Will Freight Rates Go Up In 2025?

Prepare For COVID Bounce-Back

While supply and demand are pretty stable for now, rock-bottom prices aren’t going to last forever. In fact, most analysts point to a bounce back in higher freight rates as we finally emerge from post-pandemic market conditions.

Bob Mayo, COO at Freight Management Inc., says as we enter the New Year with a still-looming port strike on the east coast in January paired with restructured ocean carrier alliances set to take effect, we should see a modest increase in freight rates in 2025, probably as early as Q2.

The Commercial Carrier Journal sees a trending market turn in 2025 as capacity correction occurs. TranzAct Technologies predicts an 8%-10% increase in truckload rates, and LTL rates somewhere between 5%-7%. Yet another report from Transport Topics cites an expectation that truckload spot prices to rise 6.5%-7% in 2025.

9 Reasons Why Freight Rates Will Go Up In 2025

There are several reasons why freight rates will and are expected to go up in 2025. These include:

1. Increased Demand – Global economic growth is likely to boost demand for shipping services.
2. Supply Chain Disruptions – Port congestion, labor shortages, possible strikes, and geopolitical tensions, such as those in the Middle East and Ukraine, lead to higher costs.
3. Regulatory Changes – Stricter environmental regulations may require freight companies to invest in cleaner technologies, increasing costs.
4. Rising Operational Costs – According to the reported results of the American Transportation Research Institute (ATRI), trucking operational costs have risen more than 22% over the last two years, the highest recorded costs in ATRI’s 16-year research history.
5. Fuel Prices – Rising fuel costs, influenced by market fluctuations or geopolitical events.
6. Infrastructure Investments – Upgrades and maintenance of ports and shipping routes may necessitate increased fees.
7. Market Consolidation –  A number of companies and carriers went out of business because of unsustainable low rates.  If larger shipping companies continue to merge or dominate the market, they may have more pricing power, potentially driving rates up.
8. Weather and Climate Change – Major hurricanes have already battered Florida ports; the Tampa Bay port, for example, was closed for several days as a result of Hurricane Milton. Panama Canal traffic fell by 30% due to lowered water levels caused by drought. Ships heading to the east coast of the American continent wait several weeks and pay millions of dollars to acquire a right of way or unload goods for overland transport.
9. Election Outcome – The economic plans of whichever party dominates in the upcoming U.S. election will affect shipping rates, although exactly how is uncertain.

10 Ways to Better Manage Your Freight Rates

Whatever our crystal balls might indicate, managing rising freight rates is always a challenging endeavor. It involves:

1. Contract Negotiations – Engage with carriers to obtain the best terms.
2. Diversify Carrier Options – Building relationships with multiple carriers to obtain more competitive rates and options.
3. Optimize Shipping Routes – Analyze shipping routes and develop cost-effective alternatives.
4. Consolidate Shipments – Combine shipments to maximize container space, reducing per-unit shipping costs.
5. Improve Forecasting – Use data analytics to improve demand forecasting, allowing for better planning and fewer last-minute shipments.
6. Review Shipping Methods – Explore different shipping methods (air, sea, ground) and choose the most cost-effective option based on urgency and volume.
7. Increase Inventory Efficiency – Reduce inventory levels to lower carrying costs while still meeting customer demand.
8. Technology – Utilize logistics management software to streamline operations, track shipments, and manage costs effectively.
9. Monitor Market Trends – Stay informed about industry trends and rates to anticipate changes and adjust strategies accordingly.
10. Consider Alternative Suppliers – Explore sourcing from suppliers in different regions to reduce shipping distances and costs.