Feb

17

 

Cass TL Linehaul Index Rises Year-Over-Year for the First Time in Two Years

For the first time since December 2022, the Cass Truckload (TL) Linehaul Index has reported a year-over-year (y/y) increase. Data from January 2025 shows a 0.8% y/y rise, marking a significant shift in the U.S. trucking and freight transportation industry. While this signals potential stabilization, broader freight demand remains weak, and total shipment volumes are still declining.

The Cass TL Linehaul Index measures per-mile truckload linehaul rates, excluding fuel and accessorial surcharges, making it a key indicator of base freight pricing trends. The index also saw a 0.6% increase from December 2024, marking the fifth consecutive month of sequential growth.

Despite these positive rate movements, shipment volumes in the logistics sector continue to decline, with challenges such as winter storms and shifting freight dynamics influencing market conditions.

Understanding the Cass TL Linehaul Index

The Cass TL Linehaul Index provides insight into the pricing trends within freight transportation in the U.S., particularly in the truckload sector. By measuring per-mile freight rates without fuel surcharges, it serves as a barometer for the underlying health of the trucking industry.

Key highlights from the January 2025 data include:

• 0.8% year-over-year increase, marking the first annual rise in two years.
• 0.6% month-over-month (m/m) growth, continuing a steady recovery.
• 5.2% decline on a two-year comparison, showing that rates remain below early 2023 levels.

While this recent increase is a positive sign, it comes after a 3% decline in 2024 and a 10% drop in 2023, indicating that a full market recovery is still in progress.

The Impact of Weather and Market Conditions on Freight Rates

Winter Storms Disrupt Freight Movements

January typically sees lower freight demand, but this year’s winter storms had an unusually strong impact. Harsh weather conditions, particularly in southern states unaccustomed to severe winter disruptions, forced many trucking companies to halt operations temporarily.

• Regional disruptions: Severe winter weather in the South and Southeast delayed shipments and disrupted carrier networks.
• Temporary rate spikes: With fewer trucks on the road, spot market rates temporarily increased due to limited capacity.

While these conditions contributed to the linehaul rate increase, they do not necessarily indicate a full-fledged market recovery.

Private Fleets Are Shifting Market Dynamics

Another key factor influencing freight demand is the growing reliance on private fleets. Many large companies are moving away from for-hire trucking services, preferring to transport goods using in-house truck fleets.

This shift has put downward pressure on shipments handled by third-party logistics providers, reducing the overall freight volume available to logistics companies and independent trucking operators.

• Private fleet expansion: More large retailers and manufacturers are investing in self-managed truck fleets to control costs and improve reliability.
• Reduced demand for for-hire carriers: As businesses insource their freight operations, logistics providers must compete more aggressively for available shipments.

Despite this challenge, industry experts predict that as cost pressures mount, many companies may return to outsourcing freight transportation, boosting demand for traditional logistics companies.

Freight Shipments Continue to Decline

January 2025 Shipment Data

While truckload rates have shown improvement, shipment volumes continue to decline, reflecting broader freight market softness.

According to the Cass Freight Index, January saw:

• 8.2% year-over-year decline in total shipments.
• 15.1% decline compared to January 2023, marking the sharpest drop since the COVID-19 lockdowns.
• 5.3% month-over-month decrease, continuing a downward trend.

This continued weakness in freight demand suggests that while rates may be stabilizing, trucking companies are still struggling with lower shipment volumes.

Freight Expenditures Show a Downward Trend

The Cass Freight Expenditures Index, which measures total freight spending, including fuel and surcharges, fell 4.2% y/y in January. This decline was slightly worse than in December 2024 and largely driven by lower shipment volumes.

Despite lower total expenditures, when adjusting for shipment volume, actual freight rates appear to have increased by 4.3% y/y—another sign that pricing power is returning to carriers.

Industry Outlook: What’s Next for Trucking in the U.S.?

The January 2025 Cass TL Linehaul Index suggests that the trucking industry may be moving toward stabilization, but challenges remain. Experts believe that while rates have started recovering, a significant rebound in shipment volumes may take longer.

Key Trends to Watch in 2025

1. Continued Capacity Adjustments

   • Many logistics companies have downsized their truck fleets over the past two years.
   • With fewer available trucks, supply-demand balance is improving, leading to modest rate increases.

2. Potential for Higher Contract Rates

   • Recent rate negotiations suggest that contract freight rates may rise in 2025.
   • Carriers like Schneider National (NYSE: SNDR) and Werner Enterprises (NASDAQ: WERN) report early signs of rate recovery.

3. Ongoing Weakness in Shipment Volumes

   • Freight demand remains below pre-pandemic levels.
   • The Cass Freight Index predicts a 10% y/y decline in February, unless weather disruptions lessen.

4. Future of Private Fleets

   • In-house trucking operations continue to reduce demand for for-hire logistics services.
   • However, as cost pressures grow, more companies may return to outsourced freight transportation.

Conclusion: A Positive Shift, but a Long Road to Recovery

The 0.8% year-over-year increase in the Cass TL Linehaul Index marks an important milestone for the U.S. freight transportation industry. However, declining shipment volumes indicate that a full market recovery is still a work in progress.

While factors like capacity reductions, winter storms, and shifting fleet strategies have influenced recent rate increases, the trucking industry remains in transition. Logistics companies and truck drivers must stay adaptable, leveraging data-driven strategies to navigate the evolving freight landscape.

As 2025 progresses, freight transportation professionals will be closely watching shipment trends, contract negotiations, and broader economic conditions to determine the true strength of the trucking industry’s recovery.

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