The freight market remains uncertain for the remainder of the year. The average effective tariff rate rose to 16.4%—the highest since 1936—and manufacturing and wholesale sectors are seeing signs of inflation. Capacity is also continuing to exit the market, dipping below pre-pandemic levels.
With the current tariff rate, prices are expected to increase by 1.4%, resulting in an average annual loss of $1,900 per household, according to Uber Freight’s Quarterly Market Update and Outlook Report. Tariffs disproportionately affect clothing, footwear, vehicles, and electrical equipment. For manufacturers, tariffs affect the prices of commodities, like metals and minerals, and machinery. As a result, the manufacturing and wholesale sectors are experiencing signs of inflation. These factors, alongside a slowing job market, create significant headwinds for truckload demand despite a recent surge from pre-stocking.
“While seasonality remains the primary driver, freight-generating sectors have mostly stagnated. The soft market has also pushed carrier margins to 15-year lows, with forecasters anticipating that it will continue through the first half of 2026,” according to the report. “Most forecasts for spot and contract rates predict the flat market to continue through H1 2026, but the risk to the upside is much higher.”
Key takeaways:
· LTL demand remained low through H1, down 4% year-over-year, but LTL still remains healthy with good alternatives for shippers. LTL pricing is expected to have a minimal impact on shippers’ budgets over the next 12 calendar months.
· Expect general rate increases (GRIs) to remain in the 3-5% range, although they may be negotiable. Additionally, any uptick in pricing and volume should be slow unless there is a sudden increase in demand for truckload capacity, which could shift volume shipments to LTL.
· New U.S. tariffs continue to pressure exporters, raising uncertainty for the second half of 2025. Capacity, freight volume, cargo theft, and economic uncertainty are all factors that can impact cross-border operations.
· Mexico’s economy is expected to maintain modest growth in 2025, with nearshoring under the USMCA continuing to attract investment. Automotive, electronics, and pharmaceutical manufacturers are expanding operations to take advantage of shorter supply chains and lack of tariffs. That said, U.S. trade frictions and new tariffs are reducing export volumes in auto and other key sectors.
· While forecasts for full-year growth remain weak, a slight recovery is expected in 2026. However, outlooks are cautious with productivity challenges, policy risks, and potential USMCA disputes.
· In Canada, U.S. trade is weighing on the cross-border freight market, with U.S. tariffs putting pressure on targeted industries. Manufacturing across heavy industrial equipment, appliances, and electronics is also contracting. Additionally, annual seasonality in the spot market dampened, adding pressure to contract rates through early Q3. Moving into Q4, shippers should optimize cross-border flows, maintain access to capacity through RFQs or mini-bids, and implement network efficiencies.
