Amid a freight recession that’s lasted more than three years, transportation executives shared insights into planning for freight transportation needs for the remainder of this year and into 2026.
On Tuesday (Aug. 26), transportation information firm FreightWaves and Lowell-based carrier J.B. Hunt Transport Services Inc. hosted webinar “Freight Budgeting: Navigating 2025 and Beyond” that included market metrics such as demand, volatility and capacity.
Spencer Frazier, executive vice president of sales and marketing at J.B. Hunt, said the market is in “a supply-side oversupplied freight recession environment.” Plans and budgets that have been set over the past more than three years “have been disrupted” including his own.
“We thought normal cyclical patterns would come into play, and things have played out differently,” Frazier said.
He said customer service levels have been high and should continue to be expected. He added that the company’s customer retention rates are at its highest levels.
Looking to 2026, Frazier said he will be planning internally for multiple scenarios. This includes scenarios “that kind of indicate some of this potential change in trajectory that we’re looking at maybe rolling into next year, but also other scenarios that can have dramatic change. And I want to make sure that we are prepared and having transparent conversations with all of our customers for both of those scenarios.
“And I think internally, it’s up to all of us to do that as well,” he said. “There needs to be a range of scenarios that could happen regarding transportation and transportation spend… There are things that we cand do to more collaboratively plan and not just for tomorrow or the next month but for the next one, three, and five years, really set up strategic business planning where we’re in sync with you to make sure that we have set up our customer solutions and everything else in a way that can execute at excellence and also drive the right returns for both of our businesses.”
TARIFF ISSUES
Zach Strickland, director of freight market intelligence at FreightWaves, said freight demand has eroded this year and has rebalanced over the past year. Over the past year, he said, shippers have had to rethink shipping and inventory management strategies because of uncertainty, from the Red Sea conflict to labor strikes.
“This year the erratic trade policy implementation and the lack of clarity, from a lot of the shippers that I talked to at least — the No. 1 thing that they all talk to me about is the fact that they just do not know how to plan for the rest of the year and through this kind of on again, off again tariff implementation strategy and policy as it’s being negotiated out,” Strickland said. “And even as…we’re kind of getting some of these deals closed out, I think a lot of shippers are still kind of weary of the economics of the situation and the way that they don’t know if their consumers’ health is going to be aligned for the back half of the year and then certainly into 2026.”
So far this year, he said truckload demand is down 15% from last year. He said the demand decline is in part attributed to a modal shift. Shippers are importing freight either ahead of tariffs implemented by the Trump administration or “in front of whatever concerns they have,” and rail and intermodal freight transportation are conducive to this as warehouses fill up.
“So it can go across the country and transload into certain markets, larger markets,” he said. “It does not have to get to the end user quite yet. So intermodal is a very good strategy here to kind of do that transcontinental move while they got a lot of time, and it doesn’t have to get all the way to the megalopolis on the East Coast.”
‘DEMAND SIDE DESTRUCTION’
In recent months, Strickland said, intermodal and truckload volumes have been concerning and appear to indicate some stagnation in the economy.
“It’s not recession-style drops or anything like that,” he said. “But…we’re starting to see some demand side destruction.”
He said in April, when President Donald Trump announced a bevy of tariffs, import volumes rose before declining in May, reflecting the “lack of imports from the cost-prohibitive tariffs placed on China.” Then, imports peaked in late June and early July, which is atypical for this time of the year. The peak usually hits in late August and early September.
“So we’re really out of season – certainly the seasonal patterns that we normally see – because of the on again off again trade policy and confusion around that,” Strickland said. “We’ve got some erratic inventory management strategy going on as people are becoming more reactive, and there’s still a lot of uncertainty from the shipping community about what to expect moving through the last half of this year and certainly in 2026.”
Strickland said he expects more clarity and thinning inventories by the end of this year.
Another metric Strickland highlighted was the loads that carriers reject because they are unable to complete a shipment. Spikes in tender rejection rates this year are “showing us that this market is becoming increasingly fragile and vulnerable to any kind of unexpected or erratic…behavior from the shipping community,” he said. “The tender rejection index has been still what we would consider low. Historically anything below 6% is a fairly deflationary environment for rates.”
He said shippers are receiving the service that they expect, but the data shows a “growing vulnerability,” especially if freight demand were to rise. Additionally, he noted that shippers are hesitant to order too much because inventory costs are significantly higher than they were at the end of the COVID-19 pandemic.
“We’re clearly kind of coming to an end of this cycle, whereas the timing is still a pretty big question mark,” he said. “And the demand side decline has certainly extended this cycle longer than many of us expected.”
CONSUMER CONFIDENCE, REGULATIONS
Frazier said he spoke to a retailer Tuesday and the retailer shared its confidence in the consumer.
“This country is at near full employment,” Frazier said. “People have jobs. The consumer has remained resilient for our customers, and that’s something that hopefully, again, as maybe a few other interest rate or other policy changes could take place, that could encourage demand as we finish out the rest of the year.”
Thom Albrecht, chief revenue officer at Reliance Partners, said imports are typically a drag on GDP, which rose 3% in the second quarter. Imports added over 5% to the GDP, while exports cost it about 0.2%. The result was the United States was importing and exporting less, which negatively affected trucking.
Albrecht also discussed some of the federal regulations that are affecting the industry. One of them was the requirement that drivers must have sufficient English language proficiency to operate a truck. He said while the number of violations has risen, this has yet to affect capacity.
“There’s a whole host of things that this administration may potentially crack down on, which collectively would change the outlook for capacity,” Albrecht said. “My sense is that more of these things than not will be done over the next three to four quarters.”