Mid-Year Freight Market Update: Navigating Today’s Freight & LTL Trends
Broader Market Trends: Capacity vs. Pricing
The April 2025 Logistics Managers’ Index (LMI) came in at 58.8, signaling another month of supply chain expansion. But buried within that growth is a critical divergence: while capacity is increasing slowly (at 55.2), transportation pricing surged to 62.3. This marks the ninth consecutive month that pricing outpaced capacity, giving carriers continued leverage.
For SMBs, this creates a challenging equation. Even if there’s available capacity, it doesn’t necessarily translate into lower costs. In fact, shippers may find themselves paying more for access to lanes and reliable service.
What This Means for SMBs:
- Higher baseline rates: Transportation is no longer cheap or soft across the board.
- Contract agility is critical: Fixed-rate agreements could save money, but need to be timed wisely.
- Margin pressure is real: Higher rates squeeze SMB profitability unless mitigated through smarter shipping strategy.
LTL Strength: Density-Based Pricing Takes the Lead
Less-than-truckload (LTL) shipping has remained comparatively resilient amid broader freight shifts. One major reason? The steady industry pivot toward density-based pricing, which rewards more efficient freight and penalizes underutilized space.
Upcoming NMFC changes in July are only accelerating this trend. Instead of categorizing freight by subjective factors (like value or stowability), carriers are using automated systems to rate based on a simple formula: weight divided by volume.
Why This Matters:
- Dimensioners are now standard tools: Terminals can instantly validate shipper measurements and charge accordingly.
- Freight class is fading: While not obsolete, class-based pricing is being phased out in favor of more transparent, volume-driven billing.
- Carriers are protecting their margins: With density-based pricing, they can more accurately charge for the trailer space being used.
What SMBs Can Do:
- Invest in packaging optimization: Right-sized boxes and efficient palletization directly translate into lower shipping costs.
- Use dimensioning tools proactively: Avoid billing surprises and align outbound freight with carrier expectations.
Warehousing Costs: The Silent Margin Squeeze
While freight rates capture the headlines, warehousing costs are quietly putting equal pressure on SMBs. According to the LMI, April saw inventory costs climb to 75.6 and warehousing prices reach 72.3. Even with some additional capacity entering the market (warehousing capacity index at 55.4), utilization remained elevated at 60.1.
In other words, even if there’s more space, it’s still expensive—and likely being used inefficiently.
Strategic Implications:
- JIT vs. JIC deserves a second look: Holding excess inventory may no longer be cost-effective in this pricing environment.
- Inventory velocity is key: Turnover matters more than square footage.
- Storage decisions now affect freight costs too: More inventory can lead to more frequent LTL shipments, which amplifies density pricing penalties.
Key SMB Strategies for Mid‑2025
To stay competitive in today’s freight climate, SMBs must be proactive. Here’s what we recommend:
- Lock in contract rates now: If you haven’t negotiated new terms recently, mid-year is the perfect window.
- Run density audits: Packaging inefficiencies cost money—Amware can help identify them.
- Reassess warehousing strategy: Evaluate inventory policies and whether storage locations are optimal.
- Partner with a tech-savvy 3PL: A third-party logistics provider that understands both freight trends and technology gives SMBs a measurable edge.
What Makes Amware Different?
Amware is more than a 3PL—we’re a logistics partner built to help SMBs thrive amid change. Our integrated approach includes:
- AmRate TMS: Real-time access to LTL rates, with built-in dimensional pricing scenarios.
- Packaging Audits: Identify wasted space and reduce cost per shipment.
- Contract Intelligence: We help clients time negotiations to avoid seasonal rate hikes.
- Inventory Flow Consulting: We align freight strategy with warehouse cost containment.
The Path Ahead
The second half of 2025 promises more volatility:
- Summer tightening is likely: Seasonal shipping patterns (like produce or energy) will further strain capacity.
- Tariff uncertainty looms: Ongoing trade tensions could drive another import surge—and ripple effects in domestic freight.
- NMFC changes go live in July: Non-compliant freight could face reweighs or reclass charges.
SMBs that act now to audit freight specs, lock in rates, and streamline inventory will be best positioned for the months ahead.
We’re halfway through a pivotal year for transportation logistics. Rates are climbing, expectations are rising, and efficiency is non-negotiable. But with the right tools and the right partner, SMBs can not only weather the pressure—they can outperform.
Want to see how Amware helps customers adapt to freight volatility? Schedule a mid-year logistics strategy session today.