Chicago, IL — On Wednesday, the Federal Reserve increased the federal funds rate by 75 basis points, a move that has already started to bite into the freight market that had been riding high since early March.

The Outbound Tender Volume Index (OTVI), which tracks shippers’ requests for truckload capacity, has a clear inverse relationship with the fed funds rate: when the latter rises, OTVI falls. Truckload demand reached record highs while rates hovered near zero, but the sudden spike in borrowing costs is forcing shippers to pull back. The Fed’s mandate to curb inflation—kept above its 3 % target since the start of the year—has led to this unprecedented rate hike. By raising the cost of interbank borrowing, the Fed pushes up the rates that banks charge consumers and businesses, which in turn raises the price of financing large purchases and slows overall demand, especially for goods.

Freight Waves reported a 19 % drop in truckload demand over the five weeks that began in March, even before the Fed’s rate hike. Spot rates for truckloads, excluding fuel, fell from a peak 63 % higher than pre‑COVID levels to a current 17 % above September 2019. That decline signals a tightening of the market as shippers become more cautious about spending and carriers feel the squeeze on freight margins.

What This Means for Drivers

Owner‑operators will see fewer loads and tighter margins, making it harder to cover operating costs and repay equipment loans. CDL‑A holders working for fleets may experience reduced overtime and fewer long‑haul assignments, as fleet managers cut back on discretionary hauling to preserve cash flow. Drivers who rely on fuel‑exempt spot rates will notice the narrowing spread, squeezing profits further. The increased borrowing costs also mean that new equipment purchases are more expensive, forcing many to defer upgrades or seek alternative financing options.

Industry Reaction

Carrier groups have warned that the Fed’s aggressive stance could trigger a prolonged downturn in freight volumes. The American Trucking Associations’ freight research team noted that the recent rate hike “has already begun to erode the excess demand that sustained high rates during the pandemic.” Many carriers are now evaluating their hedging strategies and cutting back on discretionary loads to maintain cash reserves. The broader industry is watching closely, as a continued decline could ripple through the supply chain, affecting everything from retail to manufacturing.

Key Points

• Fed raised the federal funds rate by 75 basis points on Wednesday.
• OTVI shows a clear inverse relationship with the fed funds rate.
• Truckload demand fell 19 % over five weeks starting in March.
• Spot rates excluding fuel dropped from 63 % above pre‑COVID to 17 % over September 2019.

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