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Truckload spot rates to continue upward trend, RXO says
North America’s third-largest full truckload broker, RXO, believes spot rates will continue to step higher. The post Truckload spot rates to continue upward trend, RXO says appeared first on FreightWaves.
The overall trajectory for truckload spot rates remains “inflationary,” but trade policy presents a significant wild card, according to a report issued by freight broker RXO on Thursday.
The Charlotte, North Carolina-based company’s Curve quarterly forecast said the TL market “has remained relatively calm” with spot rates continuing to step higher despite disruption from rapidly changing tariff policies. A trend – largely in place since 2023 – of soft freight demand, reductions in carrier capacity and stable rates continued in the first quarter.
RXO’s (NYSE: RXO) data showed TL spot rates (excluding fuel) were up 9.1% year over year in the first quarter, which compared to an 11.6% growth rate during the fourth quarter. The company’s all-in spot rate index, which includes fuel, also increased slightly again in the first quarter as it did in the fourth.
The data showed contractual rates increased 1.4% y/y in the first quarter – the first y/y increase since the end of 2022.
The 3PL classified the first quarter as “still primarily a shippers’ market” as “carriers remained under significant cost pressure, while shippers enjoyed relatively high tender acceptance rates, easy capacity and slight rate decreases in their RFPs.”
RXO is the third-largest TL broker in North America following its acquisition of Coyote Logistics last year.
Market continues to move toward equilibrium
“We’re as close to equilibrium, in terms of carrier supply and shipper demand, as we’ve been in over two years,” the update said. “Relatively speaking, the capacity situation is much more fragile than at this time last year. With a continued difficult landscape for carriers, and (in many cases) decreasing 2025 contract rates setting in, it could set the stage for volatility later in 2025.”
Market tightening during the fourth quarter held into January before unwinding in February and March as tariff rhetoric accelerated. RXO pointed to an 11-week period on the platform at the end of last year when spot rates were at a premium to contract rates, which is typically a sign of recovery. However, into the second quarter, it said spot rates are at a 5% to 8% discount to contract rates.
RXO doesn’t believe the step down in the y/y spot rate increases during the first quarter is a sign the TL market is weakening, noting significant cost pressures on carriers. It said the average cost to operate a truck is 34% higher over the past decade but absolute spot rates are largely the same as they were in 2014.
“Though the spot market has receded since January, it did the same thing in 2024, then continued to build momentum (albeit gradually) throughout the rest of the year,” the update said. “Simply put, it is difficult for freight rates to drop materially, as many carriers have been running with unsustainable unit economics.”
Broker sees mixed bag of outcomes in Q2, 2025
RXO doesn’t expect a material ramp in rates during the second quarter as the spot market hasn’t held the increases from one-off seasonal or weather events in recent months like it typically would at the start of a material upcycle.
“Q2 will not likely feel like a dramatically different operating environment, but we are in a changing marketplace that may set us up for a more meaningful flip later in the year,” the report continued. “The severity of an inflationary spike in freight rates largely depends on tariffs and how shippers and carriers respond.”
RXO said spot rates are expected to continue to increase in the second quarter even as imports and industrial production are receding. A typical seasonal lift for the quarter is still expected “especially if there is some stabilization in trade policy (i.e., reduction or removal of tariffs).”
The broader trend for 2025 calls for more carrier exits (“despite a couple of atypical months of operating authority growth in March and April”) and high carrier operating costs to keep upward pressure on rates.
RXO also pointed to a chance for a more material uptick in rates if trade tensions calm ahead of peak season and if carrier exits become more pronounced. That scenario would likely mean “contract rates and routing guides set in the softer market of 2024 may not survive a tighter market late in 2025, when the spot market will likely become more lucrative than the contract market.”
“All that said, while we are in an inflationary rate environment, we don’t anticipate the sort of extreme conditions we experienced in the last inflationary market in 2020 and 2021.”
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The post Truckload spot rates to continue upward trend, RXO says appeared first on FreightWaves.
