Newsletters Contact Us

The ‘ingenious strategy’ behind most truckers’ least favorite week of the year: International Roadcheck

truck fallen over

International Roadcheck Week is hardly the sexiest topic in trucking, but it is a darn-tootin’ important one. Inspectors in the U.S. and Canada halt tens of thousands of trucks for vehicle inspections for a few days every summer or early fall. They remove thousands of trucks and drivers from the road; in 2021, 16.5% of inspected vehicles were put out of service along with 5.3% of drivers.

It’s uncommon for truck drivers to actually get their vehicles inspected at random during most of the year. To avoid International Roadcheck Week, many truckers simply don’t drive during that period of time — which, presumably, means more unsafe vehicles and drivers on the road outside of the inspection blitz. It’s a question that ate at Andrew Balthrop, a research associate at the University of Arkansas Sam M. Walton College of Business. 

Around 5% fewer one-person trucking companies are active during International Roadcheck Week. But Balthrop and his fellow researcher, Alex Scott of the University of Tennessee, found a major upside to the inspection blitz — even with all the folks who avoid it. According to their working paper published in March 2021, vehicles are safer a month before and after the inspection period. There’s a 1.8% reduction of vehicle violations, according to Balthrop and Scott’s analysis. Surprise inspection blitzes don’t result in the same uptick of compliance. 

I caught up with Balthrop about his research last week at FreightWaves’ Future of Supply Chain conference, and we chatted again on the phone this week about his findings on International Roadcheck Week.

Enjoy a bonus MODES and a lightly edited transcription of our phone interview: 

FREIGHTWAVES: For our readers who are not aware of what Roadcheck Week actually is, can you explain a little bit about what it and why it is important to drivers and companies?

BALTHROP: “The International Roadcheck is part of an alliance between the inspectors in Canada and the ones in Mexico and the U.S. to have a unified framework for making sure trucks are safe to operate. That should make it easier to go across borders when you have this kind of unified structure.

“In the U.S., one of these CVSA inspection blitzes is the International Roadcheck that happens for three days in the summer. Usually it’s a Tuesday, Wednesday and Thursday. And usually it’s the first week in June.

“And in it, they focus on Level One inspections, the North American Standard Inspection where they inspect the driver records, the hours of service, the licensure and I believe medical records as well. Then they inspect the truck. It’s an in-depth inspection where the inspector will actually crawl under the truck to look at various things. And these inspections, from the data that I’ve seen, take about a half an hour on average.

“During the Roadcheck Week, they’ll do about 60,000 inspections, so 20,000 a day. They’re going to pull over a lot of trucks, and this can cause a little bit of congestion at the weigh stations and the roadside inspections localities as the inspectors are doing these inspections.”

Roadcheck Week doesn’t catch all truck drivers, but it has a long-lasting benefit to safety

FREIGHTWAVES: So, can most drivers kind of expect to be pulled over? How likely is that?

BALTHROP: “There’s 1 million or 3 million trucks on the road, somewhere around there on any given day. With 20,000 inspections, most drivers still will not get inspected, but there’s going to be a higher proportion of drivers inspected. 

“You’re more likely to get inspected on these days. If you don’t have a recent inspection on your record, or if you have a bad recent inspection on your record, you’re more likely to be pulled over on these days.”

FREIGHTWAVES: Your research focused on that it’s just unusual that this inspection is announced, that it’s planned. We were talking before about how normally, if you’re trying to assure quality or compliance, you would not announce an inspection in advance. It would be more of a surprise-type situation. 

Can you walk us through why that’s so unusual, or what’s the rationale that you see behind announcing it in advance?

BALTHROP: “It is unusual, and on the surface, it doesn’t make much sense, but it turns out to be kind of an ingenious strategy. So I’ll walk through it here. 

“Over the course of a year, there’ll be 2 million inspections of 3 or 4 million trucks out there. The average rate of inspections is pretty low. It’s not uncommon for truckers to go years without having an inspection. With this low inspection intensity, the FMCSA has sort of a problem of, how does it get anybody to abide by the regulations?

“I’m a jaded economist, and I don’t worry or consider too much ethics and morality and all that kind of stuff. It comes down to incentives for drivers to follow these inspections. The incentives do guide behavior. So, how could the FMCSA incentivize drivers to follow these regulations more closely and adhere to the standards?

“They do this by announcing the blitz. This does two things. On one side, it allows everybody to prepare in advance. There’s a bunch of anecdotal evidence out there that people do prepare for these blitzes in advance. They will have their trucks inspected beforehand for any problems. They’ll time maintenance and upkeep in advance to make sure that their vehicles are in order. “They’ll be a little bit more cognizant of the driver-side regulations. One thing we notice in our study is that hours-of-service violations really drop during these extensions, because people see them coming. They don’t fudge the books in any way.”

Owner-operators can evade Roadcheck Week. Big carriers, not so much.

BALTHROP: “The issue with the announcement, on the flip side, is that it allows people to just dodge the inspection entirely. For a long time, people have talked about how owner-operators and smaller carriers time their vacations for this particular time. They could do this for a couple reasons. To avoid the hassle is a nice way to put it, but it also allows you to be noncompliant to avoid the high-intensity inspections.

“You have this balance here that on one side you get the behavior you want with people complying with regulations. That’s the behavior the FMCSA wants. But on the flip side, you get a bunch of people that are kind of outright dodging inspections.

“When you compare these two things on balance, the policy is actually pretty effective because you get a lot of people focused on maintaining their trucks and obeying the rules during that particular week. Especially with the vehicle maintenance stuff, that lasts a long time. 

“In our research, we saw that vehicle violations, a month before and up to a month afterwards, is when you still notice your vehicle violations. That trucks are kind of better maintained around these blitzes.

“The ingenious aspect of it is that the FMCSA, by concentrating their inspection resources all at one time and announcing it, they’re making it clear that they’re serious about enforcing these regulations and everybody prepares for it. For the number of inspections that are happening, you get fewer tickets than you would have otherwise expected.

“The FMCSA, they’re putting people through a little bit of a hassle, but they’re not having to write a bunch of tickets to get people to comply. They’re not really punishing a whole bunch of people because, by making this apparent that this is going to happen, people comply and the FMCSA gets what they want essentially without having to come down on carriers too hard.”

A convenient time for a vacation, indeed

FREIGHTWAVES: OK, interesting. And how does this pattern of shutting down, how does that compare for an owner-operator versus a driver for a big fleet?

BALTHROP: “If you’re a motor carrier with thousands of power units, you can’t just pack up and not do business on a particular day. They just don’t have that option. So they get inspected at a higher intensity, and you see the larger carriers kind of more focused on making sure that they’re prepared for these inspections. With so many inspections, the larger carriers are going to be inspected at higher rates. You can really damage your reputation if your equipment isn’t in order on this particular day. 

“Versus the smaller carriers, especially if you’re talking about a single-vehicle fleet, an owner-operator type, it is not that difficult to just not work for those three days. And so you see a lot about that. 

“In terms of what the roadway composition looks like, if we look at inspection data and relative to a typical day with the usual inspections, on these Roadcheck days, you have about 5% fewer owner-operators on the road than you otherwise would expect.”

FREIGHTWAVES: Wow. And when you say owner-operators, you also mean just like fleets with just —

BALTHROP: “One-vehicle fleets.”

FREIGHTWAVES: OK, that’s interesting.

BALTHROP: “You know, you see a little bit of effect with the smaller fleets, below six vehicles, but it basically disappears by the time you get to a hundred vehicles.

“This effect is being driven by smaller carriers staying off the road in terms of avoidance. You see this goes also how you would expect; it’s also older vehicles that stay off the road. This is correlated with carrier size. The larger carriers use newer vehicles and owner-operators tend to use some of the older vehicles. But it’s particularly the older vehicles that are off the road.

