It looks to be a very interesting 2025 in the less-than-truckload (LTL) sector of logistics and supply chain. There are significant LTL freight classification changes, expectations of growth in LTL volume after a couple rough years, the impact of an impending spinoff of FedEx Freight (registration required), and hopes of an economic bump as a new administration sets up shop.
Even though LTL volume is projected to see a slight decline of 1.8% in the US in 2024, per Uber Freight data, LTL carriers are expected to keep their hefty general rates increases (GRI) in place for the new year. This is based on optimistic volume forecasts for 2025 (+3.5% per Uber Freight) as well as higher operating costs. Further market consolidation (registration required) could put even more pricing pressure on shippers.
In November, FedEx Freight, UPS and ABF Freight announced GRI increases of 5.9%, while Saia’s rate is rising 7.9%, and Old Dominion is going up 4.9%. Per The Loadstar, carriers are expecting the rates to hold due to consolidation and contraction as well as predictions of volume growth. The parcel market, by contrast, has seen more shipper pushback against rate hikes and accessorial fees.
The LTL market definitely bears close scrutiny, given the volatility headed into 2025 and carrier concerns about loads weighted more heavily toward lower-margin retail. In this environment, a trusted logistics partner becomes a key asset in helping shippers assess their options and set LTL strategy for the coming year.
NMFTA Freight Reclassification On Tap In July
The National Motor Freight Transportation Association (NMFTA) has been planning for over a decade to modernize and simplify its freight classification system that determines pricing. The four main factors in the NMFTA classification system are density, handling, stowability, and liability.
The rapid increase in e-commerce volume has brought lots of lightweight but often bulky packages that quickly cube out trucks. For this reason, the NMFTA’s reclassification will focus more on a density-based scale to better align pricing with actual space and weight. This is similar to dimensional weight pricing (DIM), first introduced by FedEx and UPS in 2007 for air freight but expanded to ground in 2015. It subsequently became widespread across the parcel sector.
Simplification is also a big factor. The current NMFTA freight classifications are complex and confusing, often leading to disputes between shippers and carriers. The new system will group similar items together and eliminate ambiguity with a density-based model.
While NMFTA initially planned to roll out its reclassification in May 2025, the date has been shifted to July. This is based on significant pushback from carriers, shippers and 3PLs, all of whom need to make system and process adjustments to accommodate the changes.
The net-net is that reclassification will benefit shippers of heavier, denser freight, but spell trouble in the form of higher pricing for lighter, bulkier e-commerce packages. Carriers will have to recalibrate their pricing models, while shippers will be forced to adjust freight packaging and density.
An experienced 3PL can help shippers navigate the NMFTA changes by analyzing freight classifications, ensuring compliance, and optimizing shipping strategies. They can provide expert guidance on cost impact, packaging reconfiguration, and shipment consolidation, while leveraging their carrier networks to secure competitive rates based on the updated standards.
FedEx Freight Spinoff Will Make Waves
FedEx Corp. announced plans to spin off its LTL division, FedEx Freight, into a separate publicly traded company sometime in the next 18 months. Already the dominant player in LTL, this will make the unit stronger as it draws new investment and focuses on its niche, instead of getting dragged down by the struggling parcel business.
“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” said Raj Subramaniam, FedEx Corp. president and CEO in a statement. Shareholders cheered the move, sending shares up and unlocking up to $20 billion in market value, analysts said.
LTL Carriers Looking To Reverse Volume Drops In 2025
While the optimism of LTL carriers for 2025 volumes is the basis for healthy spikes in GRI, their most tonnage reporting has been a mixed bag due to economic factors. And the free-for-all grab of volume and share from the 2023 demise of Yellow Freight is at an end.
Old Dominion reported a 4.8% drop in tons per day in Q3, with XPO seeing it decline 4% in November, while Saia saw it increase 5.7% last month. ABF Freight saw its weight per shipment dip 11% in Q3, hitting operating income to the tune of -23%.
Even so, those 2025 GRI increases are coming. And experts agree the base rates are just the beginning of the story on freight pricing, with accessorials and volume-based deals in the mix. After a period of overcapacity and depressed rates, the LTL market is in rebalancing mode. Capacity reductions by for-hire fleets and a decline in private fleet insourcing have tightened supply, a recipe for higher rates.
Carriers are focusing on yield management and profitability, favoring rate increases over volume growth. This shift is expected to influence contract negotiations and spot market pricing throughout 2025.
Shippers should prepare for rate adjustments by analyzing their freight needs, looking for consolidation opportunities, and negotiating contracts based on projected increases. A strong logistics partner will help you stay informed about market trends to maintain flexibility in transportation planning and cost management.
The LTL Market: Changes Dead Ahead
With rates rising and leverage swinging back to carriers after a two-year “recession,” the LTL market in 2025 presents challenges for shippers. Small parcel shippers will be at a further disadvantage when NMFTA classification changes take effect in July, tilting pricing in favor of denser, heavier loads.
Market uncertainty is all the more reason to find a reliable partner who can help you optimize transportation while ensuring service continuity. Wicker Park Logistics, a woman-owned company and WBENC Certified Business, provides fast, cost-efficient transportation for leading firms across a range of industries through its broad-based carrier network.
Leveraging deep industry expertise, a cloud-based platform, and a consultative approach, Wicker Park offers on-demand transportation across modes (truckload, LTL, flatbed,hot-shot, expedited, etc.) and end-to-end visibility into every shipment. Contact Wicker Park Logistics for a quick quote.
