In the final session of SMC3’s LTL Online Education Hybrid Series, industry analyst Keith Prather took a deep dive into the key economic forces shaping the less-than-truckload (LTL) sector in 2025 and beyond.

As Managing Director of Armada Corporate Intelligence, Prather brings decades of expertise in tracking market trends and global supply chain dynamics. His insights painted a complex yet cautiously optimistic picture of the road ahead for LTL carriers, shippers, and supply chain professionals.

A new business cycle: “Chaotically getting back to normal”

As the industry emerges from a volatile two-year period of supply chain destocking, Prather noted that LTL is entering a new economic phase-one that feels more familiar and stable.

“We are finally getting back into what feels like a normal cycle,” Prather explained. “We’re coming out of the anomaly and into a brand-new period of normalcy, if you will.”

Despite the familiarity, there is still a great deal of volatility. As moderator and Professor of Logistics, Karl Manrodt, quipped, “That’s the first time somebody has talked about the last 35 days as being normal.”

Prather acknowledged the ongoing uncertainty, but he also pointed to stabilizing inventory levels and improving demand signals as evidence of recovery.

“For the first time in those two years, we’re starting to see language inside the global manufacturing sector that says they’re ordering more inputs, seeing a little more hiring, and inching up new orders.”

Chaos theory and global trade

One of the session’s more provocative discussions centered around the role of “chaos theory” in global trade policy, particularly under the Trump administration. Prather described a strategy known as “madman theory” or “strategic incoherence,” where unpredictability is used as a tactical advantage in trade negotiations.

“It keeps competitors and potential threats off balance,” he explained. “Whether you’re an ally or an adversary, you don’t know what’s going to be thrown at you next.”

He noted this unpredictability makes it difficult for supply chain executives to plan ahead, as shifting policies on tariffs and trade agreements create constant uncertainty.

Tariffs and their LTL ripple effects

One of the biggest sources of uncertainty for LTL carriers and shippers in 2025 is the return of aggressive trade tariffs. Prather cautioned that while tariffs on Mexico, Canada, and China will have an immediate impact on some sectors, their broader effect on freight movement remains unclear.

“When we go back and look at freight movement in 2018 and 2019, we didn’t see a direct impact on normal dry van freight,” he noted.

However, he warned that purchasing managers will be closely watching the “net effective tariff rate,” which includes factors like currency devaluation in response to tariffs.

“What happens inside those countries matters,” he said. “If China devalues its currency like it did in 2018, it can neutralize some of the tariff impact. But that has its own economic consequences.”

The looming driver shortage

Another key issue for the industry is the lingering impact of Yellow Corporation’s 2023 collapse and the broader driver shortage.

“We don’t know yet what the real impact of the Yellow closure is,” Prather said. “Some drivers left the industry altogether. Others weren’t willing to move to competitors. But with freight volumes projected to rise in 2025, we’re going to feel that capacity crunch soon.”

Historically, he noted, LTL prices rise 6-8% following a major bankruptcy.

“We haven’t felt that pricing pressure yet, but by mid-2025, it will start to show up.”

From government to private-sector growth

Prather also outlined a critical macroeconomic shift: the transition from government-driven growth to private-sector investment.

“The Trump administration knows it has to get government spending under control,” he said. “They’re looking at a trillion dollars in cuts, but at the same time, they need to stimulate private investment.”

For the LTL industry, this means watching for increased business spending on capital goods, construction, and manufacturing-all key drivers of freight demand.

“The administration wants corporations investing in technology, AI, robotics, and infrastructure. That’s where future freight growth will come from,” he explained.

A market poised to accelerate

Prather’s long-term outlook for LTL is optimistic. His economic models suggest that, while 2025 may be a “breather year,” manufacturing and retail activity will accelerate into 2026 and beyond.

“For LTL, the next five years are going to be very interesting,” he said. “We’re going to see new manufacturing activity, shifts in lane density, and changing freight patterns. The key will be staying agile.”

His final advice to shippers?

“Capacity will tighten, tariffs will create volatility, but overall, this is a market getting back to strength,” he concluded. “For the first time in a long time, it just feels like we’re getting back to normal-chaotically but still getting there.”

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