“This makes intuitive sense. Older vehicles are more costly to keep compliant. Maintenance is more costly, and they’ve been around longer so there’s time for more stuff to have broken essentially.

How a truck driver gets stopped for inspection

FREIGHTWAVES: Can you explain a little bit more, the idea of having this inspection history and why it would benefit a larger or small carrier?

BALTHROP: “Getting flagged for inspection is sort of random, but not totally. If somebody notices something obviously wrong with your truck, that’s ground for a more in-depth inspection. Or if you get pulled over for some other reason, this can be grounds for inspection of some type. 

“But there’s also the inspection selection service. The computer program that is random, that it randomly flags people in for inspection, but it’s based on your inspection history.

“So if your firm hasn’t been inspected recently, or if your carrier doesn’t have a very dense inspection history, you’ll be more likely to trigger that system to pull you in and have you inspected. If you have a dense inspection history, you’re less likely to get inspected.”

FREIGHTWAVES: So how do you get pulled over for inspection? As a person who only drives a passenger car, my main interaction with being pulled over is, I’m driving down the freeway or wherever, and I get stopped by the police. How does it work for a truck driver? How does getting pulled over or inspected work in that way?

BALTHROP: “The law is that you cannot pass a weigh station without pulling in and getting weighed. At that point they may flag you to be inspected. Now, in the past decade or two, there’s been a bunch of electronic devices that are installed in cabs. You may have heard of PrePass or Drivewise. This allows you to pass weigh stations. 

“I don’t have data on how many trucks have the in-cab devices. But from a trucking perspective, they’re so convenient that you don’t have to stop every time you cross a state line. I think the vast, overwhelming majority of trucks have some sort of one of these electronic devices. The DOT inspectors at these roadside inspection points have a dial they can twist essentially about how many people they want to inspect. 

“So during the roadcheck inspection week, they’ll crank that dial all the way up and pull everybody over. And if they get too backed up, they might crank it back down a little bit and so on.”

FREIGHTWAVES: OK, interesting. It reminds me of a highly sophisticated E‑ZPass.

A $10 million-plus expense to trucking companies every year … but it’s worth it if just one fatal crash is avoided

FREIGHTWAVES: Zooming out, when we hear about large truck crashes, something like a vehicle maintenance issue is not really the most sexy explanation. But just looking at the FMCSA data, in 29% of all truck crashes, a major factor is brake problems. So it seems like a lot of the truck crashes on the road are caused by vehicle maintenance, versus something like the driver using illegal drugs or some other sort of more dramatic explanation. Can you speak a little bit to why this sort of vehicle maintenance is important for safety in preventing large crashes?

BALTHROP: “We did a little bit of a back-of-the-envelope cost benefit analysis of this. Let me try and make sure I remember it clearly, but we have it in the paper that the cost of this on one side is that you have the compliance costs the firms are undertaking, and then you have to add to that the delay costs from doing this, and then the cost of the inspection itself, having to pay federal inspectors to do this.

“On the benefit side, it reduces crashes. So when we add up, just looking at the cost of what an inspection is, we don’t have a good idea of how to measure the compliance cost. It’d be fun to measure the delay cost, but I don’t have good enough price data on that to get at that cost. 

“But if you look at what the cost of an inspection is, it is something like $100 or $120 is what you would pay to have one of these inspections done privately. A lot of people do this in the run-up to inspections, and have it done privately so that you can fix whatever the problems are and be sure that you would pass the FMCSA inspection.

“With that $120 figure, if you aggregate that up to 60,000 inspections or whatever, and you take that in comparison, I’m going to give you a bad figure here, it’s on the order of $10 million. That is about the value of a statistical human life. Looking at this economically, it’s worthwhile if it saves one human life. If you identify just one faulty brake system that would’ve resulted in an accident, you’re getting some value out of the program. 

“When you add those other costs in there, we’re going to need to save a couple of lives, but in terms of cost benefit analysis with this kind of stuff, we’re usually looking at orders of magnitude differences in cost and benefits to say something for sure. 

“If you can save just a couple lives, this program will pay for itself.”

Time to start inspecting in the winter

FREIGHTWAVES: Then one last question: Is there any rationale for this program happening in the summer? 

BALTHROP: “I think part of it is that for the inspectors this gets much harder and much more miserable to do in winter conditions.”

FREIGHTWAVES: That makes sense.

BALTHROP: “Inspectors are less productive. One of the things that we talk about in the paper, that they have in addition to the International Roadcheck, is that they have Brake Week where they focus a little bit more on brake inspections. You have Operation Safe Driver a little bit later on in the summer, usually in September, where it’s a little bit more focused on passenger vehicles and how they drive around these trucks.

“But there’s not one in the winter time. There’s an unannounced brake check that usually happens in May, a surprise inspection that’s just one day. But you’re right in pointing out that it might be worthwhile having one of these in the wintertime. You have this periodic high-intensity inspection that kind of incentivizes everybody to be compliant through the summer. 

“But there’s nothing in the winter, so that’s an area. But if I was managing the FMCSA, that would be one of the first questions I ask, ‘Why don’t we have one of these in the wintertime?’”

FREIGHTWAVES: That makes sense. Maybe they can do it in the South or something. Maybe a Miami January inspection … 

That’s it for this special bonus MODES. Subscribe here if you’re not already receiving MODES in your inbox every Thursday. Email the reporter at rpremack@www.freightwaves.com with your own tales on International Roadcheck Week or any other trucking topics. 

Why the Northeast is quietly running out of diesel

The nozzle of a diesel fuel pump is inserted into the tank of a commercial truck as its driver looks on the bankground.

The East Coast of the U.S. is reporting its lowest seasonal diesel inventory on record. And some trucking companies appear spooked.

The East Coast typically stores around 62 million barrels of diesel during the month of May, according to Department of Energy data. But as of last Friday, that region of the U.S. is reporting under 52 million barrels. 

The sharp increase of diesel prices has been a major stressor in America’s $800 billion trucking industry since the beginning of 2022. According to DOE figures, the price per gallon of diesel has reached record highs — a whopping $5.62 per gallon. It’s even higher on the East Coast at $5.90, up 63% from the beginning of this year. 

When relief is coming isn’t yet clear, and experts say higher prices are the only way to attract more diesel into the Northeast.

“I wish I had some good news for the Northeast, but it’s bedlam,” Tom Kloza, global head of energy analysis at OPIS, told FreightWaves. 

2022 has seen record-setting diesel prices. (SONAR)

Everyday Americans don’t fill up their cars with diesel, but the fuel powers our nation’s agriculture, industrial and transportation networks. More expensive diesel means the price of everything is liable to increase. Trucks, trains, barges and the like consumed about 122 million gallons of diesel per day in 2020. 

Patrick DeHaan, a vice president of communications at fuel price site GasBuddy, reported that retail truck stops are hauling fuel from the Great Lakes to the Northeast, calling it “extraordinary.” We’ve also seen anecdotal reports from truck drivers posting company memos:

Pilot Flying J and Love’s, two of America’s largest truck stops, told the Wall Street Journal yesterday that they were not planning to restrict diesel purchases, but were monitoring low diesel inventory.

Not unlike every other supply chain crunch we’ve seen in the past few years, the cause of the Northeast’s diesel shortage is multifaceted. A yearslong degradation of refineries is rubbing against the Gulf Coast preferring to ship its oil to Europe and Latin America.

Here’s a breakdown:

1. The East Coast has lost half of its refineries. 

As Bloomberg’s Javier Blas wrote on May 4 (emphasis ours): 

In the past 15 years, the number of refineries on the U.S. East Coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.

