Navigating Economic Headwinds: September 2025 Freight TSI Declines 2.1% Amid Broader Transportation Slowdown

In the ever-evolving landscape of global supply chains and economic indicators, the U.S. Department of Transportation's Bureau of Transportation Statistics (BTS) has released its latest Freight Transportation Services Index (TSI) data for September 2025. The numbers paint a picture of deceleration: the Freight TSI fell 2.1% from August 2025, snapping a two-month growth streak, and declined 1.2% year-over-year from September 2024. This downturn extends to the Passenger TSI, which dropped 2.9% month-over-month and 1.1% year-over-year. The Combined Freight and Passenger Index mirrored this trend, falling 2.3% in September and 1.1% over the past year.

At Gain Consulting, we specialize in helping logistics providers, manufacturers, and shippers interpret these signals to optimize operations, mitigate risks, and capitalize on emerging opportunities. In this in-depth analysis, we'll break down the September TSI data, explore contributing factors, compare it to other economic indicators, and provide actionable insights for businesses navigating an uncertain freight environment. Whether you're a trucking executive, a rail operator, or a supply chain strategist, understanding these shifts is crucial for informed decision-making.

What is the Transportation Services Index (TSI)?

Before diving into the numbers, a quick primer on the TSI for context. The TSI is a monthly measure of the output of services provided by the for-hire transportation industry. It tracks month-to-month changes in freight shipments (Freight TSI) and passenger travel (Passenger TSI), offering a window into the health of domestic transportation sectors.

The Freight TSI includes:

• For-hire trucking

• Railroad freight services (including intermodal shipments like containers on flat cars)

• Inland waterways transportation

• Pipeline transportation (primarily petroleum, petroleum products, and natural gas)

• Air freight

Notably, it excludes international or coastal waterborne movements, private trucking, courier services, and the U.S. Postal Service.

The Passenger TSI covers:

• Local transit

• Intercity passenger rail

• Passenger air transportation

It omits intercity bus, sightseeing services, ferry services, taxi services, private automobile usage, and non-motorized transport.

The TSI focuses exclusively on domestic "for-hire" services—those provided by firms to external customers for a fee. It excludes in-house transportation, paid ride-sharing (e.g., Uber, Lyft), and noncommercial travel. By design, the TSI serves as a leading economic indicator, often correlating with broader trends in Gross Domestic Product (GDP) and industrial activity. Historical data from 2000 onward is available on the BTS website or the FRED database for deeper analysis.

September 2025 Highlights: A Month of Declines

The Freight TSI stood at 136.2 in September 2025, down from 139.1 in August (revised from an initial 138.9 in last month's release). This 2.1% drop marks the first monthly decline after gains of 1.4% in July and 0.1% in August. Year-over-year, the index is 1.2% lower than September 2024.

The Passenger TSI fared worse, falling to a level 2.9% below August after similar two-month gains. It remains 1.1% down from September 2024 and a staggering 9.7% below its all-time high in January 2020—a lingering effect of pandemic-era disruptions.

The Combined Index dropped 2.3% month-over-month and 1.1% year-over-year, underscoring a synchronized slowdown across freight and passenger segments.

Modal Breakdown: Winners and Losers in Freight

The Freight TSI's decline wasn't uniform. Key decreases drove the overall drop:

• Air freight: Sharp reductions, reflecting softer demand for high-value, time-sensitive goods.

• Rail carloads: Lower volumes in commodities like coal, chemicals, and grain.

• Rail intermodal: Fewer container movements, often a proxy for retail and consumer goods imports/exports.

• Trucking: Reduced tonnage, impacted by inventory drawdowns and cautious retailer ordering.

Offsetting these were gains in:

• Pipeline: Increased flows of petroleum and natural gas, buoyed by seasonal energy demand.

• Waterborne (inland waterways): Modest upticks, possibly from agricultural exports or bulk commodities.

BTS notes that pipeline petroleum, air freight, and air passenger data for September were estimated one month ahead (based on August actuals), and waterborne tonnage was forecasted due to data unavailability. These estimations introduce minor uncertainty but align with BTS's concurrent seasonal analysis methodology, which refines factors as new data arrives.

For passengers, declines were broad-based:

• Air passenger: Fewer enplanements amid high fares and economic caution.

• Rail passenger: Lower Amtrak ridership.

• Transit: Reduced local bus and subway usage, signaling urban mobility slowdowns.

