Trucking capacity is contracting, and the latest tonnage reports indicate that the reduction in available trucks and drivers is having a positive impact on freight rates. However, tariffs and regulatory and economic uncertainty continue to prolong the longest freight downturn in recent history.
Some analysts are saying that it’s not looking good for 2026, either.
Capacity is shrinking, due in part to reduced sales of new Class 8 trucks. On the U.S. market, sales are running 9.4% behind the 2024 pace, with nearly 17,000 fewer trucks sold in the first nine months of 2025. September sales alone ran 25.6% lower than in September 2024, the largest disparity of the year so far. The second largest year-over-year decline was August, down 13.5% from August 2024.
Another contribution to shrinking capacity is the removal of drivers from the fleet who fail to meet English Language Proficiency (ELP) standards. A release by FTR Transportation Intelligence claimed 6,446 drivers have been placed out of service (OOS) since enhanced enforcement began on June 25. The analytics firm estimates a potential loss of 25,000 drivers a year as enforcement continues.
Then in late September, the Federal Motor Carrier Safety Administration (FMCSA) announced tougher CDL restrictions on non-domiciled drivers, estimating that enforcement could result in removal of another 194,000 drivers over a two-year period. Some of the non-domiciled drivers could be caught up in the ELP enforcement — but it’s still enough drivers to impact industry capacity.
Impact on freight rates
Freight rates might be feeling the impact already, however slightly.
DAT Freight and Analytics reported spot rate increases for dry van, refrigerated and flatbed load on its boards in September. National average van rates rose two cents per mile to $2.05, while refrigerated rates moved up three cents to $2.44 per mile. Flatbed spot rates on average rose a penny per mile to $2.50.
DAT reported that contract rates for van were unchanged at $2.42, refrigerated rose two cents to $2.76 per mile and flatbed contract rates declined two cents to an average of $3.06 per mile.
The Cass Freight Index for Expenditures reported an increase of 2.2% in September 2025 over September 2024, despite a 5.4% decrease in shipment numbers — indicating that shippers are paying more for fewer shipments. Compared to August, the September index rose 5.1%.
Carriers paying the price of economic woes
The positive movement in freight rates came too late for Montgomery Transport, an Alabama-based flatbed carrier with 458 reported power units. On Oct. 10 the company suddenly announced it was ceasing operations and proceeding with a Chapter 7 bankruptcy. Drivers were instructed to deliver current loads and take their trucks home to await further instruction, but since fuel cards were cut off, many had to fund fuel purchases on their own.
Montgomery reportedly owed more than $25 million to two banks and ran out of cash to fund daily operation. A deal to sell to competitor P&S Transportation was a possibility, but a lawsuit from creditors halted negotiations. Private equity firm One Equity Partners acquired an interest in the company in 2022, with founder Robert Montgomery losing majority control.
Another carrier, USA Truck, is back on the market after being acquired in 2022 by Danish freight forwarder DSV through the purchase of German corporation DB Schenker. The company currently has over 2,000 trucks.
LTL carrier Forward Air, in the process of negotiating a sale to a private equity firm for months, has seen share prices fall as suitors failed to submit satisfactory bids and is still struggling to find a buyer.
Small businesses having even more trouble
These larger companies are not representative of the millions of one- to three -truck operations that are struggling to stay afloat in the tough market. Mickey Davis, an owner operator based in Maine, is an unfortunate example of what small trucking business owners are facing.
“I paid my truck off back in January 2019,” he said. “It’s in good condition. But with the way everything is out there, I can’t afford to operate it and have a breakdown. (There’s) just no money in it.”
Davis says he’s looked for a carrier to lease to, but with fleets downsizing, finding a fit has been difficult.
With freight rates and trucking conditions continuing the slow climb from the bottom, it’s likely that more capacity reductions will be driven by closing carriers, both large and small.
Regulatory limbo
An Oct. 23 release from ACT Research blamed at least part of the slow recovery on the tariff trade war as well as “regulatory limbo,” referring to regulations that were enacted by the Environmental Protection Agency (EPA) and FMCSA under President Joe Biden and quelched by the Trump administration.
“Initial tariffs in 1H (the first half of 2025) did two things,” said Ken Vieth, ACT’s president and senior analyst. “One, they temporarily pushed retail sales above replacement levels, stalling a necessary capacity contraction and prolonging a rate recovery; and two, 1H’s large macro demand pull-forward has elevated the risk of weaker goods demand in 2H.”
The TD Cowen/AFS Freight Index for October reported an increase in Truckload Linehaul cost per shipment of 0.2% for the third quarter, ending September 30. The report blamed “persistent uncertainty around tariff policies” and excess capacity for the slow growth. An increase of 0.1% is predicted for the fourth quarter, ending the year with a 0.9% increase in cost per shipment over 2024 levels.
The AFS data is compiled from freight data from more than 1,800 clients and $39 billion in transportation shipping across multiple modes annually.
The tariff factor
As President Donald Trump announced tariffs and threatened others this year, manufacturers and retailers stocked products before tariffs became effective, providing a temporary bump in freight volumes and rates but slowing orders and shipments for the second half of the year.
“In our view, lower capacity in an otherwise stable demand environment could move the cycle forward and actually create for-hire demand by reversing the insourcing of recent years. But this will take time,” said Tim Denoyer, ACT’s vice president and senior analyst.
Trump had announced a 25% tariff on trucks manufactured outside of the U.S., but on Oct. 17 issued a proclamation that exempted truck imports that qualify under the U.S.-Canada-Mexico (USMCA) agreement that replaced NAFTA during the first Trump administration.
The freight recession drags along as carriers struggle to hang on.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