Rory Johnston, a managing director at Toronto-based research firm Price Street and writer of the newsletter Commodity Context, told FreightWaves that refining is a “thankless industry,” with intense regulations that have limited the opening of new refineries. The Great Recession of 2008 led to several East Coast refineries shuttering, but there have been more recent shutdowns too. One major Philadelphia refinery shuttered in 2019 after a giant fire (and it already had declared bankruptcy), and another refinery in Newfoundland shut down in 2020.

2. It’s a financial risk to bring diesel to the Northeast.

The Northeast has increasingly relied on diesel from the Gulf region. Much of that diesel travels to the Northeast through the famous and much-adored Colonial Pipeline. You may remember the 5,500-mile pipeline from last year, when a ransomware attack shuttered it for nearly a week!  

It takes 18 days for oil to travel on the Colonial Pipeline from its source in Houston to New York City (or, more specifically, Linden, New Jersey), Kloza said.

That’s a long enough time to prioritize Colonial pipelines financially risky for traders — or, as Kloza said, “incredibly dangerous” — thanks to a concept called “backwardation.”

Backwardation refers to the market condition in which the spot price of a commodity like diesel is higher than its futures price. It’s only gotten stronger over time in the diesel market, Kloza said. So, a company could send off a shipment of diesel and find that it dropped by $1 per gallon in the time the diesel traveled from the Gulf Coast to New York — er, New Jersey. That could mean hundreds of thousands or more in lost profits, so traders often avoid such a fate.

“We’re not in an era where there are any U.S. refiners or big U.S. oil companies who would ‘take one for the team’ and bring cargo in where it’s needed,” Kloza said. 

The desperation is showing in New England and the mid-Atlantic regions. New England diesel retail prices are up 75% from the beginning of 2022, per DOE data. In the mid-Atlantic, diesel is up 67%. 

It’s not worth the risk, even amid ultra-high prices. As FreightWaves’ Kingston reported last week, the spread between a gallon of diesel in the Gulf Coast and its New York harbor price is usually a few cents. Last week, that swung up to 66 cents.

But that uptick still isn’t justifying moving oil to the Northeast — particularly when traders can make so much more money selling diesel abroad. 

3. Of course, we can blame COVID and the crisis in Ukraine. 

The catalyst for this diesel shortage, of course, is the ongoing conflict in Ukraine — particularly Europe’s desperation for diesel after weaning off Russian molecules. 

As CNBC reported in March, Europe is a net importer of diesel. Europe consumed some 6.8 million barrels of diesel each day in 2019; Russia exported some 600,000 barrels per day of that. Today, Europe has only eliminated one-third of its Russian diesel, so prices are expected to continue to climb amid that transition. Latin America, too, has been clammoring for U.S. diesel.

The Gulf Coast has been happy to provide such diesel, amid “insane” prices for diesel abroad, said Johnston. Waterborne exports of diesel from the U.S. Gulf Coast hit record highs last month, according to oil analytics firm Vortexa. (The records only date back to 2016.)

Naturally, COVID is also to blame for the Northeast’s run on diesel. Those refineries still retained on the East Coast scaled back during the pandemic due to staffing issues. It takes six months to a year to reignite refineries that were previously shuttered, Kloza said.

The ‘everything shortage’ endures

It’s been a tale as old as, well, last year. An industry is quietly hampered by supply issues for years, or even decades, and COVID pulls back the curtains on its unsteady foundation. It’s particularly jarring for commodities we never thought about before, like shipping containers or pallets, but that quietly underpinned our livelihood all along. 

Recall the Great Lumber Shortage of 2020? Big Lumber had unusually low stockpiles of wood by the summer of 2020, thanks to a vicious 2019 in the lumber industry shuttering sawmills and the spring of 2020 sparking staffing issues. (There was also a nasty beetle infestation.) Those in lumber expected the pandemic to slow the economy, not ignite online shopping, construction and housing mania. It meant lumber went from around $350 per thousand board feet pre-pandemic to a crushing $1,515 by the spring of 2021. The lumber price roller coaster persists today.  

In diesel, there’s no beetle infestation, but there are plenty of other headaches. It all means higher fuel prices on the East Coast, particularly the Northeast, to lure molecules from the Gulf Coast. And, down the line, probably more expensive stuff for you. 

Do you work in the trucking industry? Do you want to say that you hate or love MODES? Are you simply wanting to chitchat? Email the author at rpremack@www.freightwaves.com, and don’t forget to subscribe to MODES.

Updated on May 13 with the latest comments from truck stops.

Exclusive: Central Freight Lines to shut down after 96 years

Nearly, 2,100 employees will be laid off right before Christmas. Central Freight Lines is the largest trucking company to close since Celadon ceased operations in 2019.

Waco, Texas-based Central Freight Lines has notified drivers, employees and customers that the less-than-truckload carrier plans to wind down operations on Monday after 96 years, the company’s president told FreightWaves on Saturday.

“It’s just horrible,” said CFL President Bruce Kalem.

A source close to CFL told FreightWaves that CFL had “too much debt and too many unpaid bills” to continue operating, despite exploring all available options to keep its doors open.

Kalem agreed.

“Years of operating losses and struggles for many years sapped our liquidity, and we had no other place to go at this point,” Kalem told FreightWaves. “Nobody is going to make money on this closing, nobody.” 

Central Freight will cease picking up new shipments effective Monday and expects to deliver substantially all freight in its system by Dec. 20, according to a company statement.

A source familiar with the company said he is unsure whether CFL will file Chapter 7 or “liquidate outside of bankruptcy,” but that the LTL carrier has no plans to reorganize.

The company reshuffled its executive team nearly a year ago in an effort to stay afloat, including adding the company’s owner, Jerry Moyes, as CFL’s interim president and chief executive officer. Moyes remained CEO after Kalem was elevated to president in July.

“I think it was surprising that there wasn’t a buyer for the entire company, but buyers were interested in certain pieces but not in the whole thing,” the source, who didn’t want to be identified, told FreightWaves. “Part of it could have been that just the network was so expansive that there was too much overlap with some of the buyers that they didn’t need locations or employees in the places where they already had strong operations.”

Third-party logistics provider GlobalTranz notified its customers that it had removed CFL as “a blanket and CSP carrier option immediately, to prevent any new bookings,” multiple sources told FreightWaves on Saturday.

CFL, which has over 2,100 employees, including 1,325 drivers, and 1,600 power units, is in discussions with “key customers and vendors and expects sufficient liquidity to complete deliveries over the next week in an orderly manner,” a CFL spokesperson said. Approximately 820 employees are based at the company headquarters in Waco.

Despite diligent efforts, CFL “was unable to gain commitments to fund ongoing operations, find a buyer of the entire business or fund a Chapter 11 reorganization,” another source familiar with the company told FreightWaves.

Kalem said the company had 65 terminals prior to its decision to shutter operations. 

FreightWaves received a tip from a source nearly two weeks ago that CFL wasn’t renewing its East Coast terminal leases but was unable to confirm the information with CFL executives. 

Another source told FreightWaves that some of the LTL carrier’s West Coast terminals had been sold recently, but that no reason was given for the transactions.

At that time, Kalem said the company was “working to find alternatives” and couldn’t speak because of nondisclosure agreements. He said executives at CFL, including Moyes, were trying to do everything to “save the company.”

“Jerry [Moyes] pumped a lot of money into the company, but it just wasn’t enough,” Kalem said.

Kalem said he’s aware that a large carrier is interested in hiring many of CFL’s drivers but isn’t able to name names at this point. 

“Central Freight is in negotiations to sell a substantial portion of its equipment,” the company said in a statement. “Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area.”

