Changing US trade policy is driving high levels of economic uncertainty. The forces of uncertainty are moving up against a wave of budding macroeconomic momentum. This clash will inevitably impact global supply chains and the transportation industry, with the potential for both upside and downside effects on freight rates. Here are a few key indicators to consider when assessing the impact:
Currently, annual freight volumes and freight rates remain low and are trending below year-ago levels. On a rate-of-change basis, however, volumes and rates are on the upswing, moving in tandem with endogenous industrial sector recovery. The quarterly Cass Implied Freight Rate is now higher than the same period one year ago, an ITR Checking Point™ that would usually signal that rate rise is likely to take hold.
For many trucking-related businesses, the US Retail On-Highway Diesel Price may be more relevant. We see upward rate-of-change momentum in Diesel Prices as well, but annual Prices were still down 10.5% from the year-ago level as of March, with the US American Trucking Association’s Truck Tonnage Index suggesting underwhelming trucking volumes.
As businesses work to front-load inventory and reorganize their supply chains to circumvent tariffs, we can expect supply chain pressures to generally increase, leading to delays or outright supply disruptions. Since freight rates often move in the same direction as the Global Supply Chain Pressure Index, increasing supply chain pressures could mean higher freight rates.
However, some companies may reduce their purchasing activities altogether in response to tariffs, potentially resulting in lowered demand and preventing rates from rising significantly. Lowered demand would keep oil prices, which are already muted, on the lower side. At current, the Global Supply Chain Pressure Index is signaling about average pressures, and US Crude Oil Spot Prices have declined into the $60s. The Global Supply Chain Index is signaling slight upward pressure on rates, rather than outright rate rise. Signals from US Crude Oil Spot Prices are similarly weak, suggesting rates are unlikely to rise significantly.
Hong Kong – the busiest air freight hub in the world – looms large in terms of global financial relevance. Consequently, Hong Kong Air Freight Volumes serve as an indicator for economic activity in Southeast Asia and global trade overall. As you can see in the chart below, Hong Kong Air Freight Volumes have provided a reasonably consistent leading signal for the ebbs and flows of US freight rates.
Through the most recent data available, annual Hong Kong Air Freight Volume totaled 4.92 million metric tons, up 11.2% from the same period a year ago. Hong Kong Volumes have been rising at double-digit rates since early 2024, another signal that macroeconomic momentum has been building. With a 10-month lead to freight rates, the Hong Kong Air Freight Volume annual growth rate (or 12/12 rate-of-change, as we call it here at ITR Economics) is signaling rise ahead for freight rates, with a mid-2025 high, followed by slowing growth for the remainder of the year.
How will tariffs impact freight rates? The evidence is mixed.
We can generally expect upward pressure on the supply chain to meet with lowered oil prices and a potential downward shift in demand. Businesses should prepare for the potential of slimmer margins and less-robust volume growth.
For those businesses influenced by transportation rates and the ripples of the global business cycle, be sure to track the trend lines presented in this blog as conditions change. In these less-than-certain times, ensure you are buffering your freight budget and transit times for potential changes. It will be especially important to be prepared for costs associated with unforeseen delays or limited capacity this cycle.