Freight volume stays soft as capacity declines continue

“While the U.S. economy remains on solid footing overall, the freight economy isn’t as strong,” Costello said. (grandriver/Getty Images)

U.S. freight volume remained sluggish through the end of the second quarter even as capacity reductions continued to raise market optimism.

The American Trucking Associations For-Hire Truck Tonnage Index in June edged up 0.1% from the prior month to 113.1 but dipped 0.1% compared with the same month last year. The report noted that tonnage in the first half of 2026 was still up 1.4% year over year due to strength in the first quarter.

“While tonnage was little changed during June, there was a definite weakening in volumes during the second quarter,” ATA Chief Economist Bob Costello said. “After five straight year-over-year gains, tonnage has now contracted from year-earlier levels for the last two months.”

The DOT enforcement crunch

The Department of Transportation has been tightening enforcement of non-domiciled commercial driver licenses and English-language proficiency standards this year, hastening a decline in capacity that has helped balance the freight market.

“While the U.S. economy remains on solid footing overall, the freight economy isn’t as strong,” Costello said. “With that said, the decrease in capacity over the last year probably has fleets feeling a little better than volumes would suggest.”

Meanwhile, the Logistics Managers’ Index increased 1.6 points from the previous month to 71.1 in June. The index, which hadn’t come in above 70 since March 2022, is considered an indicator of a significant rate of expansion and primarily comes from inventory growth.

“June was seasonally pretty much what we’d expect, although with a couple of caveats,” said Dean Croke, principal analyst at DAT Freight & Analytics. “We actually had a produce season for the first time in a decade, but not because people were buying more produce, it’s just because supply was so tight, rates went up at record levels.”

DAT data showed reefer rates over the past decade increased an average of 23 cents per mile each produce season from mid-April to July 4. But this year, rates increased by nearly double that amount, to 50 cents a mile, despite flat produce volume.

“It underpins this enforcement activity we’ve seen all year that’s really driving this supply-side market cycle,” Croke said. “It’s supply-led and regulatory, basically, not the usual demand cycle that we would typically associate lower volumes with.”

The DAT Truckload Volume Index increased sequentially across all three equipment types for June. Dry van rose 11% to a rating of 262 from 236 the prior month. Refrigerated was up 5.1% to 184 from 175. Flatbed gained 12% to 308 from 275 the prior month.

“I was not surprised that the freight market is kind of flat,” said Jonathan Phares, assistant professor of supply chain management at Iowa State University. “This was the kind of thing that I was thinking should have been happening earlier in the year with price increases and the like.”

The Cass Freight Index showed shipments decreased 3.1% sequentially to 1.009 from 1.041. They also were down 4.1% from 1.052 last year. The report highlighted pockets of strong demand within domestic intermodal that weren’t enough to move the needle for trucking. Expenditures increased 2.2% sequentially to 3.640 from 3.560 and 11.2% from 3.273 last year.

“The diesel prices are causing freight expenditure to go up,” Phares said. “I was looking at the Cass Freight expenditures, and we saw that freight tonnage was down but expenditures were up. That’s related to diesel prices, as well as tightened capacity.”

Geopolitical concerns

“The wild card here is that the Middle East crisis is moving from supply chain disruption to physical shortages,” Croke said. “The longer this goes on, the more shortage of products becomes a bigger issue, which then raises the potential for diesel prices to go even higher.”

The Iran war has been a major driver of escalating fuel prices since it began Feb. 28. This has included the influence of ceasefires starting and failing, such as the memorandum of understanding in June. The impact has been diesel rising to $5.31 the week of July 27, according to U.S. Energy Information Administration data, from $3.81 before the war.

Phares compared the fuel volatility to uncertainty related to tariffs.

“Tariffs were on, and then they were off, and on and off, and shippers were kind of getting fatigued with their responses to that, and it seems like a similar type of experience with these oil prices now. The ceasefires are on and off.”

Phares expects to see some sequential freight increases over the next few months before peak shipping season ramps up. He also warned higher prices could impact discretionary spending in the second half, as well as decisions by shippers.

“In June, people were distracted by the World Cup going on and the MOU was still in action, so it was kind of a quiet month,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “But now you come into July, and all of a sudden you realize that the geopolitical situation is a lot more complicated.”

Dhawan added that the start of hostilities was more of a shock to the supply chain in February. He has since seen companies adjust, so now the resumption of fighting is less disruptive. He pointed to Ukrainian attacks against Russian oil refineries as impacting energy markets, too.

Ongoing market drags

“On the jobs front, when it comes to entry-level, white collar, corporate, technology-type jobs, that is where, for the fresh young graduates coming out of university, it feels like a bad recession,” Dhawan said. “They’re not getting the entry-level jobs. But if you are established, you already have a job in this low-hire, low-fire economy, you’re fine.”

Dhawan added that companies are essentially neither shedding nor adding workers in the current market. This could hurt freight demand since these entry-level jobs mean new purchasing power that goes toward apartments, furniture and goods.

“June’s industrial production really wasn’t that exciting,” said Jason Miller, professor of supply chain management at Michigan State University. “Some sectors were down, some sectors were up. But on an absolute basis, we’re not seeing any type of significant increase.”

Miller sees strong demand pockets across industrial production on an aggregate basis, especially parts and equipment related to the artificial intelligence ecosystem. But manufacturing that is tied to discretionary consumer spending or single-family housing has been slow.

“Flatbed has been very strong, even on a seasonal basis up until this point,” Miller said. “Dry van rates have obviously been very strong this year, but I think that’s much more the supply side sort of correction more so than anything else.”