Truckload capacity is contracting, diesel fuel prices are low and freight rates are rising — all signs that point to better times for the trucking industry.
Improvements in economic conditions, however, are excruciatingly slow. Some carriers that are barely hanging on may run out of time before revenue improvements outpace inflation. Decision makers are looking to the experts for guidance, but when the experts don’t agree, things don’t get easier.
Capacity flees the market
Capacity left the industry throughout 2025. According to the Federal Motor Carrier Safety Administration (FMCSA), there were more than 6,400 authority revocations in December alone, after reinstatements are added back in. Most of these were small carriers, but several acquisitions of larger carriers have been also in the news in the past few months.
Low rates certainly play a part in carrier woes, as does FMCSA enforcement of English language proficiency (ELP) and non-domicile CDL rules.
The supply side of the supply-demand equation is shrinking. The problem is that the demand side — the production and movement of available loads — hasn’t been growing.
“Demand is still very uncertain. I mean, it’s clearly not roaring back,” said Dean Croke, principal analyst at DAT Freight and Analytics. “But it’s not tanking, either, and maybe that’s the good news. The freight market has weathered the storm, and I think people have gotten used to the new normal.”
What is the new normal?
“If I could use one term to describe what this freight market looks like, it would be that a gradual recovery meets constrained supply,” Croke said.
Jason Miller, interim chair of the Supply Chain Management Department at Michigan State University’s Eli Broad College of Business, says the industry will have a better sense of the 2026 market going into the year’s second quarter.
“From a supply standpoint, we probably have a little bit more capacity to exit, but not much more,” Miller said. “Unfortunately, there’s not much in the demand side to really kick things off.”
The trucking industry was encouraged by spot freight rate increases in December 2025 and January 2026, but much of the increase was attributed to weather.
Interest rates
One item the industry has watched closely is inflation and the interest rate adjustments used by the Federal Reserve to keep it in check.
“If they start to drive down interest rates, that’s going to stimulate the housing market and mortgage rates,” Croke said. “And if 30-year mortgage rates 6% that’s going to unlock the housing market in a way like we’ve never seen.”
Miller looks in another direction for help on mortgage rates.
“The 10-year treasury (bond yield rate) is what determines the 30-year mortgage rate,” he said. “If the 10-year treasury doesn’t come down, that means mortgage rates really aren’t going to come down that much.”
He suggests there’s a more reliable metric to follow.
“I tell people to watch single-family housing permits, not housing starts, because (the number of) permits issued isn’t seasonally adjusted and reflects actual activity in the housing market,” he said.
The Fed voted to hold the current interest rate range of 3.5% to 3.75% steady at its January meeting — and indicated that it is leaning towards doing the same at its next few meetings. In addition, a recent release by the U.S. Bureau of Economic Analysis revised the estimated GDP (gross domestic product) for the third quarter of 2025 (July, August and September) to 4.4%. That’s more than double the Fed’s target goal of 2%.
Miller cautions that a solid GDP does not necessarily equate to a good trucking market.
“They’re very disconnected metrics,” he said. “We had good GDP readings in 2019, and we had a weak freight market. We had good GDP ratings in 2023, and we had an abysmal freight market. So don’t think just because GDP is up that it means freight is doing a lot better.”
Diesel costs
Croke is keeping an eye on diesel fuel pricing as lower prices help carriers maximize revenues.
“Cash is king, and cash flow is going to be absolutely critical this quarter,” he said. “Diesel prices being lower for the small carriers have given them a little bit of tailwind, particularly the carriers who don’t have access to the fuel surcharge.”
But lower fuel prices, a stated goal of the Trump administration, come with a caution:
“There’s just no evidence that fracking is going to be up significantly, not with what’s going on with oil prices right now,” Miller said. “That (fracking) was what really drove things in 2013-14, but also, even in 2017-18 — fracking doubled between 2016 and 2018.”
When barrel oil prices are on the rise, oil companies invest in drilling and fracking, pulling back on both activities when prices are down. Lower energy prices reduce business costs, but higher prices spur development and production.
Factors to watch
With difficult trucking conditions continuing into 2026, what are the experts watching?
Croke sees opportunity in seasonality: “Because of efforts to remove non-domicile CDL holders, freight patterns are disrupted,” he said.
“Enforcement efforts in Texas and Florida have resulted in a shortage of available trucks, resulting in spot rate increases,” he continued. “Some drivers in California don’t want to leave the state.”
Croke points out that the agricultural produce season could present better revenue opportunities than usual this year.
Miller is keeping an eye on the numbers.
“First would be the ISM (Institute for Supply Management) Purchasing Manager Index, specifically the sub index for new orders,” he said. “Historically, every major sort of expansionary cycle in trucking has been predicated on seeing that New Order metric get above 55 even towards sort of the 60 space.”
As capacity continues to contract, a surge in manufacturing would increase demand for trucking and predicate a rise in rates, but it’s not a likely scenario.
“I keep asking, ‘Where is the demand boost going to come from?’” Miller said. “Even if spot rates stay — call it 10-ish percent — higher than where they were last year, it’s a given that’s going to draw some extra capacity back into the sector.”
Or as Croke succinctly put it, “Gradual recovery meets constrained supply.”
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.
