State of the State 2025: Regulations, tariffs, costs part of trucking sector uncertainties

The United States has been mired in a “freight recession” for more than a year and Cass Freight Index numbers indicate it’s not over. The Index reported that freight shipments across North America were down 6.5% in December in a year-over-year comparison.

It’s a 3.1% decline from November and a 13.3% decline on a two-year stacked change. Freight expenditures were down 3.1% in December and freight rates were up 3.3% the same month, the Index reported.

Data within the Index includes all domestic freight modes and is derived from 36 million invoices and $38 billion in spend processed by Cass annually on behalf of its client base of hundreds of large shippers. The companies represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, medical/pharma, OEM, retail and heavy equipment, according to Cass Information Systems.

Arkansas Trucking Association (ATA) President Shannon Newton told Talk Business & Politics she is cautiously optimistic the freight recession could end in 2025, and the metrics seem to be improving.

“I’m leery of declaring the freight recession is over. In the same way, that a sustained decline indicated that we were in a very long period of recession, I’d like to see multiple months, maybe even two quarters of growth across multiple data points to indicate that the recession is indeed over. Most analysts expect this by Q2 of 2025,” she said.

Change and uncertainty will be some of the biggest challenges the trucking and freight industries face in 2025, she said. Economic uncertainty is at the top of the list.

President Donald Trump has threatened to or has imposed tariffs on many countries around the world including China, Canada and Mexico. The U.S. exports $356.5 billion to Canada, its top trade partner, according to the office of the U.S. Trade Representative. Mexico is second in exports with $324.3 billion while China is third with $150.4 billion.

“Renegotiating trade agreements and potentially levying tariffs will impact the demand for surface transportation, exactly how remains to be seen,” she said. “Our industry is heavily regulated at the federal level and policy issues like the environment, labor and infrastructure investment are shaped by agencies in DC. With a new administration comes the opportunity to revisit and potentially reshape some policies, but the uncertainty of which ones, to what and how quickly create some angst for the industry in 2025.”

Other problems impacting the industry include Insurance and litigation costs.

“Insurance never goes down and is becoming increasingly difficult to get with fewer providers in the marketplace and this seems to be driven by the litigious environment in which carriers are operating. The entire industry is bearing the brunt of the jackpot justice philosophy,” she said.

On the state level, ATA will work with the Arkansas Legislature to craft several legislative changes that should benefit the industry. Tort and towing reforms, cargo theft, and protecting the standards of commercial driver’s license holders will be among the organization’s top legislative priorities, she said.

One the federal level, there are some specific changes that could be made to improve the industry, Newton said. One is equipment upgrades.

“Congress could incentivize fleets to upgrade their equipment with today’s clean trucks by repealing the 12% federal excise tax. 2010 marked a major milestone in truck engine technology with the standardization of selective catalytic reduction and diesel particulate filters, yet 43% of trucks on our nation’s highways are pre-2010 models. A truck sold in 2006 emits roughly 10 times the amount of (nitrogen oxide) and particulate matter as a truck sold today,” she said.

Innovation in the renewable energy sector could also be a boon to the industry.

“Policymakers should create a regulatory framework that doesn’t pick winners and losers and allows for innovation and exploration of all alternative fuels that can transition us to a zero-emission future. Renewable diesel, natural gas, flex-fuel hybrids, battery-electric, and hydrogen are all potential options to support a decarbonized future,” she said.

How and when will self-driving trucks impact Arkansas?

“I love to surprise people when I tell them that we already have autonomous trucking in Arkansas. There are at least two fleets in the state utilizing trucks without drivers to move goods in Northwest Arkansas. These moves are highly repetitive and regional, but the future is now with regard to self-driving truck technology. They provide an advantage in addressing both safety and workforce challenges as well as being able to use professional drivers in more efficient and engaging routes,” she said.

Editor’s note: The State of the State series provides reports twice a year on Arkansas’ key economic sectors. The series publishes stories to begin a year and around mid-year to provide an update on the state’s economy. Link here for the State of the State page and previous stories.