The freight market is sending mixed signals. Beneath flat demand headlines, a split economy is taking shape. Industrial expansion driven by AI infrastructure is offsetting softness in housing and consumer goods. At the same time, tightening capacity and rising costs are beginning to reshape rate dynamics.
Here’s what matters now.
Demand Level & Outlook
Freight demand is stabilizing, but not yet accelerating
The latest data shows ton-mile demand essentially flat year-over-year, signaling that the worst of the freight recession is behind us, but a meaningful recovery hasn’t fully taken hold.
A clear divide is emerging:
- Industrial freight tied to AI infrastructure and energy is strengthening
- Housing-related freight (like wood, appliances, and furniture) remains soft
Encouragingly, leading indicators are turning positive. Packaging and paper activity, along with pallet pricing, are both signaling increased goods movement for the first time since 2022. Historically, when these indicators align, freight volumes follow within one to two quarters.
Carrier sentiment is also improving. Class 8 truck orders surged, pointing to growing confidence in future demand.
What to watch:
Ongoing tariff risks and elevated interest rates could delay a full recovery
Q2 is shaping up to be the strongest demand window in three years, driven by produce season and early-cycle industrial activity
Q3 will depend on whether current inventory builds translate into sustained production
Supply, Capacity, and Carrier Operating Costs
Capacity is Tightening Rapidly, and Costs Are Surging
The market is firmly in contraction mode, with transportation capacity shrinking at one of the fastest rates since the pandemic. At the same time, pricing is accelerating, creating a wide gap between supply and demand. Fuel is the biggest driver.
Diesel prices have spiked significantly year-over-year, now accounting for up to 30–40% of operating costs for many carriers. This has forced widespread behavioral shifts:
- Carriers are reducing routes and optimizing loads
- Smaller fleets are sidelining trucks due to cost pressures
- Regulatory changes are further reducing the available driver pool
Fuel surcharges have jumped sharply across all modes, increasing as much as 50% compared to 2025 averages.
The result: fewer trucks available and higher costs to operate them.
Spot & Contract Market Trends
Rates Are Rising, but the Story is More Nuanced Beneath the Surface
Across all modes, spot rates are significantly higher than last year, driven by a combination of tighter capacity and fuel cost pass-through. However, when fuel is removed, underlying linehaul trends vary by mode.
- Dry van and reefer: Linehaul rates softened slightly month-over-month, indicating fuel—not demand—is driving most of the increase
- Flatbed: Rates continue to climb, supported by real demand in construction and industrial sectors
Produce season is adding further pressure, particularly in reefer markets, where capacity is tightening quickly and key regions are seeing sharp rate increases.
Contract rates are also moving higher as shippers and carriers renegotiate in a volatile cost environment.
Key takeaways:
Mode-specific dynamics matter more than ever
Capacity tightening is real and accelerating
Fuel volatility is distorting rate signals
Market Update.
If you thought the logistics market was finally settling into a predictable “new normal,” the last four weeks have served as a massive reality check. From regulatory shifts to fuel volatility, the industry is currently navigating a stretch that some experts are calling more tumultuous than in the early days of the pandemic.
In our latest podcast episode, Andrew Elsener, Co-founder of Spot, sat down with two of Spot’s Senior National Account Directors, Theo Mascari and Alex Buening to break down the rapid shifts in the March marketplace. Here are the key takeaways for shippers and carriers trying to weather the storm.
The Non-Domiciled CDL Regulation Factor
One of the most significant—and perhaps underestimated—drivers of this current capacity crunch is the enforcement of non-domiciled CDL regulations.
The biggest near-term shift in the freight market is a forced reduction in driver supply. Under the FMCSA’s Final Rule on non-domiciled CDLs, the current population of roughly 200,000 holders is expected to shrink sharply over time, with only about 6,000 new non-domiciled CDLs issued annually going forward. FMCSA estimates 194,000 current holders will lose renewal eligibility, while broader estimates put total market removals between 214,000 and 437,000 drivers.
“We’re seeing carriers getting notices via email saying they are either immediately shut down or ineligible for renewal,” Mascari noted. “These drivers typically handled the ‘less attractive’ freight—long-haul, multi-stop, and Midwest-to-Northeast lanes. As they leave, that freight is flooding the spot market.”
