The Economy and Market Cycles

The only consistency about logistics is that it is inconsistent.

No two years run exactly alike. Still, two patterns tend to shape most of them, and it pays to watch both: the season and the cycle.

The season tends to repeat each year, though rarely the same way twice. Freight usually builds from late summer through the fall, as goods come off the ships, move into warehouses, and head out to stores ahead of the holidays. By the time shoppers fill the stores in November and December, much of that freight has already moved, and the rush shifts toward store replenishment, parcel, and final-mile delivery. January is often one of the quieter months. You can plan around the season, as long as you remember it can arrive early, run long, or come in lighter than the year before.

The cycle runs for years, and at its core it is supply and demand. When there are more trucks than freight, rates fall and capacity leaves the market. When freight outgrows the trucks that remain, rates climb and new capacity comes back in. Then it starts again. The wider economy pushes and pulls on all of it, and it tends to move the plant, the warehouse, the broker, and the carrier at the same time. The cycle is the one that catches people, because a good season can hide a turning cycle.

This month's job is to read both a month ahead, so the next 90 days don't make your decisions for you.

Where the cycle stands this fall

Here's what the latest numbers say, as of mid-October.

• The freight recession is over on price. After a long stretch of too many trucks, roughly 2022 to 2025, rates turned. DAT's national van spot rate, not counting fuel, averaged $2.19 a mile in August, more than 30% higher than a year earlier, even after the steepest July-to-August drop in DAT's records.
• Demand hasn't caught up. Cass Freight Index shipments were up 2.1% from a year earlier in August. That's the first annual gain since January 2023 and the end of a record 42-month decline, but it's a turn, not a boom. Most of the lift in rates came from drivers and trucks leaving the market. A federal rule that took effect March 16 narrowed who can hold a non-domiciled CDL, and English-proficiency enforcement at roadside has taken more drivers off the road since 2025. The CDL rule is being challenged in a federal appeals court, so that part of the story could change quickly. The court heard arguments in September, and a ruling could come any week.
• Costs are the squeeze. Diesel averaged $6.20 a gallon nationally on October 5, down from $6.53 two weeks earlier but still $2.49 more than a year ago. The U.S. Energy Information Administration expects about $4.50 in 2027, so real relief still looks like a 2027 story. On September 16 the Federal Reserve raised its benchmark rate a quarter point, to 3.75% to 4%, saying inflation remains elevated. Borrowing is getting more expensive, not cheaper.
• Imports are expected to ease after October. The National Retail Federation's Global Port Tracker expects imports up 8.2% from last year in September and 8.5% in October, then flat to down: down 1% in November and up 0.6% in December.
• Factories are growing, and paying more. The Institute for Supply Management's manufacturing index was 54.5 in September, the ninth straight month of growth (anything above 50 is growth). Its prices index jumped to 77.9, so input costs are climbing even faster.
• Warehouse space is tight, and storage costs more. The Logistics Managers' Index, a monthly survey of supply chain managers, showed available warehouse space shrinking in September at the fastest pace since March 2022 (a reading of 39.3, where anything below 50 means shrinking). Warehousing prices kept rising (73.5), and the cost of holding inventory rose faster still (79.9). The survey's authors tie the higher costs partly to limited space and the "difficulty of adding supply," and suggest that some companies may have held back from building for fear of over-investing.

Put together: rates recovered because capacity left, not because demand came back, and costs are high while money gets more expensive. That kind of market rewards discipline and the companies that plan past the peak. It's also when strong companies gain ground, because customers who got burned when cheap capacity disappeared start looking for partners who show up.

If you're reading this, you're already practicing one of the habits behind companies that last: reaching out, comparing notes, and continuing to learn. It's a big part of what carries a business from one cycle to the next.

What others are projecting

We don't make forecasts here. These are projections from others who study the market, shared as possibilities to plan around, not promises.

• Truckload rates may settle higher rather than fall back. Arrive Logistics' base case has spot rates cresting around January 2027 near this summer's peak, easing modestly through the first quarter, and landing near today's levels. In its words, "rates settle at a higher floor after the peak." Its upside case has rates running higher into late 2027 if demand jumps or capacity tightens further, and its advice is to "plan around the floor but budget for the tail."
• Logistics managers expect costs to keep rising. In the September Logistics Managers' Index, respondents expected transportation prices, warehousing prices, and inventory costs to keep climbing over the next 12 months, with warehouse space roughly flat.
• Warehouse vacancy may keep tightening. Cushman & Wakefield put national industrial vacancy at 6.9% in the second quarter and said, "we expect vacancy to continue trending lower through the balance of the year."
• Diesel may ease, but slowly. The EIA's October outlook expects diesel to average $5.19 a gallon for 2026 and $4.49 for 2027, with low inventories keeping it above $4 through 2027.
• Imports may hold near last year. The National Retail Federation forecasts imports down 1.9% from last year in January and up 1% in February.