As of late Saturday night, Kalem said fuel cards are working and drivers will be paid for freight they’ve hauled for the LTL carrier until all freight is delivered by the Dec. 20 target date.

“I’m going to work feverishly with the time I have left to get these good people jobs — I owe it to them,” Kalem told FreightWaves. “We are going to pay our drivers — that’s why we had to close it like we’re doing now. We are going to deliver all of the freight that’s in our system by next week, and we believe we can do that.”

During the outset of the pandemic, Central Freight Lines was one of four trucking-related companies that received the maximum award of $10 million through the U.S. Small Business Administration’s Paycheck Protection Program (PPP). This occurred around the time that CFL drivers and employees were forced to take pay cuts, a move that didn’t go over well with drivers.

“It all went to payroll,” Kalem said about the PPP funds. “Yes, our employees and drivers did take a pay cut over the past few years, and we gave most of it back, even raised pay over the past several months, but it just wasn’t enough to attract drivers.”

FreightWaves staffers Todd Maiden, Timothy Dooner and JP Hampstead contributed to this report.

Watch: Central Freight Lines’ impact on the LTL market

FreightWaves CEO and founder Craig Fuller reacts to the Central Freight Lines news:

“With Central struggling for many years and unable to reach profitability, it makes sense that they would want to liquidate while equipment and real estate are fetching record prices.”

Central Freight Lines statement

Here is the statement given by Central Freight Lines to FreightWaves late Saturday after reports surfaced of its impending closure:

“We make this announcement with a heavy heart and extreme regret that the Company cannot continue after nearly 100 years in operation. We would like to thank our outstanding workforce for persevering and for professionally completing the wind-down while supporting each other. Additionally, we thank our customers, vendors, equipment providers, and other stakeholders for their loyalty and support.

“The Company explored all available options to keep operations going. However, operating losses sapped all remaining sources of liquidity, and the Company’s liabilities far exceed its assets, all of which are subject to liens in favor of multiple creditors. Despite diligent efforts, the Company was unable to gain commitments to fund ongoing operations, find a buyer of the entire business, or fund a Chapter 11 reorganization. Given its limited remaining resources, the Company concluded that the best alternative was a safe and orderly wind-down. As we complete the wind-down process, our primary goal will be to offer the smoothest possible transition for all stakeholders while maximizing the amount available to apply toward the Company’s obligations.

“Central Freight is in negotiations to sell a substantial portion of its equipment. Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area. Discussions are ongoing and no purchase of assets or offer of employment is guaranteed.”

Brief history of Central Freight Lines

1925Founded in Waco, Texas, by Woody Callan Sr.
1927Institutes regular routes in Texas between Dallas, Fort Worth and Austin.
1938Dallas facility opens as world’s largest freight facility.
1991Receives 48-state interstate operating authority, expands into Oklahoma.
1993Joins Roadway Regional Group and begins service in Louisiana.
1994Expands into Colorado, Kansas, Missouri, Illinois and Mississippi.
1995Consolidation of Central, Coles, Spartan and Viking Freight Systems into Viking Freight Inc. is announced. Central’s Waco corporate HQ starts closure.
1996Becomes the Southwestern Division of Viking Freight Inc.
1997Investment group led by senior Central management purchases assets of former CFL from Viking Freight and reopens as a new Central Freight Lines.
1999Expands into California and Nevada.
2009CFL Network provides service to Idaho, Utah, Minnesota and Wisconsin.
2013Acquires Circle Delivery of Tennessee.
2014Acquires DTI, a Georgia LTL carrier.
2017Acquires Wilson; new division created with an increase of 80 terminals.
2020Wins Carrier of the Year from GlobalTranz.
Acquires Volunteer Express Inc. of Dresden, Tennessee.
Source: Central Freight Lines

Warehouse cramming is about to begin — Freightonomics

nVision Global, is a leading Global Freight Audit, Supply Chain Management Services company offering enterprise-wide supply chain solutions. With over 4,000 global business “Partners”, nVision Global not only provides prompt, accurate Freight Audit Solutions, but also providing industry-leading Supply Chain Information Management solutions and services necessary to help its clients maximize efficiencies within their supply chain. To learn more, visit www.nvisionglobal.com

Warehouse space is at a premium right now and with peak season right around the corner, shippers are starting to scramble for space. 

Zach Strickland and Anthony Smith look into what shippers are doing to prepare for the end-of-year crunch. They welcome Zac Rogers from Colorado State University to the show to talk through the industry tightness. 

The three also talk about the latest Logistics Managers Index results and what they mean for the fourth quarter of 2021. 

You can find more Freightonomics episodes and recaps for all our live podcasts here.

Seasonality pushing rejections and rates higher ahead of the Fourth

This week’s DHL Supply Chain Pricing Power Index: 75 (Carriers)

Last week’s DHL Supply Chain Pricing Power Index: 70 (Carriers) 

Three-month DHL Supply Chain Pricing Power Index Outlook: 70 (Carriers)

The DHL Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers. 

The Pricing Power Index is based on the following indicators:

Load volumes: Absolute levels positive for carriers, momentum neutral

The Outbound Tender Volume Index at 15,980 is nominally higher now than basically at any point in the past 12 months with the exception of the week prior to Thanksgiving/Black Friday last year. OTVI captures all electronic tenders, including rejected ones, so when accounting for the rejection rate, we can get an even more accurate look at volumes. 

OTVI rose through the back half of May into the national holiday and has risen even further since. Throughout the back half of May and into the middle of June, tender rejections declined substantially. Meaning, current volume throughput is actually understated when comparing OTVI now to OTVI in November 2020. After adjusting for rejected tenders, the accepted outbound tender volume index is just 2.2% below the 2020 peak in November. At that time, OTVI surged towards 17,000, but the rejection rate moved in-kind towards its natural ceiling of 28%. So, the total accepted freight tenders in mid-June is comparable to the peakiest of peak seasons in 2020. Incredible. 

However, since the middle of June, tender rejections have begun increasing again heading into Independence Day, a time when many drivers spend time off the road with their families. The move higher in OTVI this week has been driven primarily by higher rejection rates, rather than higher freight demand. 

Over the past month, the drivers of freight volumes have continued to be imports and from just about every port. The west coast continues to provide seemingly non-stop container ships, while Houston, New Orleans, Miami and Savannah are seeing very strong throughput as well. 

It is van volumes that are driving freight markets higher right now. The Reefer Outbound Tender Volume index has tumbled 25% since its all-time high in the weeks after the polar vortex in February. Since Memorial Day, ROTVI has fallen another 10.5%. This is likely a factor of declining grocery demand, but I would expect the trend to reverse course in the near future as summer festivities accelerate. 

Dry van volumes pushed higher in the back half of May and into June while reefer volumes have declined significantly. 

SONAR: VOTVI.USA (Blue); ROTVI.USA (Green)

The congestion at our nation’s ports has spread from Los Angeles and Long Beach to Oakland, California. The California coastline is a parking lot of container ships, most of which are full to the brim with imports, awaiting berth. As detailed in the economic section, there are some signs that the reversion is underway with Americans paring back spending on pandemic superstar categories in favor of airlines, lodging and entertainment. But spending remains strong despite the moderation, and low inventory levels offset much of the decline that will occur from slowing demand. Real inventories are 3% higher now than pre-pandemic, but real sales growth is far outpacing inventory growth, leading to the lowest inventory-to-sales ratio in decades. 

On the manufacturing side, the ISM Manufacturing PMI expanded in May after declining in April. We’ve been in expansionary territory for 12 consecutive months. New orders, production, imports/exports and employment are all growing. The major issues should come as no surprise: Deliveries are slowing, backlogs are growing and inventories are too low. 

