The Freight Market Has Finally Turned

Large, publicly held carriers such as Schneider say tougher regulatory enforcement is removing capacity from the market, which in turn is driving a freight rate recovery. (Schneider)

After nearly four years of depressed freight rates, confidence is growing across the trucking industry that the market has finally flipped in its favor.

Spot market pricing has surged since late last year and contract rates have followed in recent months, providing evidence that motor carriers have regained negotiating power and now have an opportunity to expand their margins as they move into a long-awaited upcycle.

The trucking industry is now experiencing a meaningful freight market recovery, but it has far less to do with the amount of freight to haul than it does with the number of trucks available to haul it, said Bob Costello, chief economist and senior vice president at American Trucking Associations.

“We are in a supply-driven recovery at this point,” he said. “It’s a very unique time.”

The driving force behind the rebound has been the winnowing of excess freight-hauling capacity as carriers have exited the industry, initially due to weak market conditions and rising operating costs.

Within the past year, however, the attrition has accelerated due to the U.S. Department of Transportation’s crackdown on noncompliant carriers and drivers to improve highway safety.

Those actions have included stricter vetting for non-domiciled commercial driver licenses for foreign truckers, enforcing English-language proficiency requirements, targeting inadequate driver training programs or “CDL mills” and removing electronic logging devices that enable tampering.

“That pushed the market over the edge,” Costello said. “Supply had been coming down for a long time. It was just painfully slow, and it was taking so long that people didn’t feel it.”

Commercial vehicle enforcement efforts have been more constant and widespread in regions across the country, said Dean Croke, principal analyst at DAT iQ, the freight data operation of load board operator DAT Freight & Analytics.

“I’ve never seen enforcement levels like what we’ve just seen in the last few months,” he said. “It’s removed a lot of this marginal capacity from the market during the quietest quarter of the year.”

Croke agreed that the freight market recovery is tied to these capacity reductions rather than any significant boost in freight volumes.

He described the heightened scrutiny on driver qualifications and regulatory compliance as “the great recredentialing.”

“Supply is being structurally and permanently removed from the market by enforcement, by statute, by the courts, independent of freight volumes,” Croke 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.”

Together, the prolonged downcycle and the more recent enforcement initiatives appear to have purged the excess capacity built up during the economic recovery from the COVID pandemic. The urgent need to replenish inventories and stock empty shelves sparked a historic freight boom in 2021 that attracted an influx of motor carriers and drivers eager to enter what was then a lucrative market. Once that boom subsided, however, the industry was left with too much capacity relative to freight demand, prompting the prolonged freight rate recession that only recently came to an end.

A Carrier’s Market

Shippers that have enjoyed pricing power for the past several years are adjusting now that the market has flipped in favor of carriers.

“It turned, and it turned quickly and caught a lot of people by surprise, particularly shippers,” DAT’s Croke said.

Linehaul spot rates have increased for nine consecutive months in the dry van and refrigerated segments and six in flatbed, with the largest monthly gains recorded in May, according to data from DAT.

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Flatbed spot rates in May hit a record $2.78 per mile, the highest monthly average in DAT’s dataset, which goes back to 2010.

The upward pressure on rates that started in late 2025 was often attributed to severe winter weather events, but in the background, more stringent enforcement was steadily trimming industry capacity.

The market’s tightness 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 Roadcheck as noncompliant carriers and drivers are placed out of service while some others keep their trucks parked to avoid scrutiny.

This year, however, rates went through the roof.

“We had records in dry van, flatbed and reefer in terms of week-over-week changes,” Croke said. “Reefer rates went up 32 cents a mile in one week. We’ve never seen that. That’s nuts. It tells you that the market, the capacity, is very thin and it’s losing its elasticity.”

Several other factors could limit industry capacity moving forward, including further price increases for new commercial trucks associated with more stringent federal standards for nitrogen oxide emissions that go into effect in January.

On the employment side, the potential adoption of hair follicle testing could further reduce the pool of qualified commercial drivers by better detecting drug use.

“All of this stuff going on has slowed down the revolving door that drivers come through into the industry,” Croke said.

Another factor is increased enforcement at U.S. border crossings to prevent cabotage, in which foreign drivers haul domestic freight after entering the country to deliver a cross-border load.

“You’re looking at the next inflationary freight cycle that could be multiple years, because demand will improve at some point,” Croke said. “The ability to flex up and scale and bring more drivers into this business just got a lot harder. It means freight rates are going to go up and have a new, higher floor.”

Fleets Cite Growing Momentum

Trucking companies are increasingly citing improved freight market conditions as supply and demand rebalance.

Large, publicly traded motor carriers highlighted the continued capacity attrition in their first-quarter earnings reports.

“As we look at the freight market, the momentum we saw as we exited 2025 grew in 2026,” Jim Filter, Schneider’s incoming president and CEO, said on the company’s April 30 earnings call.

He attributed the tighter market conditions this year to DOT’s actions to address noncompliant carriers and predicted that the threat of enforcement will drive additional capacity out of the market.

“We believe that we will see more supply exit than what was removed by the 2017 ELD mandate while also restricting the funnel of new entrants,” Filter said. “We continue to expect that the removal of this capacity will restore the market to more normal conditions after several years of irrational supply dynamics.”

Schneider ranks No. 10 on the updated Transport Topics Top 100 list of the largest for-hire carriers in North America.

Werner Enterprises also shared an upbeat outlook on freight market conditions.

“So far, the recovery in rates has been largely supply driven as capacity continues to exit at an accelerated pace due to regulatory enforcement,” Werner Chairman and CEO Derek Leathers said April 28 on the fleet’s first-quarter earnings call. “As the supply-and-demand dynamic tightens, we are seeing rate lift and early positive momentum in the bid season. We expect pricing gains to continue with more meaningful improvement in the third and fourth quarters.”

Werner ranks No. 19 on the for-hire TT100.

Meanwhile, several prominent truckload carriers recently announced driver pay increases, suggesting that recruiting and retaining drivers has become a top priority in an improving freight market.

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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 rank No. 69 and 74, respectively, on the for-hire TT100.

Mixed Economic Signals

While the rebalance of supply and demand in the freight market is benefiting motor carriers, the macroeconomic factors that drive freight demand remain “lackluster” when taken as a whole, ATA’s Costello said.

“We are not forecasting a recession in [gross domestic product], nor are we forecasting a boom,” he said.

He cited some tailwinds from fiscal policy related to the One, Big, Beautiful Bill Act and the surge in construction activity related to data centers to support artificial intelligence.

On the other hand, the spike in fuel prices during the U.S. war with Iran could dampen consumer spending on goods.

However, those higher energy costs reflect disruptions to oil shipments through the Strait of Hormuz rather than an underlying issue in the global energy market.

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Costello

“This is not a structural problem,” Costello said.

Meanwhile, U.S. trade policy has continued to shift after the Supreme Court struck down emergency tariffs enacted by the Trump administration, which responded by swiftly instituting alternative levies under a different statute.

Nonetheless, the current tariff rates on U.S. imports are “well down from the recent highs” but remain historically elevated for modern times, Costello said.

Another source of policy uncertainty for cross-border trade is the ongoing, mandatory review of the U.S.-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement in 2020.

Longer term, however, the tighter lid on capacity puts carriers in position to command significantly higher rates when geopolitical concerns fade, shippers and consumers gain confidence and freight demand begins to take off, DAT’s Croke said.

“I think we’ll probably see rates higher than what we saw during the pandemic because the supply side is thinned,” he said.