Forecasts change, and they often disagree with each other. The value is in seeing the range, so your plan has room for more than one outcome.

How shippers are handling higher rates

When rates rise, shippers look for ways to soften the impact. Here's some of what they're doing this year, according to the people who track it.

• Moving more freight to rail. Domestic container volume on intermodal rail was up 8.1% in August from a year earlier, according to the Intermodal Association of North America. IANA president and CEO Anne Reinke said that when trucking capacity is low, "prices are going up," and shippers are "turning to intermodal." C.H. Robinson reports the strongest growth on lanes of roughly 550 to 1,500 miles, and says intermodal's cost advantage over truckload has been widening across many lanes.
• Running mini-bids. FTR's Avery Vise has pointed shippers toward "near-term tactical actions, mini-bids, greater use of intermodal."
• Filling every trailer. Vise also suggested "trying to stage truckload shipments for maximum cube capacity to reduce the number of trips needed." Fewer, fuller trips mean less fuel and less exposure to spot rates.
• Leaning on relationships. Analysts are steering shippers toward core carriers and dedicated capacity, and shippers who treated carriers well in the soft market tend to have more options now. As Vise put it, being a shipper of choice "is not something a shipper can do retroactively."

If you haul, store, or broker freight, your customers are likely weighing some of these moves right now. Knowing which way they lean helps you plan, and it may point to services you can offer.

What healthy companies do this month

1. Separate the season from the cycle, and watch for a shifted season. This year, many importers brought goods in early to get ahead of new tariffs, and at one point the National Retail Federation expected May to be the busiest month of the year. Instead, the peak stretched across the summer and into the fall, with month-to-month volume nearly level. By October, NRF reported that "most holiday merchandise has arrived." When freight moves early or spreads out, the usual fall rush can come sooner, last longer, or feel lighter than in past years. A slow week in the fall may not mean the market is turning. It may mean part of the season already happened.
2. Keep a short dashboard. Five numbers, checked once a month: one freight rate, such as DAT's van rate; one volume measure, such as Cass shipments; one cost, the weekly diesel price; the cost of money, your own borrowing rate; and one signal from your own customers. The same five work whether you run trucks, a warehouse, a plant, or a brokerage. Keeping numbers like these close at hand is one reason we built the free freight pricing calculator: it loads the latest weekly U.S. diesel average from the EIA, so one of your five is always a click away.
3. Ask your best customers what's next. Their plans are the best forecast you'll get, and no index can tell you what they can. Pick the three customers you'd least want to lose, and ask them directly, by phone or in person:
   • What does your first quarter look like: more volume, less, or about the same?
   • Are any new lanes, products, locations, or suppliers coming?
   • Is anything on hold, or moving somewhere new, such as to rail or another warehouse?
   • How are rising costs changing your plans?
   • What could we do better for you next year?

   Write down the answers, and ask the same questions again next quarter. The change from one answer to the next is often the earliest signal you'll get, and the conversation itself tells a customer you plan to be there for the long run.

4. Write three branches. One page, three scenarios: rates fall back in January, hold steady through the winter, or keep climbing into 2027. For each one, decide now what you'd do about hiring, buying, pricing, and cash. The climbing branch looks different depending on where you sit: a shipper might lock in capacity early or move longer lanes to rail, while a carrier, broker, or warehouse might hold capacity for the customers who value it most and make sure contracts keep pace with costs. When the market moves, you'll be choosing from a plan instead of reacting.
5. Price for the costs you'll have. With diesel and interest rates moving, make sure your surcharges, contracts, and quotes reflect next quarter's costs, not last quarter's. In a market like this one, every quote needs to be on point. If you price truckload freight, the free freight pricing calculator builds your cost and a suggested price from road miles, driver pay, this week's diesel price, stops, and the pickup date, so you can check a quote against today's costs before you say yes.

Habits that hold up across cycles

Companies that come through cycle after cycle in good shape tend to share a few habits:

1. Buy in the soft market, sell into the strong one. Add equipment, space and people when prices are down. When the market runs hot, that's the time to sell older assets, not to buy new ones at peak prices.
2. Keep debt light at the top. Long-term payments signed at peak prices outlast the peak. Pay down when the market is strong, so the next soft stretch finds you ready. In a long downturn, light debt is often what keeps a company in business.
3. Keep cash for the turn. Aim to hold enough in reserve to run three months without new business. After several lean years, that's hard, and many companies are still working toward it. Build it a little at a time, and stay diligent. A reserve turns a soft market into a chance to gain ground.
4. Show up the same in every market. Customers remember who kept their word when capacity was tight, and they reward it when capacity is loose.

The practice: plan for the whole cycle, not just the season you're in.

Your call to action

This week, call your best customer and ask what their first quarter looks like. Write the answer at the top of your three-branch plan.