In all, there are many, many catalysts to keep freight demand strong for the foreseeable future. Americans are traveling and spending on services at a high clip, but the high savings rate is enabling it to occur without a massive detriment to goods spending. 

SONAR: OTVI.USA (2021 – Blue; 2020 – Green; 2019 – Orange; 2018 –  Purple)

Tender rejections: Absolute level and momentum positive for carriers

After declining steadily from mid-March to mid-May, the Outbound Tender Reject Index has reversed course heading into Independence Day. This is typical for a national holiday as carriers selectively choose loads to bring drivers closer to home. OTRI now sits above 25% for the first time in June. 

One of our newest indices in SONAR gives us the ability to compare markets on as close to an apples-to-apples basis as possible. FreightWaves’ Carrier Trend Market Score indices are divided into two perspectives – shipper/broker and carrier. The scores are positioned on a scale from 1-100 and have values measuring van and refrigerated (reefer) capacity. The higher values represent more favorable trends for whichever perspective. For instance, a value near the high-end of the range would suggest very favorable conditions for carriers in our carrier capacity trend score index. 

For the past several weeks, capacity disparities have been driven by import volumes. The markets with the tightest carrier capacity coincide with the nation’s busiest ports. Ontario, California, Savannah, Georgia, and Atlanta all have carrier capacity trend market scores of 100. 

SONAR: Capacity Trend Market Score (Carriers – VAN)

By mode. Reefer rejection rates tumbled from it’s all-time high in March to under 35% in mid-June before popping higher over the past two weeks. Reefer rejections are still quite high from a historical standpoint at 38%, but are significantly lower than just three months ago when reefer carriers were rejecting half of all electronically tendered loads. 

SONAR: VOTRI.USA (Blue); ROTRI.USA (Orange)

Dry van tenders make up the majority of all tenders, so the van rejection rate mirrors the aggregate index closely. Van rejections have surged from ~23% to ~26% over the past two weeks. 

Yes, one-in-four loads being rejected is not ideal, but it’s better than 30%. I am unaware of any meaningful signals that capacity is being added at a rate that would change my outlook. With so many catalysts for demand, and many constraints on drivers including the Drug & Alcohol Clearinghouse, driver training school closures and continued government unemployment benefits, the outlook is tight throughout this year and into 2022. That’s not to say we won’t see improvement as consumers revert to pre-pandemic spending habits and drivers enter or reenter the market. But I’m not expecting any quick reversal of this environment; there are simply too many catalysts driving volume and suppressing capacity. 

SONAR: OTRI.USA (2020/21 – Blue; 2020 – Green; 2019 – Orange)

Freight rates: Absolute level and momentum positive for carriers

Throughout June, spot rates have moderated while contract rates have pushed higher. The Truckstop.com dry van rate per mile (incl. fuel) has fallen from $3.21 to $3.11 since the beginning of June, while FreightWaves van contract rates have risen from $2.50 to $2.59/mile, exclusive of fuel. 

I still believe the Truckstop.com dry van national average will not retest the post-vortex surge pricing that brought spot rates up to an all-time high of $3.30. But, there aren’t many catalysts to bring spot rates down anytime soon either. Demand is unwavering with continued strong consumer goods demand, humming industrial recovery and a potentially cooling, yet still sizzling, hot housing market. And carriers can’t fill enough trucks to keep up with demand. 

Prior to the seasonal movements we’re seeing in tender rejections, routing guides generally had been improving through Q2. We should continue to see a convergence between spot and contract rates, but spot rates will remain historically very elevated throughout the summer as demand simply outstrips capacity. 

SONAR: TSTOPVRPM.USA (Blue); VCRPM1.USA (Green)  

Economic stats: Momentum and absolute level neutral

Several economic releases this week are worth noting.

Weekly jobless claims were released Thursday and give us one of the best close-to-real-time indicators of the overall economy.  This week, the data was again very promising as the labor market continues on a bumpy but trajectorially stable recovery path. 

First-time filings totaled 411,000 for the week ended June 19, a slight decrease from the previous total of 418,000 but worse than the 380,000 Dow Jones estimate, the Labor Department reported Thursday. Initial claims have held above 400,000 for consecutive weeks after falling to a pandemic low of 374,000 three weeks ago. As things stand, the current level of initial claims is about double where it was prior to the Covid-19 pandemic. 

The good news on the jobs front is that continuing claims are on the decline, falling to 3.39 million, a drop of 144,000. That number runs a week behind the headline claims total.

Initial jobless claims (weekly in May 2020-May 2021)

At the time of writing, the newest weekly data for the week ending May 29 had not been updated in SONAR. This week, claims fell from 405,000 to 385,000. 

SONAR: IJC.USA

Consumer. Turning to consumer spending, as measured by Bank of America weekly card (both debit and credit) spending data, total card spending (TCS) in the latest week accelerated to 22% over 2019. This is the first time in June that TCS has topped 20% over 2019, but spending has been running up 16-19% consistently on a two-year comp for months. For contect, the average pre-pandemic two-year growth rate was about 8% (from 2012 to 2019). 

The Bank of America team highlighted service spending in the nation’s two largest state economies, California and New York, which are now fully reopened. Spending at restaurants is now well above 2019 in both states, and the team believes there is more capacity for spending to accelerate in the states that were slower to reopen given pent-up demand. 

There was also a notable acceleration in spending on clothing this week, according to Bank of America. It could be a reversal from some softening in the early weeks of June, or an indication of people refreshing wardrobes ahead of a return to work, more travel and vacations. One tepid statement for freight markets from this week;s report: Leisure spending is on the rise and durable goods spending is flatlining.  

FreightWaves’ Flatbed Outbound Tender Reject Index, both a measure of relative demand and capacity, moves directionally with the ISM PMI. 

SONAR: ISM.PMI (Blue); FOTRI.USA (Green) 

Manufacturing. Over the past two weeks, regional manufacturing surveys have reported generally positive readings amid logistical challenges. The New York Fed’s Empire State business conditions index declined 6.9 points to 17.4 in June, retreating from strong readings the past two months. The Empire State Index is a diffusion index with a baseline of zero; any reading above zero indicates improving or expansionary conditions. 

Delivery times lengthened to a new record during the month, new orders and shipments fell, and inventories entered negative territory. The supply chain and transportation challenges are as visible upstream as downstream, but overall the manufacturing sector is handling. Growth continued throughout the second quarter in both the Empire State and Philly Fed indices. 

The Philadelphia Federal Reserve’s business activity index edged lower to a still robust 30.7 in June from 31.5 in the prior month. Unlike NY, the pace of shipments growth accelerated in the Philly region during June. The employment subcomponent rose to a very healthy 30.7 from 19.3 last month, the regional bank said. 

Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy, but demand remains strong. 

For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at khill@www.freightwaves.com or Andrew Cox at acox@www.freightwaves.com.

Check out the newest episodes of our podcast, Great Quarter, Guys, here.

Project44 acquires ClearMetal to strengthen predictive tools

Project44, a leader in real-time visibility of the global supply chain, announced on Thursday it has acquired ClearMetal, a San Francisco-based supply chain planning software company that focuses on international freight visibility, predictive planning and overall customer experience. The terms of the acquisition were not disclosed.

ClearMetal, founded by top software engineers and data scientists from Stanford, Google and other Silicon Valley elites, has created a “continuous delivery experience” that leverages proprietary machine learning algorithms that can forecast supply chain disruptions. 

In an interview, Jason Duboe, chief growth officer at project44, explained that bringing in ClearMetal’s elite team is essential for the company’s future predictive solutions.

