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Freight Recession, Phase II: LTL Strategy, Spend & Signals in Q1-25

Structural headwinds, macro uncertainty, and muted volume recovery push LTL carriers to focus on margins over miles as the 2025 Playbook is revealed

Author

Freight Insider
May 08, 2025

The Q1-25 earnings cycle highlights an LTL market still contending with structural headwinds, macro uncertainty, and muted volume recovery.

  • Volumes remain 10-15% below peak. Freight trends have improved gradually but fall short of seasonal norms.

  • Tariff-related uncertainty and shifting trade policy have left many shippers in “wait-and-see” mode, delaying supply chain decisions and pressuring LTL demand.

  • Carriers remain laser-focused on cost control, pricing discipline, and targeted growth as soft industrial demand and inconsistent retail trends weigh on top-line performance.

  • Despite these pressures, carriers are demonstrating resilience by improving operational productivity, expanding premium services, and investing in scalable infrastructure.

The best perfroming carriers in Q1-25 are those executing well: using yield management, cost reductions, and technology deployment to support margin stability even in the low-growth environment.

While volumes are weak, strong operators are using service quality, operational agility, and long-term investments to win share and position themselves for eventual demand recovery. The groundwork for future leverage is being laid now.

Theme

Key Trends

Market conditions

Outlook / Risk factors

Demand / Supply

Volume remains ~10-15% below 2021 levels; seasonal recovery is subpar. Industrial outperformed retail.

Focus on core customers, local market growth, and pipeline expansion. Some market share gains via premium service.

Flat-to-gradual recovery expected. Customers more cautious than in Q4. H2 rebound now seen as less likely.

Volume Compliance

Shipment-level forecasting and execution variability remain a challenge.

Carriers tightening alignment of labor and equipment to actual freight.

Ongoing investment in agility to reduce mismatch and margin drag.

Capacity

Industry-wide capacity still constrained post-Yellow. New facilities provide growth runway.

Spare capacity held in new terminals. Focus on high-return volumes expansion, not fill-in volumes

Capacity discipline remains. Structural advantage for carriers with real estate and asset flexibility.

Contracts

Renewals strong with good flow-through to yield.

Mid–high single digit increases in Q1. Q2 guidance projects similar trends.

Strong confidence in renewal pricing holding through 2025.

Costs in ’25

Inflation persists in labor, healthcare, and equipment. Weather added temporary cost spikes.

Variable cost management, insourcing linehaul, AI-driven labor flexing. Reduction in purchased transport costs.

Carriers are well-positioned to handle cost growths. Continued productivity gains the focus, regardless of macro.

Pricing Cycle

Rational pricing environment. Carriers showing pricing power, especially with strong service.

Mid-to-high single digit increases on renewals. Dynamic and accessorial pricing expanding.

Strong momentum. Carriers confident in maintaining above-cost pricing through 2025.

Tariffs

Customers are split: wait-and-see vs. nearshoring vs. unchanged behavior.

LTL carriers less directly exposed to imports but impacted via customer uncertainty.

Risk remains if macro worsens. No clear demand uplift from tariff shifts expected in near term.

Freight Classification

Changes underway in NMFC present administrative complexity.

Carriers focused on maintaining revenue neutrality for customers.

Limited near-term revenue impact expected.

Growth Opportunities

SMB and accessorial revenue rising in mix. Premium services expanding.

Targeting growth in ‘local’ customer, SMBs. Growth of volumes in new terminals

Structural growth tailwinds from SMB and high-margin services despite soft macro.

Model Switching

Some mode shift to truckload in weak market, but structural limitations remain.

Carriers expect Truckload-to-LTL reversion as capacity tightens.

Long-term advantage for LTL as service needs increase and TL economics deteriorate.

Competition

Amazon’s LTL product not seen as a meaningful threat.

Legacy carriers emphasize network scale and full-service reliability.

No immediate impact, but customer expectations around tech and speed may rise.

Key Takeaways

  1. Volumes are soft, but the industry isn’t broken. Demand remains below historic norms, but carriers are gaining share through better execution, not pricing desperation.

  2. Margins are being protected through discipline. Variable cost alignment, linehaul insourcing, and smarter labor utilization are offsetting volume pressure.

  3. Pricing is holding—and even accelerating for premium services. Contract renewals and yield growth point to a healthy underlying pricing dynamic.

  4. Tariffs and trade are major unknowns. Customers are split in response, with many freezing investment or shifting sourcing quietly. Impact on LTL remains mostly indirect to end of Q1.

  5. Investment continues. CapEx in real estate, fleet, AI tools, and SMB salesforces suggest carriers are betting on post-2025 upside.

  6. SMB and local customers are emerging as high-margin growth drivers. Smaller shippers are prioritizing reliability and service, areas where LTL carriers are doubling down.

  7. The freight cycle has bottomed out—but the rebound may take longer than hoped. Sub-seasonal volumes in March–April suggest that a broader recovery may slip to late 2025, or beyond if trade uncertainty continues.

What’s your take? How was Q1 in LTL, and how is the rest of 2025 likely to shake out? Let us know in the comments!