Large, publicly held carriers like Schneider say strict regulatory enforcement is removing capacity from the market, resulting in improved freight rates. (schneider)
key takeaways:
- The U.S. trucking market has shifted into a carrier-led recovery fueled by rising spot and contract rates after nearly four years of disappointing pricing.
- Analysts said the rebound stems primarily from carrier exits and shrinking capacity due to stricter federal enforcement on compliance, driver qualifications and safety.
- Carriers expect rates to continue rising due to further capacity additions due to regulations, higher equipment costs and labor constraints, although macroeconomic demand remains uneven.
After nearly four years of declining freight rates, the trucking industry is growing confident that the market has finally turned in its favor.
Spot market pricing has increased since late last year and contract rates have increased in recent months, providing evidence that motor carriers have regained negotiating power and now have the opportunity to expand their margins as they move into the long-awaited upcycle.
The trucking industry is now experiencing a meaningful freight market recovery, but it has less to do with the volume of freight moved than it does with the number of trucks available to haul it, he said. bob costelloChief Economist and Senior Vice President of the American Trucking Associations.
“We are in a supply-driven recovery right now,” he said. “This is a very unique time.”
The driving force behind the rebound is the depletion of excess freight capacity, as carriers initially exited the industry due to weak market conditions and rising operating costs.
However, within the past year, crashes have spiked due to a crackdown on non-compliant carriers and drivers by the U.S. Department of Transportation to improve highway safety.
Those actions include stricter checks for non-domiciled commercial driver licenses for foreign truck drivers, implementing English-language proficiency requirements, targeting inadequate driver training programs or “CDL mills,” and removing electronic logging devices that enable tampering.
“That sent the market to the edge,” Costello said. “Supplies had been going down for a long time. It was very slow and it was taking so long that people didn’t even realize it.”
Commercial vehicle enforcement efforts have been more consistent and widespread in areas across the country, he said Dean KrocLead analyst for load board operator DAT Freight & Analytics’ freight data operation, DAT IQ.
“I’ve never seen the level of enforcement that we’ve seen over the last few months,” he said. “This has removed a large portion of this marginal capacity from the market during the quietest quarter of the year.”
Kroc agreed that the improvement in the freight market was linked to these capacity reductions rather than any significant increase in freight volumes.
He described the increased scrutiny on driver qualifications and regulatory compliance as “great certification”.
“Supply is being structurally and permanently removed from the market by enforcement, by law, by the courts, independently of freight volume,” Kroc said. “It’s not cyclical, it’s not reversible, and it’s not isolated. What that does is it creates a higher cost base going forward.”
The prolonged downcycle and recent enforcement initiatives, combined, appear to have exhausted the excess capacity built up during the economic recovery from the COVID pandemic. The urgent need to replenish inventory and stock empty shelves led to a historic freight boom in 2021, which attracted an influx of motor carriers and drivers eager to enter what was then a lucrative market. Once that surge subsided, the industry was left with too much capacity relative to freight demand, leading to a prolonged freight rate recession that only recently ended.
a carrier market
Shippers who have enjoyed pricing power for the past several years are now adjusting as the market has changed in the carriers’ favor.
“It turned around, and it turned around quickly, and it caught a lot of people by surprise, especially shippers,” said DAT’s Kroc.
According to DAT data, linehaul spot rates in the dry van and refrigerated segments have increased for nine consecutive months and in flatbed for six months, with the largest monthly gain recorded in May.
Flatbed spot rates reached a record $2.78 per mile in May, the highest monthly average in DAT’s dataset, which goes back to 2010.
The upward pressure on rates that began in late 2025 was often attributed to severe winter weather events, but in the background, more stringent enforcement was steadily reducing industry capacity.
The tightness of the market was on full display during the Commercial Vehicle Safety Alliance’s annual international RoadCheck safety inspection blitz, held May 12-14.
Historically, spot rates typically increase during roadchecks as non-compliant carriers and drivers are taken out of service, while some others keep their trucks parked to avoid inspection.
However, rates skyrocketed this year.
“We had records in dry vans, flatbeds and reefers in terms of week-to-week changes,” Kroc said. “Reefer rates went up 32 cents a mile in a week. We’ve never seen anything like that before. It’s crazy. It tells you that the market, the capacity, is very thin and it’s losing its elasticity.”
