report. The market appears to be undergoing a rebalancing event for the remainder of 2025, which could create a positive shift in the industry.
“The U.S. economy is currently in a controlled cooling,” says Josh Allen, chief commercial officer at ITS Logistics. “Growth has slowed but remains positive, the labor market is slowing but stable, and inflation is gradually easing. At the same time, consumers are beginning to feel the impact of tariffs as volatility continues to influence broader economic trends.”
Key takeaways:
· As reported by Reuters, the Fed last cut rates in December 2024, which was a direct response to the uncertainty surrounding President Trump's implementation of tariffs after returning to the White House and policymakers' assessment of its possible impact on prices. Fast forward to the upcoming meeting expected for July 29-30, industry experts believe they will maintain the current benchmark rate in the 4.25-4.50% range. This is a level policymakers perceive as being moderately restrictive. When rate cuts resume in September, investors expect there to be a 50-50 chance that a quarter-percentage decrease will occur as inflation rose to 2.7% in June from 2.4% in the prior month.
· Additionally, the drayage market experienced a 1.8% month-over-month rise in June imports, a notable contrast to typical mid-summer trends. The top gateways for Chinese imports, particularly the Port of Los Angeles, also saw major volume increases, while East Coast and secondary ports experienced significant declines in activity. The mixed performance highlights ongoing shifts in port routing and regional demand as tariff volatility continues to shape the national drayage market.
· Fuel prices have also climbed to $3.75 per gallon, their highest level since last July. The national average diesel price increased for the third consecutive week, according to U.S. Energy Information Administration. Over the past five weeks, the cost of diesel has increased a total of four times, amounting to a rise of approximately 24.1 cents. All U.S. regions experienced a rise in diesel prices, with the Gulf Coast region experiencing the most significant increase at 7.3 cents in a single week.
· The Producer Price Index for Warehousing and Storage declined 1.4% from May’s 155.4 to 153.1 in June 2025, marking a continued downtrend from March and signaling reduced pricing leverage for warehousing providers. However, the market appears to be undergoing a rebalancing event that is bound to present new opportunities and challenges for shippers moving into the latter half of 2025.
· Freight companies prepare to navigate a hurricane season, which spans June 1-Nov. 30, that the National Oceanic and Atmospheric Administration (NOAA) has already predicted to have a 60% likelihood of being above normal. Current forecasts are showing between 13-19 named storms with winds reaching 39 miles per hour (mph) or higher. Among these, 6-10 storms are expected to intensify into hurricanes with winds of 74 mph or higher, and 3-5 of those are expected to become major hurricanes, categorized as 3, 4, or 5, with speeds exceeding 111 mph. These projections come with a 70% confidence level. The first tropical storm of the season, Andrea, appeared 2,000 miles out from Florida as early as June.
“Ultimately, the full economic effects of recent tariffs are beginning to manifest, with potential disruptions in trade flows and increased costs for businesses and consumers,” says Allen. “This comes just as the industry prepares to combat hurricane season and the trucking market continues to see marginal shifts in both spot and contract rates during peak season.”
