Freight Transportation Services Index

The Freight Transportation Services (TSI) Index is primarily driven by economic activity, as robust growth boosts demand for goods, increasing freight movement. Industrial production and consumer demand also impact freight volumes, with consumer spending patterns shaping seasonal fluctuations. Meanwhile, fuel prices alter operational costs, affecting freight rates and volumes. Infrastructure and technological advancements enhance efficiency, while regulatory frameworks and labor market conditions influence operational dynamics.

The Freight Transportation Services (TSI) Index has traditionally grown at a rate slightly below that of US GDP, driven by the economy’s shift toward service demand over goods. Service industries, while requiring some equipment, inherently depend less on the transportation of physical goods, reducing the overall demand for freight services. Despite this, the index still mirrors economic trends, with significant fluctuations during financial crises and recoveries. For instance, a decline during the pandemic and a subsequent recovery in 2021 paralleled trends in the index, although it stagnated between 2023 and 2024, labeled by some as a "freight recession." Inflation and high interest rates have been key factors restraining goods movement. Moreover, although consumer sentiment has improved, it remains well below pre-pandemic levels.

In 2025, the Freight Transportation Services (TSI) Index is expected to see growth, albeit at a restrained pace. This growth hinges on anticipated declines in interest rates, which are projected to spur demand from the nonresidential construction market. Additionally, lower interest rates are likely to boost capital investments in other goods, like industrial equipment, increasing demand for transportation services. Expected reductions in mortgage rates may also drive demand for new housing, further supporting transportation needs. Nonetheless, both mortgage and federal funds rates are anticipated to remain elevated. Moreover, the proposed tariffs on China, Canada and Mexico could present inflationary pressures, potentially keeping rates elevated longer than anticipated.