The second half of the year is often a make-or-break time for U.S. manufacturers. As the holiday season approaches, demand typically surges, and supply chains ramp up their operations. However, in 2025, manufacturers are preparing for peak season in the shadow of a freight recession, which is changing the way companies must operate.
Whether you produce windows, furniture, building products, or home décor, understanding the impact of the freight recession is essential to protect profitability and performance.
What Is a Freight Recession?
A freight recession occurs when there is a prolonged decline in freight volume and transportation demand, despite overall economic growth or stability. Unlike a traditional economic recession, which affects multiple sectors, a freight recession is specific to the transportation and logistics industry.
In 2025, several compounding factors have pushed the freight industry into recession territory:
- Overcapacity in the trucking market due to high fleet growth during the post-pandemic boom
- Falling consumer spending amid inflation and higher interest rates
- Global supply chain rebalancing, including onshoring and reshoring trends that shift traditional shipping routes
- Tariffs and trade policy changes that disrupt import/export volumes (Source: truckingdive.com)
- High diesel fuel prices and persistent driver shortages
According to Supply Chain Dive, both dry van and refrigerated (reefer) cargo volumes have seen lower year-over-year activity. Carriers are left with more available trucks than freight to haul, creating a tough environment for both shippers and transportation providers.
Tariff Uncertainty Disrupts Seasonal Purchasing and Inventory Levels
Uncertainty around 2025 tariffs has added another layer of complexity for manufacturers. In anticipation of new import costs, many companies accelerated purchasing earlier in the year to avoid price hikes, pulling forward orders that would typically support peak season production. Others scaled back overseas sourcing altogether, seeking to minimize exposure to sudden cost increases or customs delays.
As a result, some manufacturers are now entering peak season preparation with lower-than-usual inventory levels and fewer raw materials on hand. This could limit their ability to respond to late-season demand surges or last-minute orders. The shift in purchasing behavior, driven by tariff unpredictability, has left supply chains more vulnerable and less flexible during a time when agility is critical.
Why It Matters for Peak Season
Peak season, typically from October through December, is when many manufacturers generate a significant portion of their annual revenue. It’s also when logistics networks are usually under the most pressure; handling increased freight volumes, time-sensitive orders, and accelerated production timelines.
But this year, the freight recession is throwing a wrench into traditional peak season planning. Here’s how:
1. Reduced Demand for Freight, Even During the Busiest Time of Year
One of the defining traits of a freight recession is a decrease in goods being shipped. That means transportation providers are experiencing lower demand even during what should be their busiest months.
For manufacturers, this can mean a few things:
- Anticipated shipping spikes in Q4 may never materialize
- Freight providers may have excess capacity but limited routes or staffing
- Distribution plans may need to change last-minute, causing delivery delays
If your business is relying on a surge of outbound shipments during peak season to hit sales targets, a weak transportation market can create a serious gap in performance.
2. Overproduction, Excess Inventory, and Shrinking Margins
Many manufacturers begin preparing for peak season months in advance. Forecasts and historical trends are used to ramp up production. But if freight capacity is limited, or demand simply doesn’t spike as predicted, this can result in excess inventory sitting idle in warehouses.
Unsold or undelivered goods often lead to:
- Price cuts or markdowns to clear inventory
- Storage space constraints
- Production slowdowns or shutdowns to prevent further overstock
Each of these factors eats into profit margins and adds complexity to the supply chain. In some cases, inventory holding costs alone can damage year-end profitability.
3. Lower Shipping Rates, Higher Competition
In a freight recession, many assume shipping becomes cheaper. That’s true to a point: overcapacity can result in lower spot market rates. However, the story doesn’t end there.
According to Truckstop.com, even as rates fall, competition for reliable and timely service increases. Manufacturers are often forced to:
- Compete for the best carriers in crowded lanes
- Pay premium rates for guaranteed delivery windows
- Struggle to secure trucks for just-in-time or temperature-sensitive loads
So while rates may look lower on paper, the total cost of managing unreliable or disrupted logistics can actually be higher.
4. Disrupted Inbound Supply Chains
The freight recession also affects your ability to get raw materials, parts, or components on time. With fewer shipments moving, many suppliers are adjusting production, consolidating freight, or experiencing backlogs.
That can lead to:
- Delays in receiving critical items for production
- Extended lead times from international vendors
- Disruptions in just-in-time manufacturing strategies
If your operation relies on a tight procurement-to-production pipeline, these inbound freight slowdowns can prevent you from even beginning your peak season manufacturing run.
5. Financial Pressure and Reduced Profitability
The freight recession’s ripple effects hit every part of the manufacturing value chain:
- Delayed deliveries mean missed revenue
- Idle inventory means missed opportunities
- Higher costs to secure reliable freight erode margins
All of these issues combine to put significant financial strain on companies that rely on holiday sales. Some businesses may be forced to renegotiate contracts, lay off seasonal staff, or scale back investment in 2026 growth initiatives.
How Manufacturers Can Respond Using Frontier ERP
To navigate the uncertainties of freight markets and protect their peak season, manufacturers need complete visibility and control over production, inventory, and distribution. This is where Frontier ERP makes the difference.
Here’s how Frontier ERP helps you respond with agility and intelligence:
✅ Demand Planning & Forecasting Tools
Adjust production levels and shipping plans based on real-time sales, shipping trends, and market demand.
✅ Inventory Management Across Facilities
Track stock levels across multiple warehouses and proactively respond to overstock or understock risks.
✅ Integrated Transportation and Vendor Data
Stay connected with your suppliers, carriers, and logistics partners inside the ERP. Spot delays early and adjust shipping schedules automatically.
✅ Production Scheduling with Material Requirements Planning (MRP)
Prevent disruptions by aligning inbound supplies with production needs. Frontier’s MRP tools help you prepare realistic schedules based on freight realities, not just sales forecasts.
✅ Built-in CPQ and Order Accuracy
Use Frontier’s built-in Configure, Price, Quote (CPQ) tools to minimize costly order errors, reduce change orders, and streamline fulfillment.
✅ Business Intelligence Reporting
Monitor freight costs, delivery performance, and warehouse efficiency so you can optimize during and after peak season.
Don’t Let the Freight Recession Derail Your Peak Season
Freight may be in recession, but your manufacturing success doesn’t have to be. With the right tools and insights, you can stay ahead of supply chain disruption, protect margins, and deliver on customer expectations—even in a down market.
Frontier ERP provides the end-to-end visibility, automation, and control manufacturers need to navigate uncertainty and thrive during peak season.
Let’s talk about how you can strengthen your freight strategy and get the most out of 2025. Contact us for a free demo below.
