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.
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
Industrial & Manufacturing Demand
- 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.
- Why it matters: Reduced production means fewer long-haul shipments of machinery and industrial freight.
- Tariffs on imported goods and machinery from China are making production more expensive, discouraging new orders.
- Impact: Lower freight volumes from manufacturing and industrial sectors, especially for high-value, long-distance loads.
Tariffs & Trade Disruption
- What’s happening:
- Goods from China carry a 10% tariff, with an additional 34% delayed until November 10.
- Tariffs on lumber, furniture, and cabinetry are already active.
- Truck parts may face 25–100% tariffs.
- The overall U.S. tariff rate could reach 20% by the end of the year.
- Why it matters: Importers front-loaded shipments earlier in the year to avoid tariffs, leaving later volumes lower.
- Impact: Softer import-driven freight in the second half of the year, especially at ports and intermodal hubs. Higher costs ripple through domestic supply chains.
Supply, Capacity, and Carrier Operating Costs
Carrier Supply & Market Exits
- What’s happening: More trucking companies exited than entered the market in Q3. Trucking employment is down 3.1% from last year.
- Why it matters: Small carriers are struggling to absorb higher costs and are leaving the market, reducing total capacity.
- Impact: Tightening capacity could stabilize or slightly increase rates even without stronger demand.
Regulations & Labor
- What’s happening:
- A new FMCSA rule may remove up to 194,000 non-domiciled CDL drivers.
- Immigration enforcement is leading some drivers to exit the industry.
- Visa rule changes and the drug and alcohol clearinghouse continue to reduce the driver pool.
- Why it matters: Fewer available drivers limit capacity, especially in southern and border regions.
- Impact: Tighter capacity raises spot rates in affected regions.
Spot & Contract Market Trends
- Overall: The market remains supply-driven, not demand-driven. Freight volumes are flat, but rates are rising slightly due to tightening capacity.
- Dry Van: $1.70 per mile nationally, steady but firming in the Midwest and southern border regions.
- Reefer: $2.07 per mile, up sharply in Texas border markets due to immigration enforcement.
- Flatbed: $2.07 per mile, stable but stronger in the Southeast.
- Contract Rates: Mostly flat, with shippers still holding leverage in negotiations.
- Impact: Spot rates are rising in certain lanes because of capacity constraints rather than increased demand.
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 Weakness Extends
Freight demand remains under pressure, with July marking the 30th consecutive month of shipment declines per Cass Information Systems. Shipments fell 1.8% month-over-month (↓1.7% seasonally adjusted) and 6.9% year-over-year, the steepest annual decline since January. Volumes have now contracted for three straight months, reflecting persistent weakness across freight markets.
Outlook
- Tariff impacts: Ongoing steel/aluminum tariffs now cover $320B in imports, including truck trailers and industrial equipment. These are likely to create cost-push inflation and dampen demand in key freight-heavy industries.
- Economic drag: Trade uncertainty and weak housing construction continue to weigh on freight activity.
- Capacity shift ahead: Cass notes that lower commercial vehicle production and manufacturing job losses
Capacity is Tightening Modestly
Driver employment remains unstable.
Bureau of Labor Statistics: trucking employment ↑ 4,000 jobs in July after losses in May/June. Swings are driven by tariff timing; import frontloading creates short bursts of hiring, then pullbacks. With front-loading largely done and tariffs raising consumer prices, more driver job losses are likely.
Carrier Operating Costs
Equipment prices climbing with tariffs.
Tariffs have already added 2–4% to new tractor prices, with further increases likely. That makes fleet renewal/expansion harder to justify.
Fuel squeeze.
U.S. diesel averaging $3.81/gal (↑ slightly). Higher prices cut into margins, especially for small carriers lacking strong fuel surcharge recovery.
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.
A Front-Loaded Year with Fading Momentum
- Q1 2025 truckload volumes were buoyed by a 19% quarter-over-quarter spike in freight-moving imports, as shippers rushed to bring in goods ahead of anticipated tariffs.