Several other factors could limit the industry’s ability to grow further, including further price increases for new commercial trucks tied to more stringent federal standards for nitrogen oxide emissions that take effect in January.
On the employment front, the potential adoption of hair follicle testing could further reduce the pool of qualified commercial drivers by better detecting drug use.
“All this stuff that’s going on has slowed down the revolving door of drivers coming into the industry,” Kroc said.
Another factor is increased enforcement at US border crossings to prevent sabotage, in which foreign drivers smuggle domestic freight after entering the country to deliver goods across the border.
“You’re looking at the next inflationary freight cycle that could be several years, because at some point there will be a recovery in demand,” Kroc said. “Flexibility and the ability to expand and bring on more drivers in this business has become very difficult. That means freight rates are going to go up and there will be a new, higher floor.”
Fleets cited increasing speed
Trucking companies are citing the improved freight market conditions as a rebalancing of supply and demand.
Cox Fleet’s Kevin Clark discusses how fleets must rethink their maintenance strategies to remain efficient and flexible. Tune in by going above or RoadSigns.ttnews.com.
Large, publicly traded motor carriers highlighted continued capacity erosion in their first-quarter earnings reports.
“As we look at the freight market, the momentum we saw coming out of 2025 carries over into 2026,” gym filterSchneider’s incoming president and CEO said on the company’s April 30 earnings call.
He attributed the tight market conditions this year to DOT’s actions to address non-compliant carriers and predicted that the threat of enforcement would drive excess capacity out of the market.
“We believe we will see more supply exit than was removed by the 2017 ELD mandate, while also restricting the funnel of new entrants,” Filter said. “We hope that removing this capacity will return the market to a more normal state after several years of irrational supply dynamics.”
Schneider ranked 10th on Transportation Topics’s updated Top 100 list of the largest for-hire carriers in North America.
Werner Enterprises also shared an optimistic outlook on freight market conditions.
“So far, the improvement in rates has been largely supply-driven as capacity is running out at an accelerated pace due to regulatory enforcement,” said Werner president and CEO. Derek Leathers Fleet said on its first-quarter earnings call April 28. “As supply and demand dynamics are strengthening, we are seeing rate increases and early positive momentum heading into the bidding season. We expect pricing gains to continue with more meaningful improvements in the third and fourth quarters.”
Werner is ranked 19th in the TT100 available for hire.
Meanwhile, several major truckload carriers have recently announced driver wage increases, showing that recruiting and retaining drivers has become a top priority in the improving freight forwarder market.
Oklahoma-based flatbed carrier Melton Truck Lines has taken steps to improve driver retention. (Melton Truck Lines)
Between mid-May and early June, flatbed haulers Maverick Transportation and Melton Truck Lines and over-the-road carriers Nussbaum and USA Truck announced increases to their compensation structures.
Maverick and Melton are ranked 69th and 74th respectively in the TT100 available for hire.
mixed economic signals
ATA’s Costello said motor carriers are benefiting from the rebalancing of supply and demand in the freight market, but taken as a whole, the macroeconomic factors driving freight demand remain “weak.”
“We are not predicting a recession in (gross domestic product), nor are we predicting an acceleration in growth,” he said.
He cited some headwinds from fiscal policy related to the One, Big, Beautiful bill Act and an increase in construction activity related to data centers to support artificial intelligence.
On the other hand, rising fuel prices during the US war with Iran could reduce consumer spending on goods.
However, higher energy costs reflect disruptions to oil shipments through the Strait of Hormuz rather than an underlying issue in the global energy market.
“This is not a structural problem,” Costello said.
Meanwhile, US trade policy continues to shift after the Supreme Court struck down emergency tariffs imposed by the Trump administration, which responded by rapidly setting up alternative levies under a separate statute.
Nonetheless, Costello said, current tariff rates on U.S. imports are “well below recent highs” but remain historically high for modern times.
Another source of policy uncertainty for cross-border trade is the ongoing mandatory review of the US-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement in 2020.
DAT’s Kroc said that in the long term, the tight lid on capacity puts carriers in a position to command significantly higher rates when geopolitical concerns subside, shippers and consumer confidence increases and freight demand begins to grow.
“I think we’ll probably see higher rates than we saw during the pandemic because the supply side is weaker,” he said.