“Their team construct is fundamentally different. When you look at their data science, machine learning and computer science background, they are best in class,” he said. “Applying the team to solve really interesting challenges, starting with highly predictive ETA and deeper exception management to create more predictive analytics is really a key component here.”

Project44 recently acquired Ocean Insights to gain global supply chain vessel visibility and has announced it has expanded its truckload tracking services within Asia. Bringing on this new team of engineers will allow the company to capitalize on strong predictive tools, strengthening the supply chain of its customers.

“We’re going to be expanding deeper into Asia, and from a port perspective, getting data much earlier than competitors,” explained Duboe. “Our freight forwarder integrations will give us much deeper visibility from an end-to-end perspective in these regions.”

Along with the acquired skills the ClearMetal team will bring to project44, it brings a large book of customers, including large CPGs, retailers, manufacturers, distributors and chemical companies. These advanced use cases will strengthen the predictive planning tools, and project44 continues to expand into different customer markets.

“What we gain from ClearMetal is a holistic platform for anybody that joins the platform in the future,” said Duboe. “They have large customers with incredibly demanding and advanced use cases. So when it comes to order and inventory, functionality, supplier onboarding, and moving upstream into those processes, we can capture exceptions earlier on.”

Click here for more articles by Grace Sharkey.

Related Articles:

Project44 expands real-time visibility into China

Project44 reels in Ocean Insights in ‘largest acquisition in visibility space’

‘Project44’s vision has always been global’

Insurance Was Trucking’s Last Real Barrier to Entry. It Collapsed.

You can get operating authority for $300.

Three hundred bucks, some paperwork, and you’re officially a motor carrier. But insurance, that was supposed to be different. That was supposed to be the moment where someone who actually understood risk sat across from you and asked the hard questions, Are you serious about this, or are you just playing trucker?

That moment doesn’t exist anymore.

Welcome to the age of instant-issue commercial trucking insurance. A credit card, fifteen minutes, and zero verification can now put an unvetted, potentially unqualified individual behind the wheel of 80,000 pounds rolling down the same highway as your family. Fully legal. Fully covered. At least on paper.

I’ve spent 25 years in this industry. I hold a CDL. I’ve owned and overseen large and small fleets. I serve as an expert witness in highway accident litigation and work as an insurance risk control and transportation consultant. I’ve seen what happens when things go right, and I’ve stood in the wreckage when they go way wrong. 

I can tell you this, our best fleets, the legacy carriers with real safety programs, real training, real accountability, aren’t buying insurance from GEICO or Progressive. They’re in captives. They’re working with underwriters who actually understand what they’re insuring.

When I look at who’s covering a motor carrier, I can tell you almost immediately what kind of operation you’re dealing with. Subprime insurers cover subprime carriers. That’s not my opinion. That’s pattern recognition from a quarter century of watching this play out.

Right now, the instant-issue market is flooding our highways with exactly those kinds of operations.

How it’s supposed to work

If you’re running a professional fleet, a company with size, substance, and real skin in the game, you’re not shopping for insurance on a website. You’re often either in a group captive or a sole-member captive, and getting into one of those programs isn’t easy.

It was never supposed to be.

A captive works like this: best-in-class motor carriers come together and form their own insurance company. They own it. They control it. When claims stay low, the profit goes back to the members, not to some corporate insurer’s shareholders.

You have to earn your way in.

Real risk control professionals review your application. They dig into your programs, your policies, your procedures. They verify you’ve got proper driver qualification files, functioning safety programs, telematics that actually get used, training protocols that mean something. They want to know you’re defensible when the crash happens, not if.

Once you’re in, you’re not just a policyholder. You’re an owner with responsibilities. Risk control consultants review your violation data. Claims managers analyze your crash history. On-site audits happen. If your frequency exposure starts climbing and your risk profile deteriorates, you get placed on alert status. Consultants come in to work with you.

If you don’t improve, you’re out. Removed from the captive. No longer a member.

That’s accountability. That’s what insurance was designed to create, a system that protected insurers and the motoring public by keeping unfit operators off the road.

What’s happening now

GEICO has entered the commercial trucking market. Progressive has been there for years. Both are operating under a model that would make old-school underwriters physically ill.

The marketing says it all.

GEICO’s commercial truck program, backed by Berkshire Hathaway, is explicitly “designed just for the little guy, Motor Carriers and Owner Operators.” They’re advertising “quick purchase” options, credit card payments, and what they call an “innovative quoting system” that delivers “an instant price and coverage within minutes.”

No risk control review. No underwriter putting their hands on the file before issuance. Just self-attestation, payment, and a policy.

Progressive runs the same playbook. Enter your data, attest to your own qualifications, pay up, and you’re covered. This isn’t how commercial carrier insurance was ever supposed to work.

Here we are. A non-domiciled individual with no license, no office, no policies, and no particular concern for anyone else’s safety can go online, enter someone else’s information, maybe a proxy with a CDL they’re using as their “owner” and get instantly underwritten for considerably less than what legitimate insurance actually costs.

Welcome to trucking. Good luck out there.

The subprime layer

Below GEICO and Progressive sits another tier entirely, the subprime commercial carriers.

These are the surplus lines insurers, the non-standard markets, the companies willing to write policies for operations that nobody else will touch. You know the names if you’ve been around: Texas Insurance, Accredited Specialty, and a handful of others specializing in what they politely call “high-risk” coverage.

These carriers insure the carriers that can’t get coverage anywhere else. Bad CSA scores. Crash histories. Driver turnover problems. High-risk operations like municipal waste hauling where the exposure is through the roof.

When you see one of these subprime insurers listed on a carrier’s filing, it tells you everything you need to know about that operation’s risk profile.

The existence of subprime insurance isn’t the problem, someone has to cover high-risk operations. The problem is that the wall between subprime and standard coverage has essentially disappeared. When anyone can get instant-issue coverage without verification, the entire market drifts toward lower standards.

The floor drops for everyone.

Nuclear verdicts meet paper-thin coverage

Underwriting standards are collapsing at precisely the moment when the financial consequences of crashes are at their highest.

The average verdict in truck crash lawsuits exceeding $1 million jumped from $2.3 million in 2010 to $22.3 million by 2018. That’s a 967% increase in eight years.

By 2022, the median nuclear verdict, defined as any award over $10 million, hit $36 million. That’s 50% higher than the median in 2013.

In 2023 alone, 27 cases against corporate defendants resulted in verdicts exceeding $100 million. A St. Louis jury in 2024 handed down a $462 million verdict in a single trucking accident case.

Nuclear verdicts have tripled since 2020. Thermonuclear verdicts, those over $100 million, increased 35% in just one year.

Between 2020 and 2023, the average trucking verdict ran approximately $27.5 million. Some carriers have absorbed insurance rate hikes exceeding 100%. Others have simply closed their doors because they can’t afford coverage at any price.

While these verdicts are bankrupting legitimate carriers who played by the rules, we’re simultaneously making it easier than ever for high-risk operators to get on the road with minimal coverage and zero scrutiny.

Make that make sense.

The chameleon problem

Instant-issue insurance has a best friend, it’s the chameleon carrier.

Here’s how it works. A trucking company causes a catastrophic crash. Their minimum coverage, if it’s even valid, can’t come close to compensating the victims. Instead of facing consequences, the owner folds the company, walks away from the judgment, and reopens under a new name with a new DOT number and a new instant-issue policy. Often from the same insurers who covered them before.

The FMCSA calls them “reincarnated carriers.” The practice has existed for decades, but instant-issue coverage makes it trivially easy. Same owner. Same trucks. Same dangerous practices. New name. New policy. Back on the highway.

