February 19, 2025 • Marketing Update, Spotlight
Freightwaves reports consumer spending is down, with “total retail sales [falling] by 0.9% month over month to start 2025, the biggest decline since February 2024.”
Along with current lower consumer spending, current tariffs and impending tariffs will also continue the spending deficit.
But it’s important to note that in the post-holiday season, through February, consumer spending historically decreases. It will be important to see how factors such as tariffs continue to impact spending throughout the year. For now, we can remain optimistic that spending will increase after February as it historically does, but keep a realistic expectation with these exacerbating factors.
We’re in the thick of lower consumer spending now, though, so how does this make for a slower season for those in logistics and supply chain?
Production lines are slower, meaning less volumes to pump out. This can be good for lower truck rates, as trucks try to stay booked with competitive rates, but this also means tender rejection rates can remain elevated.
Shippers push for lower transportation prices. As shippers continue pressuring for lower contract rates, it will be crucial for those submitting bids and repricing to be conscious of the unpredictable volumes we might see throughout the year. Shippers may need to consider smaller bid cycles to account for possible market volatility.
Prepare for a busy spot market. More spot loads are going up on the boards with spot rates increasing in turn. This is due to higher tender rejections rates but also due to low volumes. Loads picking up or heading to undesirable markets make for hard sells, and trucks are combatting low volumes with the rates they want in order to move.
All this can spell a swing toward higher truck rates. With current low volumes, a sudden demand from consumers means a boom in production. If shippers don’t properly account for increased consumer demand, they will be at the will of trucks to grab inventory. Here the carriers will hold sway and truck rates can increase. Remember, pendulums swing both ways, so it’s best not to bet on a set market.
Overall, we’re far from the boon of the COVID market and have been in a down market for a few years. There are current strains on inventory and material supply for shippers with current and impending tariffs, various weather events, natural disasters, as well as lower consumer spending. Market disruptors can be both expected and hard to predict. Try to control what you can, and rely on an educated and client-based logistics partner like Full Sail Logistics to find solutions customized to your needs. We’ll do the legwork for you, so you can keep your eye on what’s around the corner.
Let’s tackle the slow season together!