The “All-In” Fuel Crisis
Carriers are facing that tightening backdrop while also absorbing rapidly rising fuel costs. Diesel has climbed to about $5.37 per gallon, nearly $1 per gallon higher than before the recent oil shock, and some fleets report fuel costs rising 25% since late February.
For carriers, that translates into meaningful budget pressure:
- Monthly fuel spend rising from roughly $12K–$13K to about $15K
- An annual impact of roughly $100,000
- Fuel surcharge increases of about 10% in some cases
Even with surcharge adjustments, carriers are struggling to fully offset the increase, which is tightening margins and putting pressure on freight pricing. Fuel remains especially volatile because oil market disruptions can still push carrier costs higher quickly, even with strategic reserve releases of 172M barrels in the U.S. and 400M barrels globally.
Regional Hotspots: California in the Crosshairs
- While the Midwest and Northeast were recently hampered by weather, California is the new center of the capacity struggle.
- The transition from Yuma to Salinas produce seasons, coupled with the highest diesel spikes in the country and new EPA regulations (specifically the EPA 2027 standards), has created a “perfect storm.” Carriers are “pre-loading” or buying Class 8 trucks now to get ahead of the 2027 maintenance and cost increases, but this isn’t necessarily adding new capacity to the road—it’s just replenishing old iron before it gets too expensive.
Market Update.
The freight market is tightening, but not evenly. March brings a mix of modest demand recovery, continued capacity contraction, and growing pressure on rates, with regional and modal shifts driving new pockets of volatility. From truckload to LTL, this month’s update breaks down where the market is moving, what’s driving change, and how to stay ahead as conditions continue to evolve.
Demand Level & Outlook
Where Demand Stands Today
According to trucking ton-mile data, freight demand reached a seasonally adjusted low point in Q2 2024 and has been slowly improving since.
That modest demand recovery, combined with significant carrier exits throughout 2024 and early 2025, helps explain why capacity has tightened even though freight volumes remain historically soft.
To put growth into perspective:
- Q3 2025 demand was up just 0.8% year-over-year
- Compare that to prior bull markets:
- Q3 2017: ↑ 2.4%
- Q4 2017: ↑ 3.7%
Those past cycles saw rapid demand expansion for 18 months or more. There is currently no evidence of that kind of acceleration heading into 2026.
Supply, Capacity, and Carrier Operating Costs
Capacity & Costs: Tight, But Under Strain
Transportation capacity tightened sharply at year-end. The Logistics Managers’ Index shows capacity fell to a four-year low in December:
- Transportation Capacity Index: 36.9
- Lowest since October 2021
- First contraction since March 2022, when the freight recession began
At the same time:
- Transportation utilization rose to 58.2
- Transportation pricing increased to 66.7, the highest since January 2025
- Pricing sat nearly 30 points above capacity, signaling a tight market on paper
Spot & Contract Market Trends
Contract Rates: Stable, For Now
Contract pricing has been far less reactive than spot markets. Retailers and shippers entered peak season with:
- Inventory plans are set months in advance
- Elevated inventory-to-sales ratios
- A cautious approach to restocking
Post-holiday inventory drawdowns are normal seasonal behavior, not a signal of a Q1 demand surge. With sales largely flat on a price-adjusted basis, there is little incentive for shippers to lock in higher contract rates early in 2026.
Market Update.
At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry. Market Update.
Canadian Tariffs Surge: A Hidden Shock
While China has dominated the headlines, Canadian imports are bearing the brunt of new tariffs under the current administration:
•Average monthly tariffs in 2024: $34M
•March & April 2025 tariffs: $660M and $675M, a 19.5x increase
•June is expected to surge again due to 50% tariffs on steel/metal
Top affected categories
•Unwrought aluminum: $123.7M
•Auto parts: $67.5M
•Finished vehicles: $52.2M
Operating Costs: Inflation Without Pricing Power
- Stagflation Strains Margins: Carriers face the worst of both worlds, flat volumes and rates paired with rising costs. This stagflationary environment has forced many into cost-deferral decisions that may backfire long term (e.g., delayed maintenance, equipment replacement).
