Freight shipments are set to turn positive after more than three years of year-over-year declines, according to the monthly Cass Freight Index released Monday by Cass Information Systems. The multimodal shipments component dipped just 1.2% year over year in May, the smallest decline in 18 months and a sharp improvement from the prolonged downturn that began 40 months ago. The report projects freight volumes will grow 1.8% in the second half of 2026, driven by tight inventories, falling tariffs, and a weaker U.S. dollar.
The data shows truckload linehaul rates have climbed for 17 consecutive months, with the TL linehaul index up 6.9% year over year in May—the largest increase in nearly four years. Total freight expenditures jumped 7.5% year over year and rose 5.3% from April (4.9% seasonally adjusted), marking the biggest annual increase since late 2022. Shipments increased 3% month over month but dipped 0.3% on a seasonally adjusted basis. The two-year stacked volume decline of 5.2% was the smallest since February 2024. Domestic intermodal volumes improved while spot indicators signaled strengthening freight demand, according to the report.
"These are positive signs that a volume recovery in the second half of the year remains likely," the report stated. While the recovery may not be consumer-led, the combination of tight inventories, declining tariffs, and a soft dollar supports demand growth. The report notes that "volumes are beginning to recover, but it is mainly supply constraints supporting higher rates, in our view, both for equipment capacity and drivers." Publicly traded carriers appearing at an investor conference last week indicated contract rates set earlier this year are proving too low as capacity continues to shrink, with potential for double-digit rate hikes this year and next as routing guides fail.
The rate surge stems primarily from a rapid contraction in truckload capacity that began last year. Authorities tightened enforcement of non-domiciled commercial driver's license rules and English proficiency requirements, alongside crackdowns on questionable driver schools and electronic logging device providers, forcing capacity out of the market. Recent developments—including increased policing of cabotage rules and the Supreme Court's broker liability ruling—are further removing noncompliant drivers from the industry. This supply squeeze is pushing rates higher even as demand remains relatively modest, creating what carriers expect could be a multiyear rate upcycle after nearly four years of depressed pricing.
The outlook points to a supply-driven rally rather than a demand boom. Assuming historical seasonal patterns hold through year-end, the Cass index projects a 1.8% volume increase in the second half of 2026—a modest gain but a significant reversal after 40 months of contraction. The data comes from freight bills processed by Cass, which handles $37 billion in freight payables annually and tracks both spot and contract rates across multiple transportation modes. If capacity constraints persist and inventories remain lean, carriers may finally see the pricing power they've lacked since early 2022.