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This week’s top stories in trucking

Roadcheck and Supreme Court Ruling Tighten Freight Capacity

The domestic freight market is tightening as trucking companies navigate rising enforcement, volatile diesel prices and broker liability concerns heading into the summer shipping season.

Ken Adamo, chief strategy officer at EASE Logistics, said last week’s Commercial Vehicle Safety Alliance International Roadcheck inspection blitz pushed spot rates higher. “We saw enforcement levels tick up considerably,” Adamo said. “As a market that’s already facing some capacity constraints in the near term, it definitely pushed rates higher.”

The recent Supreme Court ruling on broker liability is adding pressure. Brokers are scrambling to strengthen carrier vetting, favoring longer operating histories and stronger safety records, widening pricing stratification across the carrier market.

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Supreme Court Broker Ruling Triggers Industry ‘Flight to Quality’

The Supreme Court’s landmark decision expanding liability exposure for freight brokers is accelerating a capacity crunch. Carriers and brokers with scale, financial stability and rigorous vetting stand to benefit most.

Schneider National slashed its brokerage carrier network by 76 percent, from 60,000 to 14,000. “I don’t know if you can have several hundred thousand contractually approved carriers and say that you have a strong vetting process,” Schneider National President and Chief Executive Officer Mark Rourke said.

RXO calls the ruling a “capacity-tightening event,” predicting that brokers will drop marginal carriers without strong safety ratings, pushing more capacity out of the market and rates higher. Small brokers facing higher insurance premiums could become targets for mergers and acquisitions.

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FMCSA Grapples With Post-Montgomery Reality at Freight Fraud Symposium

The Supreme Court’s Montgomery v. Caribe Transport II decision is forcing brokers and the Federal Motor Carrier Safety Administration to confront new terrain. At FreightWaves’ Freight Fraud Symposium in Cleveland, Deputy Administrator Jesse Elison acknowledged the ruling changes the game. “What’s changed is that clearly the activity of a broker is now considered part of a motor vehicle, and that is within our purview,” he said.

The ruling strips brokers of two key liability defenses they had long relied upon. Echo Global Logistics Chief Executive Officer Doug Waggoner pressed Elison on carrier vetting, noting that only about 92 percent of carriers are certified. Elison countered that 60 percent to 70 percent of carriers receive regulatory “touches,” such as inspections. He conceded, however, that the industry now needs a clearer safety standard.

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Montgomery Ruling May Drag Shippers Into Liability Crosshairs

The Supreme Court’s unanimous Montgomery v. Caribe Transport II decision isn’t just a broker problem. Industry leaders Dave Bozeman of C.H. Robinson and U.S. Xpress founder Max Fuller warned that shippers could face expanded liability under the ruling’s safety exception interpretation.

“Shippers are now going to have to start looking because this particular ruling now changes the dynamic and the space of where shippers can be liable on some things,” Bozeman said. He predicted that 20 percent to 30 percent of smaller brokers may exit the market as shippers tighten vetting standards.

Fuller echoed the concern that shippers supporting cheaper carriers for better rates may soon share broker-level exposure.

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Truck Insurance Premiums Rise Faster Than Inflation

The American Transportation Research Institute’s latest report shows commercial auto liability insurance premiums rose 18.6 percent from 2021 to 2024, reaching 10.2 cents per mile and outpacing consumer inflation. Heavy-duty truck crash rates fell 2.6 percent over the same period. Insurers have continued to post combined ratios above 100 in recent years, paying out more in claims than collected in premiums. Distracted driving and an influx of inexperienced drivers during the pandemic freight boom have contributed to higher claim costs.

Smaller fleets typically bear a heavier burden, facing significantly higher per-mile insurance costs than larger fleets.

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SONAR spotlight: Memorial Day Weekend brings rate fireworks and new cycle highs.

(Source: SONAR)

Summary: The week before Memorial Day saw dry van spot market rates and tender rejection rates reach new cycle highs. The holiday weekend historically sees an increase in both as trucking capacity leaves the market. Spot market rates increase while tender rejection rates rise due to decreases in larger fleets’ working tractor percentages until drivers return home.

The impact of the supply-side-driven upcycle continues. Spot market rates are at their highest levels observed in the SONAR dataset other than a brief period between late December 2021 and January 2022. Tender rejection rates are at their highest levels since Q1 2022.

In the past week, the SONAR National Truckload Index 7-Day Average (NTI) rose 27 cents per mile from $3.27 on May 14 to $3.54. The NTI is 80 cents per mile, or 29%, higher than $2.74 last month and $1.19 per mile, or 50.6%, higher than $2.35 last year.

In the contract market, dry van tender rejection rates rose as larger fleets reduced tender commitments due to declines in their fleet availability, expressed in working tractor percentages.

The SONAR Truckload Rejection Index Van (STRIV) rose a week earlier than the NTI, with the past week seeing a slight drop of 15 basis points from 14.86% to 14.71%. The real movement occurred in the comparisons with last month and last year. Compared with last month’s value of 11.31%, STRIV is 340 basis points higher. Compared with last year’s value of 5.98%, the increase is much more pronounced at 873 basis points.

A good rule of thumb for working tractor percentages: Fleets typically operate anywhere between 85% and 92%, meaning at any given time around 8% to 15% of their assets are either unseated or in shop status. When holidays happen, that number flips, with 80% to 90% of their fleet returning home and around 10% to 20% staying out. This effect is more pronounced during the Thanksgiving, Christmas and New Year’s holidays, but events like Memorial Day, the Fourth of July and Labor Day also show up in SONAR data via higher tender rejection and spot market rates.

Looking ahead, the next question for both rates remains whether there will be a new pricing floor or if rates will settle downward before rising again ahead of the Fourth of July holiday. Given that the current upcycle is capacity-driven, with higher barriers to entry and regulatory scrutiny, current consensus points to the former rather than the latter.