An abnormal drop in domestic shipping volumes during a month that typically sees increases can be blamed, at least in part, on the destocking of pre-tariff inventory buildups, according to the most recent monthly data from Cass Information Systems Inc. A shift from LTL to truckload appears related well. 

The Cass Freight Index also looks at truckload rates, overall freight rates and total spend on domestic U.S. freight.

Cass Freight Index - Shipments
The shipments component of the Cass Freight Index was down 0.4% m/m in May.

• Since volumes usually rise seasonally in May, shipments fell 3.4% m/m in SA terms.
• The y/y decline in shipments was 4.0% in May, after a 3.6% y/y decline in April.

The trade war is having a variety of effects, with pre-tariff consumer spending still supporting freight demand. The negative consequences of tariff effects are partly reflected in May data, as pre-tariff inventory stocking has started to turn to destocking, and those stocks will start to thin in the coming months.

After rising 13% in 2021 and 0.6% in 2022, the index declined 5.5% in 2023 and 4.1% in 2024. So far, it is trending toward another decline in 2025.

In June, the shipments component of the Cass Freight Index would decline 2% y/y on the normal seasonal pattern.

Cass Freight Index - Expenditures
The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, rose 1.4% m/m in May. The y/y gain slowed to 0.8% from 1.2% in April, but held onto a second straight increase after more than two years of declines.

The y/y increase in spending was more than explained by higher rates, as shipments fell 4.0%. We infer that rates—or more specifically, the average cost of a shipment—rose 5.0% y/y in May. One factor in this equation is a higher TL mix and lower LTL mix.

• In SA terms, the index rose 1.2% m/m, with shipments down 3.4% and rates up 4.8%.  

This index includes changes in fuel, modal mix, intramodal mix, and accessorial charges, so is a bit more volatile than the cleaner Cass Truckload Linehaul Index.

The expenditures component of the Cass Freight Index, after a record 38% surge in 2021 and another 23% increase in 2022, fell 19% in 2023 and 11% in 2024.

Inferred Freight Rates
The rates embedded in the two components of the Cass Freight Index rose 1.8% m/m in May, and 4.8% SA.

While the 5.0% y/y increase is outpacing most freight markets, mix is always a factor, and mix is currently shifting toward TL from LTL. While this is typically a positive sign of an improving freight cycle, it is currently more likely a head-fake related to pre-tariff shipping.

• After a 7% decline in 2024, freight rates are so far on track to rise in 2025.

Based on the normal seasonal pattern, this index would accelerate y/y in June, though a reversion in mix could slow it down. We do not get the sense market rates are accelerating, as the Cass Truckload Linehaul Index confirms.

Truckload Linehaul Index
The Cass Truckload Linehaul Index fell 0.8% m/m in May, after a 0.5% decline in April.

• The y/y increase slowed to 0.6% in May from 0.9% in April, as rate momentum in the truckload market stalled. Pre-tariff shipping was not enough to tighten the market balance even as seasonality improved in May.

This index fell 10% in 2023, another 3.4% in 2024, and is on track for a small increase in 2025. 

Freight Expectations
Visibility remains low and highly dependent on policy developments and legal challenges. The uncertainty has lowered the economic outlook, and pre-tariff inventory building will lead to destocking regardless of the outcome of trade negotiations in the coming months. 

The effects of tariffs have yet to be fully felt, and although freight rates have started to rise, it is still not enough to offset cost headwinds broadly. The trade war is likely to extend the for-hire freight recession further as higher prices reduce goods affordability and consumers’ real incomes. With the demand outlook choppy, the rate upturn remains elusive, but the equipment cycle is setting up tighter capacity with Class 8 tractor sales falling below replacement this year.