- Insurance a Top Pressure Point: Premiums are skyrocketing due to increased litigation and nuclear verdicts (claims >$10M). Carriers are also contending with cargo theft risks, including sophisticated scams like identity manipulation and double brokering.
Supply & Capacity: A Market in Contraction
- Carrier Exits Hit New High: In April 2025, 7,474 trucking companies exited the market, a 12-month peak and a 26% increase from March. Weekly revocation rates remain elevated, with more than 1,500 carriers losing authority each week.
- New Entrants Defy the Trend: Despite exits, new carrier authorities rose 48% month over month in April. Seasonal optimism and the lure of an eventual rate rebound keep new players entering the market, though many may be underestimating the financial headwinds.
Market Update.
At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry. Market Update.
Demand Level & Outlook
Where Demand Stands Today
According to trucking ton-mile data, freight demand reached a seasonally adjusted low point in Q2 2024 and has been slowly improving since.
That modest demand recovery, combined with significant carrier exits throughout 2024 and early 2025, helps explain why capacity has tightened even though freight volumes remain historically soft.
To put growth into perspective:
- Q3 2025 demand was up just 0.8% year-over-year
- Compare that to prior bull markets:
- Q3 2017: ↑ 2.4%
- Q4 2017: ↑ 3.7%
Those past cycles saw rapid demand expansion for 18 months or more. There is currently no evidence of that kind of acceleration heading into 2026.
Supply, Capacity, and Carrier Operating Costs
Capacity & Costs: Tight, But Under Strain
Transportation capacity tightened sharply at year-end. The Logistics Managers’ Index shows capacity fell to a four-year low in December:
- Transportation Capacity Index: 36.9
- Lowest since October 2021
- First contraction since March 2022, when the freight recession began
At the same time:
- Transportation utilization rose to 58.2
- Transportation pricing increased to 66.7, the highest since January 2025
- Pricing sat nearly 30 points above capacity, signaling a tight market on paper
Spot & Contract Market Trends
Contract Rates: Stable, For Now
Contract pricing has been far less reactive than spot markets. Retailers and shippers entered peak season with:
- Inventory plans are set months in advance
- Elevated inventory-to-sales ratios
- A cautious approach to restocking
Post-holiday inventory drawdowns are normal seasonal behavior, not a signal of a Q1 demand surge. With sales largely flat on a price-adjusted basis, there is little incentive for shippers to lock in higher contract rates early in 2026.
Market Update.
At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry. Market Update.
Demand Level & Outlook
Where Demand Stands Today
According to trucking ton-mile data, freight demand reached a seasonally adjusted low point in Q2 2024 and has been slowly improving since.
That modest demand recovery, combined with significant carrier exits throughout 2024 and early 2025, helps explain why capacity has tightened even though freight volumes remain historically soft.
To put growth into perspective:
- Q3 2025 demand was up just 0.8% year-over-year
- Compare that to prior bull markets:
- Q3 2017: ↑ 2.4%
- Q4 2017: ↑ 3.7%
Those past cycles saw rapid demand expansion for 18 months or more. There is currently no evidence of that kind of acceleration heading into 2026.
Supply, Capacity, and Carrier Operating Costs
Capacity & Costs: Tight, But Under Strain
Transportation capacity tightened sharply at year-end. The Logistics Managers’ Index shows capacity fell to a four-year low in December:
- Transportation Capacity Index: 36.9
- Lowest since October 2021
- First contraction since March 2022, when the freight recession began
At the same time:
- Transportation utilization rose to 58.2
- Transportation pricing increased to 66.7, the highest since January 2025
- Pricing sat nearly 30 points above capacity, signaling a tight market on paper
Spot & Contract Market Trends
Contract Rates: Stable, For Now
Contract pricing has been far less reactive than spot markets. Retailers and shippers entered peak season with:
- Inventory plans are set months in advance
- Elevated inventory-to-sales ratios
- A cautious approach to restocking
Post-holiday inventory drawdowns are normal seasonal behavior, not a signal of a Q1 demand surge. With sales largely flat on a price-adjusted basis, there is little incentive for shippers to lock in higher contract rates early in 2026.