- That activity has since cooled: dry van volumes are forecast to fall 0.9% YoY in 2025, and total truckload volume is expected to remain flat for the year.
- While manufacturing activity was strong early in the year, it is now slowing, reducing its contribution to freight demand. The goods transport sector, excluding services, is expected to grow by only 2.5% in 2025, and most of that growth is already behind us.
Tariffs Are the Central Disruptor
- U.S. effective average tariff rate has risen to 20.6% pre-substitution, the highest level since 1910. After substitutions in sourcing/import behavior, the effective rate remains 19.7%, still the highest since 1933.
- Tariffs implemented so far in 2025 are forecast to reduce U.S. real GDP growth by -0.9 percentage points this year and shrink the long-run size of the U.S. economy by 0.5%, or $135 billion annually.
- The average U.S. household will lose $2,800 in purchasing power in 2025 due to higher consumer prices stemming from tariffs.
Shrinking Labor Pool and Excess Equipment
The market continues to struggle with a capacity overhang, despite signs of structural tightening:
- Truck capacity declined by 2.2%
- Carrier attrition is trending at a 1.7% annual rate
- Class 8 truck orders dropped 45% year-over-year, suggesting fewer equipment investments ahead
- Drivers per truck fell to 0.93, and non-driver staff levels declined 6.8%
Cost Shocks Around the Corner
Although not an immediate operational cost, looming tariff changes threaten to further disrupt carrier economics:
- A 25% tariff on Canadian and Mexican imports could suppress new truck sales by 17% in 2025.
- Steel tariffs have pushed cold-rolled steel prices up 9.4%, increasing the cost of truck manufacturing and repairs.
These upstream effects will likely be passed downstream, contributing to long-term operating cost inflation.
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.
Back-to-School Shipping May Provide Demand Boost
The market could see a short-term lift as retailers ramp up orders ahead of the back-to-school season. The 90-day pause in tariffs between the U.S. and China is encouraging importers, especially small to mid-sized retailers, to move quickly while trade conditions are favorable.
Bookings for U.S.-China freight are already up 50% week-over-week. Experts expect higher volumes to hit West Coast ports by late June, just as the produce season peaks. This will likely increase demand for trucks and trains to move goods inland, putting upward pressure on spot rates. While many carriers have lowered Q2 expectations, this import surge could lead to stronger-than-expected results.
Policy Wildcards
The English Language Proficiency (ELP) mandate could sideline thousands of drivers if strictly enforced, potentially cutting capacity and pushing rates up by 15%, per analysts.
Tariffs Amplify Equipment and Parts Inflation
•Equipment costs are expected to rise by low single-digit percentages, according to Werner, particularly if the 30% U.S. tariff on Chinese imports persists beyond the temporary rollback.
•OEM pricing is fluid, but used truck values remain strong, providing a partial hedge.
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.
Tariff Timeline Driving Demand Disruption
• April 2 – “Liberation Day”:
• 10% universal tariff on all imports (excl. Canada/Mexico), effective April 5
• “Reciprocal” tariffs on 60+ countries (China: 54%, Vietnam: 46%, EU: 20%)
• Announcement of De Minimis elimination for Chinese imports, effective May 2
• April 5 – Import volumes momentarily surge as tariffs take effect
• April 8 – U.S. raises China tariffs to 120%; Chinese-made electronics no longer exempt
• April 9–11 – China retaliates with 125% tariffs, rare earth export bans, and blacklisting U.S. firms
• April 10 – U.S. imposes a 90-day global tariff suspension, but raises China’s rate to 125%
• April 15 (projected) – EU rolls out $23B in retaliatory tariffs
LTL and Parcel Holding Steady as Warning Signs Emerge
LTL cost per shipment rose 1.5% quarter over quarter in Q1 2025, supported by fuel surcharges and GRIs, but faces looming softness tied to industrial slowdown and tariff impact on manufacturing inputs. The PMI returned to contraction in March, signaling a risk of near-term volume erosion.
