RXO’s Q1 forecast reveals stronger truckload market, but shippers still hold the advantage

The new edition of the “Q1 2025 Curve Truckload Market Forecast,” which was recently issued by Charlotte, N.C.-based full truckload brokerage RXO, examined various factors currently influencing the truckload market.

RXO describes the Curve as a proprietary index measuring the annual rate of change in truckload linehaul spot rates, exclusive of fuel. The company added that by using thousands of daily shipments over a 20-year period, the Curve gauges truckload cycles as the balance of carrier supply and shipper demand shifts in a dynamic, fragmented marketplace.

It also provides a recap of fourth quarter performance, as well as macroeconomic indicators and trends in the truckload market and a first-quarter freight market forecast, too.

Key takeaways cited in the Curve included:

• Q4 truckload spot rates continued their inflationary rise, with truckload spot rates up 11.6% year-over-year at the end of Q4, up from 5.8% in Q3;
• Q4 truckload contract rates were still deflationary, but trended up, with truckload contract rates down 1.5% annually, less than the 3.4% year-over-year decline in Q3 2024;
• While a prolonged soft freight market remains intact, contractual rates are moving higher and momentum is building; and
• expectations for a recession remain low, but consumers are putting big-ticket purchases on hold while continuing to prioritize spending on services, among others

LM interviewed RXO VP of Pricing & Procurement Corey Klujsza about the report’s findings and related topics in the Q&A below.

LM: Do you expect spot rates to continue at a similar pace in Q1 as in Q4?

Klujsza: It depends on if we’re looking at year-over-year comparisons (which is what we measure with our proprietary Curve index), or actual, all-in rates paid to carriers.

Looking at our Curve spot rate index, which measures the year-over-year performance, we’ve seen spot rates pushing higher into inflation through the first two months of the quarter and expect Q1 to finish that way.

Looking at our all-in rate index, which measures actual rates paid to carriers, in Q4 we saw spot rates spike over the holiday peak season as carrier capacity tightened relative to shipper demand. In Q1-to-date, we’ve seen spot rates moderate throughout the quarter.

Though the baseline has been reset higher, we don’t expect much acceleration. That said, we don’t expect them to drop either — carriers are getting similar spot rates to those they saw eleven years ago, though their operating costs (diesel, insurance, labor, etc.) have increased substantially. Simply put, there is no room for rates to drop, as many carriers have been running at unsustainable levels.

LM: What, in your opinion, is driving contractual rates higher and building momentum?

Klujsza: Looking at past truckload market cycles, we can see that spot market activity tends to drive contract rate behavior, with contract rates generally lagging behind by two to three quarters.

If spot rates are deflating for several consecutive months, shippers go into their next RFP or bid expecting a decrease in annual rates. Conversely, if spot rates are inflating, shippers are prepared for contract rate increases.

Since Q2 2024, spot rates have been year-over-year inflationary. This gradual rise has been pulling up contract rates closer to year-over-year inflation, and we expect that by the end of Q1, we’ll see contract rates (as measured by the Cass linehaul index) flip inflationary for the first time since 2022.

LM: How far past the bottom of the cycle do you think the freight market is?

Klujsza: For most logistics’ professionals, the truckload market hasn’t felt too different compared to the past several quarters, but we are past the bottom of the cycle, gradually rising higher.

We measure market cycles with our proprietary Curve index—based off of that, the cycle bottomed out in Q1 2023. That said, rates were still year-over-year deflationary until Q2 2024. Coming off of the highest peak in our observed company history in 2021, we dropped into the most prolonged down cycle in our observed history. It’s been a long, slow climb out of the trough, but we have seen consistent, though gradual, signs of an improving market for several consecutive quarters.  

LM: Do we remain in a shippers’ market in Q1, as was the case to end 2024?

Klujsza: Broadly speaking, yes, we remain in a shipper’s market for now —rates are relatively stable and capacity is relatively easy to come by—but the landscape is shifting.

Spot rates are year-over-year inflationary and heading higher, as is our all-in index, and we also anticipate contract rates to flip year-over-year inflationary by the end of the quarter.

If spot rates continue to rise faster than contract rates, it will create routing guide disruption as carriers move more of their capacity into the spot market. Rates set in the softer market of 2024 may not survive a tighter market later in 2025.

LM: How are things like inflation, interest rates and tariff policy impacting market conditions early into the new year?

Klujsza: So far this year, the economy has remained stable, but the impact of trade policies and how they could affect U.S. consumers and companies has yet to unfold.

We track several economic indicators, but consumer spending, namely on physical goods, has one of the most direct tie-ins to freight market activity — when people are buying goods, there is more freight to ship.

So far this year, consumer spending remains reasonably healthy, which will at least keep the freight market from heading back towards deflation. Of course, inflation, interest rates, tariffs and trade policy can all have an impact on consumer spending, we just haven’t seen it yet.

For instance, consumers are expecting tariffs to drive inflation—in a recent survey, these concerns drove consumer confidence to a seven-month low—but consumer spending has remained stable over the past two years.

The manufacturing and industrial sectors have shown signs of improvement while most indicators have remained relatively flat since Q3 2024.

It’s worth noting that though the truckload market is linked to what happens in the wider economy, it’s possible for the truckload market to remain strong while the economy stagnates (and vice versa). It has to do with the level of carrier supply relative to shipper demand.