Take the case of William “Bill” Card, a 69-year-old Indianapolis man killed in a truck crash in 2021. The truck that killed him was operated by a single-truck owner carrying only minimum insurance. After the crash, the owner changed the company name and re-emerged as a different carrier.

The Card family received inadequate compensation. The person responsible for Bill Card’s death kept right on trucking.

When the chameleon carrier gets into a bad wreck, they swap names, change DOT numbers, and get new insurance. 

FMCSA has tried to address this through their Application Review and Chameleon Investigation program, which uses software to flag reincarnated carriers by pattern-matching phone numbers, addresses, VINs, and other data points.

The system isn’t foolproof and when new authority requires minimal verification and insurance is available at the click of a button, the incentives still favor bad actors.

Chameleon carriers consistently show higher crash rates than legitimate new entrants. They undermine safety oversight and fair competition. And every time one reincarnates with a fresh instant-issue policy, everyone sharing that highway pays the price.

The $750,000 joke

The federal minimum liability coverage for most trucking operations is $750,000. That number was set by the Motor Carrier Act in the 1980s. It has never increased.

If it had kept pace with inflation, FMCSA calculated back in 2014 that the minimum should have been $1.62 million. Today, that inflation-adjusted figure sits around $5.5 million.

Let me show you how fast $750,000 disappears in a modern commercial crash.

A single tractor replacement runs $150,000 easy. One passenger vehicle involved, no injuries, adds another $50,000 to $100,000. Hit a traffic signal or transmission control box? That’s $120,000. Towing, hazmat cleanup, property damage, initial medical transport, you can blow through $750,000 before anyone even calculates pain and suffering or wrongful death damages.

Most people assume the $750,000 works like airline insurance, where each victim gets coverage up to that amount. It doesn’t. That $750,000 is the total available for ALL claims from a single incident. Five people injured or killed? That coverage is split among them, potentially up to $150,000 per person, which won’t cover a single catastrophic injury.

Whether you operate one truck or 500, the federal minimum is identical. A single owner-operator carries the same $750,000 requirement as a massive fleet moving millions of miles annually.

No sliding scale based on revenue. No adjustment for miles driven. No fleet-size multiplier. No year-end audit to reconcile actual exposure the way we do with workers’ compensation.

There have been proposals to raise the minimum to $2 million. New Jersey bumped its state requirement to $1.5 million as of July 2024. But federally? Still stuck in the Reagan administration. Still $750,000. Still wildly inadequate for the damage an 80,000-pound vehicle can cause. 

Who pays

When a policy is exhausted and the carrier is judgment-proof, victims don’t simply absorb the shortfall. That excess has to go somewhere. The public pays.

Research on crash costs to the government shows Medicaid covers approximately 15.8% of hospital costs for motor vehicle crashes. Medicare picks up another 7.3%. And those figures don’t account for cases where catastrophic injuries force victims into indigence, making them newly eligible for Medicaid to cover all their medical care going forward, not just the crash-related bills. The burden extends beyond direct medical costs.

Social Security Disability Income increases when crash victims can no longer work. Welfare rolls expand. Food stamps. Housing assistance. Low-income energy assistance. Every safety net program sees increased demand when truck crashes leave people permanently disabled or indigent because insurance was inadequate.

Foregone taxes compound the problem. Injured workers stop contributing to the workforce. They stop paying into the systems that support everyone else.

So when a chameleon carrier folds after a crash, when an instant-issue policy turns out to cover a fraudulent operation, when minimum coverage can’t touch the actual damages, families suffer first. Then government programs absorb the overflow. Then taxpayers foot the bill.

Everyone pays except the people who created the risk.

The carriers who lie

Instant-issue coverage enables another flavor of fraud that’s become disturbingly common.

We have carriers declaring three vehicles and three drivers on their policy while actually operating twenty-plus trucks. When an undisclosed vehicle gets involved in a crash, the insurance company has contractual grounds to deny the claim.

“You lied on your application. You didn’t disclose this equipment or this driver. Coverage denied.”

Who does that protect?

Not the motoring public. Not the victim whose life just got destroyed by a truck that was never supposed to be on the road in the first place.

It protects GEICO. It protects Progressive. It protects the insurers who wrote that policy without ever verifying the application.

The instant-issue model creates a perverse incentive structure. Insurance companies collect premiums, maintain limited exposure through policy exclusions and misrepresentation clauses, then walk away when claims get expensive. Meanwhile, the barriers to entry for dangerous operators have effectively vanished.

If these insurers review policies months after issuance and discover problems, they can deny claims retroactively. By then, the damage is done. The crash happened. The victim needs care. And everyone learns the hard way that the “coverage” never really existed.

The broker bond farce

It’s not just carrier insurance. Freight broker bonds are equally broken.

Every freight broker in America must maintain a $75,000 surety bond. That number was increased from $10,000 in 2013 under MAP-21, which felt like progress at the time.

Whether you’re a small brokerage moving a few million in freight annually or TQL brokering over $1 billion, the requirement is identical. Same bond amount. Same protection.

If a mega-brokerage goes under, that $75,000 gets divided among potentially thousands of motor carriers owed money. They might see pennies on the dollar, if they’re lucky enough to file a claim before the bond exhausts.

FMCSA is finally addressing some trust fund loopholes. By January 2026, entities serving as BMC-85 trustees must be FDIC-insured depository institutions, insurance companies, or Federal Reserve members. Trust assets must consist only of cash, FDIC-insured letters of credit, or Treasury bonds, all liquidatable within seven days.

If available security falls below $75,000, carriers have seven calendar days to replenish or face automatic authority suspension.

It’s something. But the fundamental problem, that $75,000 is laughably inadequate for modern brokerage volumes, remains completely unaddressed.

What has to change

If we want acceptable risk on our highways, we need to return to an old-school underwriting model.

Every policy needs real underwriting review. Every application needs verification. Every carrier should demonstrate they have the programs, policies, procedures, and safeguards necessary to operate safely, and to be defensible when crashes inevitably occur.

Insurance should remain the barrier it was designed to be. Not just by cost, but by actually ensuring the carrier is fit to operate with a risk profile acceptable for public highways.

Minimum coverage limits need to reflect modern economic reality. A sliding scale based on fleet size, miles driven, or revenue, audited and reconciled annually like workers’ compensation, would ensure exposure actually matches coverage.

Broker bonds should scale with transaction volume. A brokerage moving $1 billion annually shouldn’t carry the same $75,000 bond as one moving $3 million.

Insurance companies that issue policies without verification should bear consequences when those policies turn out to cover fraudulent operations. They collected the premium. They should pay the claim.

This comes down to three questions every carrier should ask themselves, and every insurer should ask before writing a policy:

Who are you willing to hire?

What equipment are you willing to buy?

What are you willing to put on the highway alongside everyone else’s family?

If you can’t answer those questions honestly, you have no business operating. If an insurance company is willing to cover you without ever asking them, they’re not in the business of managing risk.

They’re in the business of collecting premiums and hoping nothing goes wrong.

The captive model worked because it required accountability. It created a community of carriers with skin in the game, operators who understood that their safety performance affected their fellow members. That model hasn’t disappeared. It’s just become increasingly exclusive while the bottom of the market turned into a free-for-all.

The last real barrier to entry has collapsed.

Until someone rebuilds it, until underwriting standards mean something again, until coverage limits reflect reality, until insurers bear responsibility for the risks they choose to cover, the motoring public will keep paying the price.

One crash at a time.

Why Robotaxis Keep Failing While AV Trucks Take the Slow Road to Safety

Let’s paint the picture. It’s a typical school morning in Austin, Texas. A yellow school bus pulls to the curb, red lights flashing, stop arm extended, crossing control arm deployed. A child steps off the bus and begins crossing the street. A Waymo robotaxi approaches, initially slows, and then, inexplicably, proceeds through the stop zone. The child is still on the road.