Carrier Operating Costs Rise Under New Tariff Burden
Parts and Maintenance Costs Climbing: “Bolts, bars, anything with steel” is now significantly more expensive. Even with heavy-duty trucks exempt from direct tariffs, indirect exposure is high. Preventive maintenance is being delayed, potentially leading to increased breakdowns and rental costs.
Tariff-Induced Uncertainty: Companies are stalling investments due to policy whiplash. The White House’s 90-day “pause” came days after declaring tariffs permanent, freezing expansion plans, and curbing capital deployment.
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.
The State of Tariffs and Their Impact on Supply Chains
U.S. Tariff on Canadian Aluminum (50%)
The U.S. has imposed a 50% tariff on aluminum imports from Canada and a 25% tariff on steel and aluminum imports from most countries. The U.S. produces only 670,000 tons of primary aluminum annually, while it imports over 2 million tons from Canada.
Industries Affected:
- Automotive: Higher material costs for vehicle production.
- Packaging: Increased costs for aluminum cans and food containers.
- Manufacturing: Rising expenses for aluminum-based products.
U.S.-China Trade War Intensifies
The U.S. has added a 20% blanket tariff on top of existing 10% duties on Chinese imports. China has responded with up to 15% tariffs on U.S. farm goods like chicken and pork. The U.S. has also signed a measure allowing for reciprocal tariffs by April 2.
Industries Affected:
- Agriculture: Farmers face declining exports and higher storage costs for unsold goods.
- Retail & Consumer Goods: Increased costs for Chinese-manufactured goods, affecting pricing and inventory planning.
Carrier Operating Costs and Freight Rates
Despite falling fuel prices, carrier operating costs remain elevated. Long-haul spot market operating costs averaged $1.80 per mile in February 2025, consistent with 2024 levels but still $0.18 per mile higher than pre-pandemic rates in 2019.
Meanwhile, dry van linehaul rates have struggled to keep pace with rising expenses. February spot rates averaged $1.66 per mile nationally, only $0.04 above 2019 levels, reinforcing concerns about profitability for smaller carriers.
Tariff Impact on Carrier Costs
Potential job losses: Rising costs may force businesses to cut logistics
Higher fuel costs: If tariffs disrupt global oil imports, diesel prices may rise despite recent declines.
Increased compliance costs: Carriers will need to invest in updated documentation, customs declarations, and compliance checks.
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.
Inflationary Pressures from Tariffs
The economic dynamics of tariffs indicate a direct inflationary impact on manufacturers and, consequently, on the freight sector.
•Aluminum: The U.S. imports ~47% of its aluminum, mostly from Canada. Tariffs will increase costs, prompting both importers and domestic producers to raise prices.
•Steel: Only ~13% of U.S. steel is imported, yet past behavior (e.g., 2018 tariffs) suggests that domestic mills will follow suit by raising prices.
Cross-Border Freight: Laredo Sees Capacity Constraints
Rejection Rates & Trade Uncertainty
Laredo, Texas, the largest U.S.-Mexico freight crossing, has seen rejection rates climb to their highest levels since the pandemic era. The Outbound Tender Reject Index rose from a 3.8% average (October–mid-December) to over 6% in late December and remains elevated.
This increase suggests that market tightening is influenced by more than demand, which has been running 10% higher year-over-year. One potential factor is trade uncertainty, as fluctuating U.S. tariff policies on Mexico drive shippers to accelerate cross-border shipments before potential cost increases.
The Closing Gap: Spot vs. Contract Rates
The gap between dry van truckload contract and spot rates (excluding estimated fuel costs) has narrowed steadily over the past 2.5 years. This trend is driven by gradual capacity reduction and slow yet consistent demand growth, reshaping freight dynamics despite going largely unnoticed by market participants.
Contract Rates Begin to Rebound
Most contract rate declines happened in 2023, continuing into late 2024 before rebounding slightly. Leading into peak season (Nov-Dec 2024), the spot-contract spread hovered at 16%, compared to 10-15% in 2029. A key shift in market expectation may be influencing pricing decisions, as stakeholders anticipate tightening capacity.
Market Update.