Contextualizing with Other Economic Indicators

The TSI doesn't exist in a vacuum. BTS compares it to seasonally adjusted metrics like Industrial Production, Housing Starts, Retail Sales, and Personal Income. However, several September figures were unavailable due to a government shutdown, limiting full comparability. Here's the available data through August:

Economic Indicator	July	August	September	% Change (Jul)	% Change (Aug)	% Change (Sep)
Freight TSI	139.0	139.1	136.2	1.4%	0.1%	-2.1%
FRB Industrial Production Index	103.8	103.9	NA	-0.4%	0.1%	NA
FRB Manufacturing (% change)	-	-	NA	-0.1%	0.2%	NA
FRB Mining (% change)	-	-	NA	-1.5%	0.9%	NA
FRB Utilities (% change)	-	-	NA	-0.7%	-2.0%	NA
Housing Starts (thousands)	1,429.0	1,307.0	NA	3.4%	-8.5%	NA
Retail Sales (millions, nominal)	628,620.0	NA	NA	0.7%	NA	NA
Personal Income (billions, chained 2017 $)	20,625.7	20,646.5	NA	0.2%	0.1%	NA
ISM Manufacturing Index (%)	48.0	48.7	49.1	-1.0 ppt	0.7 ppt	0.4 ppt

The Institute for Supply Management (ISM) Manufacturing Index edged into expansion territory at 49.1 in September (above 50 indicates growth), up 0.4 percentage points. This modest improvement contrasts with the Freight TSI's sharp drop, suggesting manufacturing sentiment is stabilizing even as actual freight volumes contract. Industrial Production was flat in August (+0.1%), but subsectors like manufacturing (+0.2%) showed resilience—yet the TSI's multimodal declines hint at downstream bottlenecks.

Housing starts plunged 8.5% in August, signaling construction slowdowns that could reduce demand for trucking and rail-haul building materials. Retail sales grew 0.7% in July (August data pending), but year-over-year freight weakness may foreshadow inventory adjustments heading into the holiday season.

Why the Decline? Key Drivers and Implications

The September Freight TSI drop stems from a confluence of factors:

1. Inventory Destocking: Retailers and manufacturers, flush with post-pandemic stockpiles, are drawing down inventories rather than replenishing. This reduces trucking and intermodal volumes.

2. Demand Softening: High interest rates and consumer caution are curbing spending on goods, hitting air freight and rail carloads hardest.

3. Sector-Specific Pressures: Energy pipelines bucked the trend due to steady oil and gas flows, but broader commodity weakness (e.g., metals, forestry) dragged rail down.

4. Seasonal and External Shocks: Back-to-school and pre-holiday ramps were muted; potential port disruptions or weather events may have played a role (though not explicitly cited).

For passengers, air and rail declines reflect travel normalization post-summer peaks, compounded by economic uncertainty. The Passenger TSI's 9.7% gap from January 2020 highs underscores a structural shift toward remote work and cost-conscious travel.

Broader implications:

• Economic Cycle Signal: The TSI has historically led GDP turns. A sustained freight decline could foreshadow Q4 GDP weakness, especially if ISM gains don't translate to volume growth.

• Supply Chain Risks: Trucking capacity remains ample, but rate pressures may intensify if volumes stay low. Intermodal operators face competition from resilient ocean shipping.

• Opportunities in Resilience: Pipelines and waterways highlight energy and bulk sectors as bright spots—ideal for diversification.

Actionable Insights for Logistics and Supply Chain Leaders

At Gain Consulting, we advise clients to treat TSI data as a strategic compass. Here's how to respond:

1. Optimize Modal Mix: Shift volume to cost-effective pipelines or waterways where feasible. For time-sensitive goods, monitor air freight for rebound signals.

2. Inventory Strategies: Use TSI trends to fine-tune just-in-time models. Avoid overstocking amid destocking cycles—leverage predictive analytics for demand forecasting.

3. Cost Management: With trucking down, negotiate rates aggressively. Invest in intermodal for long-haul efficiency, but hedge against rail volatility.

4. Passenger-Adacent Plays: Airlines and transit operators should focus on yield management; ancillary revenues (e.g., cargo belly space) can offset passenger softness.

5. Scenario Planning: Model TSI paths against GDP forecasts. If October data (due December 10, 2025) shows continued declines, prepare for recessionary hedging.

6. Sustainability Angle: Lower volumes present a window to decarbonize fleets—electrify trucking or optimize rail for lower emissions per ton-mile.

Looking Ahead: October TSI and Beyond

BTS will release October 2025 data on December 10, 2025. Early indicators like ISM (potentially above 50) and holiday shipping ramps could signal stabilization. However, persistent year-over-year declines warrant caution.

For historical context, explore BTS's Transportation as an Economic Indicator resources or the report Transportation Services Index and the Economy. Subscribe to BTS GovDelivery for direct updates.

At Gain Consulting, we're committed to turning data into decisions. If your organization needs customized TSI analysis, supply chain audits, or forecasting models, contact us today. In a world of economic flux, proactive insights are your competitive edge.

Gain Consulting: Empowering Transportation Excellence. Data sourced from BTS Release 70-25. All figures seasonally adjusted unless noted. Revisions may occur with updated inputs.