Market Update.
In the dynamic world of logistics, understanding market shifts and their implications on supply and demand is crucial. In this episode of More Than a Broker, Spot Cofounder Andrew Elsner engages with our Senior National Account Directors, Alex Buening and Theo Mascari, to explore how external factors are reshaping the logistics landscape.
The podcast also addresses the implications of regulatory changes, particularly the English Language Proficiency (ELP) guidelines and the non-domicile driver rule. These regulations have impacted driver availability and capacity, prompting shippers to reassess their strategies. The team discusses how these changes have led to changes in the spot market, affecting the overall supply and demand dynamics.
As the episode concludes, the experts reflect on how the logistics landscape is evolving. They agree that the focus on strategic partnerships with carriers is critical, as companies aim to streamline operations and reduce the number of vendors. The discussion underscores the importance of adaptability in a rapidly changing environment, with technology and regulatory factors playing key roles in shaping the future of logistics.
In summary, the logistics industry is currently navigating a complex landscape influenced by a variety of factors. From market shifts and capacity challenges to regulatory impacts and the need for strategic partnerships, it is clear that staying informed and adaptable is essential for success. As we move forward, embracing technology and fostering strong relationships within the supply chain will be vital in overcoming the challenges ahead.
Logistics Lessons in this Episode:
- Rapid Lane Shifts: Customers are demanding extreme flexibility and quickly reassigning lanes due to volatile market conditions.
- Technology as Table Stakes: Advanced reporting and technology are now mandatory requirements for securing business partnerships.
- Mini Bid Necessity: Mini bids are increasingly used to swiftly cover needs and mitigate risks following carrier failures.
- Strategic Partner Consolidation: Shippers are narrowing their focus to fewer, more reliable supply chain partners.
- Capacity Constraints: Regulatory changes are consistently impacting driver availability and tightening market capacity.
- Structural Market Reset: The logistics industry is experiencing a fundamental structural reset, not just a cyclical recession.
- Volatile Spot Rates: Supply constraints can cause freight rates to surge even amidst broader economic slumps.
- Evolving Broker Value: The role of the logistics broker is rapidly transforming to meet complex, evolving market demands.
- Pricing Optimization: Shippers are actively utilizing variable pricing models to achieve maximum cost efficiency.
- Tightening Market Forecast: Future projections anticipate a tighter market environment and potential rate increases.
At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry. Market Update.
Demand Level & Outlook
Retail & Manufacturing Impacts
Importers cite persistent geopolitical and regulatory volatility, leading to:
- Cautious inventory positions
- Delayed orders
- Tariff-related cost uncertainty
Manufacturers tied to Chinese imports are particularly strained, with shipments to the U.S. falling over 25% YoY.
Holiday Season 2025 Outlook
Retailers remain well-stocked, preventing shortages, but that is a sign of reduced ordering, not healthy demand and port trackers anticipate the slowest December since March 2023.
Supply, Capacity, and Carrier Operating Costs
Massive Productivity Losses Shrink Effective Capacity
Lost driver time is effectively lost supply:
- 135.9 million hours lost annually due to detention.
- 1.2 billion hours lost annually due to congestion.
These productivity losses convert directly into higher operating costs and reduce the effective capacity available in the network.
Tariffs Are Increasing Equipment Costs
New heavy-duty truck tariffs took effect in November. Although less severe than expected, these new policies will increase tractor and parts costs, incentivize reshoring U.S. production, and delay OEM capacity expansions.
Spot & Contract Market Trends
Contract Rates: Stable but Unsustainably Low
Contract rates have been essentially flat since mid-2024, rising only 1% over the last 15 months. Despite this stability, they now sit just 16% above 2019 levels, even though carrier operating costs have increased roughly 33% in that same period.
This creates a widening and unsustainable gap between revenue and expenses for carriers.
Market Update.
At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry. Market Update.
