Is Trucking Headed for a Multi-Year Recovery?

The freight market is undergoing its most significant structural shift since deregulation, with 20-25% of for-hire truckload capacity exiting. RXO’s Jared Weisfeld explains why this supply-driven correction, fueled by ongoing government enforcement and rising operating costs, points to a multi-year recovery ahead. Learn why prior cycle analysis might no longer apply and what shippers should do to prepare for increased volatility.

The trucking market is not in a short-lived cyclical rebound but the early stages of a multi-year recovery driven by structural, government-enforced capacity reduction — that is the core argument made by RXO Chief Strategy Officer Jared Weisfeld in a recent FreightWaves interview. Weisfeld said enforcement actions around non-domiciled CDLs, English language proficiency, CDL mill crackdowns, ELDs and cabotage rules have been ongoing for roughly 12 months and amount to “the largest structural change to occur in the market since deregulation in 1980.”

Weisfeld estimates that as much as 20% to 25% of the for-hire truckload market’s supply base is likely to exit, a figure he called far from trivial. He said the evidence is already visible in rate data: spot rates, depending on the week, are running 30% to 50% higher year over year despite what he characterized as muted freight demand. Industry tender rejections, which hit 17%–18% around the July 4th holiday, had pulled back but were still running at approximately 13% — multi-year highs — at the time of the interview.

A key data point undscoring the recovery’s durability, Weisfeld argued, is the cost-to-operate gap. Even as all-in rates including fuel approach parity with the first-half 2022 peak, operating costs — insurance, tires, maintenance — have risen approximately 26%, making a rapid capacity re-entry economically difficult. Higher capital costs compound that barrier: with 30-year mortgage rates near 7%, financing new fleets or starting new carriers or brokerages is far more expensive than in the prior cycle.

“The framework in which we need to evaluate cycles needs to fundamentally change when you have a capacity situation that has structurally changed in a way that we haven’t really seen in 50 years,” Weisfeld said. “Prior cycle analysis, while interesting, may not be completely relevant in the context of a population pool that is structurally lower given recent government actions.”

At the company level, RXO reported that spot volume as a share of its overall mix climbed roughly 900 basis points sequentially and 1,500 basis points year over year in the second quarter, reaching approximately 42%. That figure rose further to about 50% of the mix in July alone, an additional 800-basis-point gain, as shippers turned to the broker amid routing guide failures. During Q2, RXO’s proprietary Curve data showed spot rates running at an average premium of roughly 20% above contract rates; Weisfeld said that premium had moderated to the mid-teens by the time of the interview.

Weisfeld also pointed to a notable shift in shipper behavior: large shippers are actively consolidating freight with fewer, larger brokers in response to federal enforcement risk and carrier compliance concerns. He said the top 10 brokers currently represent about half the brokerage market and predicted that longer term the top five could command more than half, driven by shipper-led consolidation. RXO, which completed its acquisition of Coyote, now ranks as the third-largest provider of broker transportation in North America and maintains a network of more than 120,000 carriers.

On the near-term outlook, Weisfeld said it is too early to call the strength of peak season but expects the market to tighten through the end of September. He advised shippers to lock in capacity partnerships now, warning that any improvement in consumer demand on top of already-constrained supply could rapidly erode routing guides and spike freight rate volatility. “If you do start to see an improvement in demand, you can absolutely start to see erosion in routing guides,” he said, “and that could be problematic for their service levels.”

• RXO’s Weisfeld estimates 20–25% of for-hire truckload capacity will exit the market due to structural government enforcement actions he calls the biggest industry shift since 1980 deregulation.
• Spot rates are up 30–50% year over year despite soft demand, while trucking operating costs have risen roughly 26%, making rapid capacity re-entry economically unviable.
• RXO’s spot volume surged 1,500 basis points year over year in Q2 to ~42% of mix, then climbed to ~50% in July as shippers sought large, vetted brokers amid routing guide failures.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.