THE DAILY

Monday, April 27, 2026

The five minutes that make you the most informed person in freight today

The Daily

New York sues DOT to recover $73M in withheld highway funding

The fight over non-domiciled commercial driver’s licenses has moved from regulatory dispute to federal court, and $73 million in highway dollars is at stake.

New York Attorney General Letitia James filed Friday in the Second Circuit Court of Appeals, challenging the Department of Transportation’s decision to claw back roughly $73 million in funding tied to the Federal Motor Carrier Safety Administration’s finding that the state was substantially noncompliant with federal CDL rules. Gov. Kathy Hochul called the cutoff "political payback." The lawsuit itself runs three pages plus addendum, but its argument is sharper than its length suggests: FMCSA, the state contends, "is predicated on an erroneous reading of its own long-standing regulations" and is applying a new interpretation retroactively without accounting for state reliance interests.

FMCSA’s April 16 final determination letter, which served as the basis for the funding cutoff, anticipated New York’s defense and called the arguments "without merit." The agency’s response argues that prior clean reviews don’t bind future audits. "The Agency cannot be stopped from enforcing safety regulations — nor are Federal standards waived — simply because a State’s noncompliant practice went undetected in prior sample sets," FMCSA wrote. The other live disagreement is operational, centered on the Employment Authorization Document. FMCSA says state DMVs must verify lawful presence at every CDL transaction, including renewals. New York read the prior rule as not requiring re-verification.

The case will set a national template. New York is the first state to formally litigate FMCSA’s reinterpretation of non-domiciled CDL rules, and the Second Circuit’s posture on issues including standing, retroactivity, and the agency’s reliance-interest analysis will signal how much room other states have to push back when their own funding lines come under review. Carriers running NY-credentialed drivers face two layers of uncertainty: the immediate question of whether those CDLs survive federal-state crossfire, and the longer one of how the next round of FMCSA audits will treat states that issued non-domiciled licenses under the prior framework.

So What? If your fleet runs drivers credentialed in any state with a sizable non-domiciled CDL population, treat the New York filing as the leading indicator for what’s coming everywhere else. Validate driver license status against current federal interpretation now, not after the next audit. Procurement teams contracting with state-funded freight programs should also pressure-test counterparty cash flow, because federal funding cutoffs flow downhill fast.

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Top Stories

Covenant says drivers are tight for the first time in 40 months

Covenant Logistics Group missed Q1 expectations: net income fell to $4.4 million, or $0.17 per share, after winter weather and fuel costs. But management spent Friday’s earnings call talking about the recovery. "For the first time in 40 months drivers are starting to get tight out there," CEO David Parker said, adding that driver pay discussions are reemerging across large customer accounts and that shippers are leaning back into dedicated capacity at a level "almost since ’21 or ’22." Managed Freight revenue surged nearly 60% year over year on late-2025 acquisitions, and the company cut net debt by $51 million during the quarter.

So What? Driver costs already run 30% to 40% of total carrier costs, per Parker, and wage inflation is going to absorb part of any rate gain. Shippers should treat current contract benchmarks as a ceiling and budget for the bid cycle that follows.

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Imports are sitting out this freight market flip

SONAR’s Inbound Ocean TEUs Volume Index sits at 1,715, down roughly 20% from the June 2021 peak of 2,692 and closer to multi-year lows than highs for late April. FW Market Expert Zach Strickland writes that the 2024-2025 "just-in-case" ordering pattern, which was pulled forward first by Middle East maritime risk, then by tariff uncertainty, gave way to a leaner just-in-time model in late 2025 as tariff concerns settled. Truckload tightening so far has come from capacity attrition, not import-driven demand. The SONAR Truckload Volume Index is at levels seen before, but rejection rates are running far higher.

So What? Peak season runs July through August and leans heavily on intermodal. Leaner warehouses can’t absorb a demand shock, and the trucking market is already ill-equipped to flex. The downside surprise will arrive on the upswing.

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Texas cargo theft falls 22% as organized crime targets higher-value loads

Verisk CargoNet logged 80 theft incidents in Texas in Q1 2026, down from 102 a year earlier. Across the U.S. and Canada, 767 supply chain crime events produced $131.6 million in losses, flat year over year, despite fewer incidents. California led at 277 incidents and New Jersey jumped 119%; together with Texas, the top three states accounted for 54.3% of Q1 thefts. Personal care products were the fastest-growing stolen category at +178% year over year. Impersonation fraud is now the dominant tactic, with criminals phishing carrier credentials and buying dormant motor carrier authorities to pose as legitimate operators. "We’re watching transnational organized crime groups become the dominant force," CargoNet’s Keith Lewis said.

So What? Falling Texas incidents aren’t a win; they’re a relocation. Audit the dormant MC authorities in your TMS that haven’t moved freight recently before they get reactivated against you, and flag any new carrier onboarding faster than it should be possible to onboard.

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USPS owes Maine air carrier $349K and a Maine carrier nearly went dark

Maine’s congressional delegation pressed Postmaster General David Steiner this week over USPS arrears stretching to 2023. Penobscot Island Air, which serves Vinalhaven, North Haven and Matinicus with a four-plane Cessna fleet, briefly suspended mail service after USPS missed payments totaling roughly 20% of annual revenue. Sen. Susan Collins and the state’s House delegation called for prompt resolution; Rep. Chellie Pingree took it to House Appropriations: "What the hell is going on over there?" The Postal Service agreed to pay 25% of the balance Friday with the rest unscheduled.

So What? Federal contracting rules generally require interest on late payments for properly invoiced services. If USPS is 75 days behind on a small island contract, run a receivables audit on every government-funded lane in your book before it becomes your cash-flow problem.

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Sponsored By Werner

Werner Doubles Down on Mexico With Asset-Based Intermodal Expansion Werner is doubling its Mexico-bound container fleet from roughly 400 to 800 by year-end as it scales an asset-based intermodal service across 12 border crossing ports, leveraging 27 years of cross-border operations. The Mexico Direct approach clears customs at origin to bypass border congestion, and railroad service in Mexico is "the best it’s been in my 14 years of intermodal," SVP of Intermodal Nate Browne said. SVP Lance Dixon called record FDI "the long tail of nearshoring," which is freight demand that truckload alone won’t be able to absorb. Read the full story →

Sponsored By T-Mobile for Business

What Network Downtime Really Costs Manufacturers Unscheduled downtime drains 11% of annual revenues across the world’s 500 largest companies, per a 2024 Siemens report, a $1.4 trillion collective hit. Automotive runs $2.3 million an hour, or $600 every second a line sits idle, and the average manufacturing facility logs $260,000 per hour. T-Mobile for Business pairs a standalone 5G network with network slicing, Edge Control and IoT management to keep ERP, TMS and production systems live when the public network falters. Read the full story →

From the Research Desk

What We’re Watching

▸ Whether the Second Circuit fast-tracks New York’s CDL case. Other states with sizable non-domiciled CDL populations are watching this docket. A quick scheduling order signals the court takes the reliance-interest argument seriously and gives every other AG a roadmap.

▸ Whether driver wage inflation eats Covenant’s pricing gains. Parker said tightening capacity is real but driver costs run 30% to 40% of total costs. Q2 dedicated awards will tell us how much of the rate move shippers are willing to fund versus push back on.

▸ The IOTI as peak-season inputs land. Inbound ocean bookings sit ~20% below the 2021 peak. If just-in-time inventory levels meet a normal July-August import wave on top of an already-tight truckload market, the rejection-rate response will be steeper than any model built off the past three years suggests.

That’s your Daily for today. See you tomorrow.

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