Demand Level & OutlookÂ
Industrial & Manufacturing DemandÂ
- What’s happening: Industrial production for equipment (like machinery and electrical tools) has fallen 2.2% since April. New manufacturing orders have moved into contraction.Â
- Why it matters:Â Reduced production means fewer long-haul shipments of machinery and industrial freight.Â
- Tariffs on imported goods and machinery from China are making production more expensive, discouraging new orders.Â
- Impact: Lower freight volumes from manufacturing and industrial sectors, especially for high-value, long-distance loads.Â
Tariffs & Trade DisruptionÂ
- What’s happening:Â
- Goods from China carry a 10% tariff, with an additional 34% delayed until November 10.Â
- Tariffs on lumber, furniture, and cabinetry are already active.Â
- Truck parts may face 25–100% tariffs.Â
- The overall U.S. tariff rate could reach 20% by the end of the year.Â
- Why it matters: Importers front-loaded shipments earlier in the year to avoid tariffs, leaving later volumes lower.Â
- Impact:Â Softer import-driven freight in the second half of the year, especially at ports and intermodal hubs. Higher costs ripple through domestic supply chains.Â
Supply, Capacity, and Carrier Operating CostsÂ
Carrier Supply & Market ExitsÂ
- What’s happening: More trucking companies exited than entered the market in Q3. Trucking employment is down 3.1% from last year.Â
- Why it matters:Â Small carriers are struggling to absorb higher costs and are leaving the market, reducing total capacity.Â
- Impact:Â Tightening capacity could stabilize or slightly increase rates even without stronger demand.Â
Regulations & LaborÂ
- What’s happening:Â
- A new FMCSA rule may remove up to 194,000 non-domiciled CDL drivers.Â
- Immigration enforcement is leading some drivers to exit the industry.Â
- Visa rule changes and the drug and alcohol clearinghouse continue to reduce the driver pool.Â
- Why it matters:Â Fewer available drivers limit capacity, especially in southern and border regions.Â
- Impact:Â Tighter capacity raises spot rates in affected regions.Â
Spot & Contract Market TrendsÂ
- Overall: The market remains supply-driven, not demand-driven. Freight volumes are flat, but rates are rising slightly due to tightening capacity.Â
- Dry Van: $1.70 per mile nationally, steady but firming in the Midwest and southern border regions.Â
- Reefer:Â $2.07 per mile, up sharply in Texas border markets due to immigration enforcement.Â
- Flatbed:Â $2.07 per mile, stable but stronger in the Southeast.Â
- Contract Rates:Â Mostly flat, with shippers still holding leverage in negotiations.Â
- Impact:Â Spot rates are rising in certain lanes because of capacity constraints rather than increased demand.Â
Market Update.
At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry. Market Update.
Labor Market
- BLS will revise March 2025 employment down by 911k jobs (manufacturing ↓95k, wholesale trade ↓110k, professional/business services ↓158k).
- Jobless claims are higher than 2023–2024 but still better than 2014–2016.
Tariff Pressures by Country
- India: 25% emergency tariff on top of 25% existing , 87% of India’s exports to the U.S. are impacted tariffs.
- Brazil: 40% emergency tariff on top of 10% base.
- South Africa: Reciprocal tariffs 31%, metals/steel already facing 50%.
- Canada: 35% reciprocal tariffs, especially autos, steel, and inputs.
Tariff-Driven Cost Pressures
- Steel & aluminum tariffs increase van trailer prices ↑ 16–28%.
- Other heavy-duty trailers (flatbeds, dumps) ↑ 17–30%.
- Class 8 trucks & tractors ↑ 15–24%.
- Raw material costs overall ↑ 9–12%.
- Additional non-USMCA and reciprocal tariffs add 1–6% across segments.
- Rising material costs from tariffs are pushing up the price of both trucks and trailers. Fleets are cautious, waiting for clarity before committing to new purchases.
Current Market Signals
Regionally, produce and holiday shipping are creating localized tightness, but it isn’t enough to offset the broader softening.
Seasonal forces are visible. Reefer load-to-truck ratios are elevated (9.26 loads per truck) and flatbed volumes spiked (22.02 loads per truck) with construction, yet both sectors still saw rates fall by $0.03/mile. This shows how trend pressure is overpowering seasonal lifts.
Market Update.