This wasn’t a one-time glitch. According to the Austin Independent School District’s December 2025 letter to Waymo, this scenario, or a variation of it, has played out at least 19 times since the start of the school year. Five of those violations occurred after Waymo claimed it had pushed software updates to fix the problem, and a recall was issued in October. 

“Put simply, Waymo’s software updates are clearly not working as intended nor as quickly as required,” wrote Jennifer Bergeron Oliaro, senior counsel for the Austin school district. “We cannot allow Waymo to continue endangering our students while it attempts to implement a fix.”

Welcome to the wild west of autonomous vehicles, where Silicon Valley’s “move fast and break things” philosophy has been deployed on public roads with our children as the beta testers.

The San Francisco Experiment

To understand how we got here, you need to understand how Waymo and Cruise exploited California’s regulatory framework to turn San Francisco into the world’s largest autonomous vehicle test track.

In August 2023, the California Public Utilities Commission voted 3-1 to approve unlimited 24/7 robotaxi operations throughout San Francisco, over the explicit objections of the city’s fire chief, police department, and transportation officials. Fire Chief Jeanine Nicholson had documented 55 instances of robotaxis interfering with emergency responses that year alone. San Francisco police, firefighters, and transit workers pleaded with regulators to pump the brakes.

The commission approved anyway.

“It is not our job to babysit their vehicles,” Chief Nicholson told the commission. She described robotaxis stopping in front of fire stations, running over firefighter hoses, and freezing at emergency scenes for up to 30 minutes each.

The Cruise Catastrophe

On October 2, 2023, at approximately 9:30 p.m. on Market Street in downtown San Francisco, a hit-and-run driver struck a pedestrian, throwing her into the path of a Cruise robotaxi. The Cruise vehicle braked hard but ran over the woman. It stopped.

The robotaxi’s sensor system failed to detect that a human being was pinned beneath its chassis. Following its programming to “pull over after a collision,” the vehicle accelerated to 7 mph and dragged the woman 20 feet down the street before coming to a final stop, with its rear wheel resting on her legs.

Emergency crews had to use the jaws of life to extract her.

According to the U.S. Department of Justice, Cruise subsequently filed reports with NHTSA that omitted the dragging entirely. In a videoconference the next morning, Cruise employees showed regulators a video of the incident, but “due to technical difficulties,” the portion depicting the dragging conveniently didn’t play.

In November 2024, Cruise admitted to filing a false report to influence a federal investigation and agreed to pay $500,000 in criminal fines, in addition to a separate $1.5 million civil penalty from NHTSA. The California DMV immediately suspended Cruise’s permits. The company’s CEO resigned. Hundreds of employees were laid off. GM has since lost more than $8 billion on its Cruise investment.

Researchers from Carnegie Mellon analyzed the crash and found the robotaxi had multiple opportunities to avoid hitting the pedestrian in the first place, but its programming prevented it from recognizing a pedestrian about to be struck in an adjacent lane, caused it to lose tracking of the victim after impact, and then essentially “forgot” it had just run over someone when initiating its pullover maneuver.

The Underride Problem 

While Waymo and Cruise were turning San Francisco into an autonomous free-for-all, Tesla’s Autopilot system was developing its own deadly pattern, one with direct implications for the trucking industry.

On May 7, 2016, Joshua Brown was driving his Tesla Model S on Autopilot near Williston, Florida, when a tractor-trailer made a left turn across his path. Tesla’s system failed to detect the white side of the trailer against a brightly lit sky. Neither the Autopilot nor the automatic emergency braking engaged. Brown’s car passed under the trailer at 74 mph, shearing off the roof and killing him instantly.

The NTSB determined that Brown had not touched his steering wheel for 37 minutes before the crash.

Nearly three years later, history repeated itself with horrifying precision. On March 1, 2019, Jeremy Banner engaged Autopilot in his Tesla Model 3 in Delray Beach, Florida. Ten seconds later, his car underrode a semi-trailer crossing the highway. Banner had his hands off the wheel for the final eight seconds. Neither he nor the Autopilot system did anything to avoid the crash.

The NTSB’s subsequent investigation found that “Tesla’s Autopilot was not designed to, and could not, identify the truck crossing the Tesla’s path or recognize the impending crash.” The system’s automatic emergency braking was designed for rear-end collisions, not crossing-path scenarios. Yet Tesla continued to market the system under its suggestive “Autopilot” branding.

Then came the emergency responder crashes. NHTSA’s Office of Defects Investigation documented at least 16 incidents in which Teslas operating on Autopilot plowed into first responder vehicles at crash scenes, despite flashing lights, flares, illuminated arrow boards, and road cones. Most occurred after dark. The vehicles’ systems simply failed to recognize stationary emergency vehicles as obstacles requiring braking.

In December 2023, Tesla issued a recall of 2 million vehicles, stating the issue had been resolved through over-the-air software updates. NHTSA immediately opened a new investigation to determine whether the recall was actually effective.

The AV Truck Difference That Demanded Respect

While robotaxi companies were rushing to deploy in urban environments with minimal testing and aggressive lobbying of state regulators, the autonomous trucking industry took a fundamentally different approach.

Aurora Innovation didn’t begin commercial driverless operations until May 2025, and only after completing over 3 million autonomous miles with safety drivers behind the wheel and delivering more than 10,000 supervised customer loads. The company spent years testing on controlled routes, refining its systems, and building what it calls a “safety case”, a comprehensive evidence package demonstrating its technology is acceptably safe for public roads.

Kodiak Robotics similarly accumulated over 3 million miles with safety drivers before transitioning to driverless operations in the Permian Basin. The company’s trucks have logged over 750 hours of commercial driverless operation without a driver on board.

The difference in approach is considerable. A Waymo robotaxi weighs about 5,400 pounds and operates in dense urban environments filled with pedestrians, cyclists, and unpredictable traffic. A fully loaded Class 8 tractor-trailer weighs up to 80,000 pounds and primarily operates on controlled-access highways with (relatively) predictable traffic patterns.

“Driverless trucks need to look much farther down the road than robotaxis in busy cities,” industry analysts note. “They take steps to respond to situations that won’t unfold for another few seconds. This includes the ability to see pedestrians in the dark from hundreds of yards away, and being able to predict when another car might run a red light.”

Aurora’s sensors can detect objects beyond the length of four football fields, which is critical when you’re piloting a vehicle that can’t stop on a dime.

Inside the Machine

Understanding why autonomous trucks have (so far) avoided the catastrophic failures plaguing robotaxis requires understanding the technology itself.

Modern autonomous vehicles rely on three primary sensor types working in concert: LiDAR (Light Detection and Ranging), radar, and cameras. Each has strengths and weaknesses, and how companies combine them reveals a lot about their approach to safety.

LiDAR fires millions of laser pulses per second, measuring how long each takes to bounce back from objects. This creates a precise 3D “point cloud” map of the environment, accurate to centimeters. It’s particularly effective for detecting pedestrians, cyclists, and oddly shaped objects. However, LiDAR can struggle in heavy rain, fog, or dusty conditions, and until recently was prohibitively expensive. Modern systems from Luminar and Hesai can detect objects beyond 500 meters, which is crucial for highway-speed trucking.

Radar uses radio waves rather than light, making it effective in adverse weather conditions where LiDAR falters. It excels at detecting metal objects and measuring the speed of moving vehicles. However, radar’s lower resolution means it struggles to distinguish between objects of similar size and shape,a limitation that contributed to Tesla Autopilot’s infamous trailer underride failures.

Cameras provide visual context that neither LiDAR nor radar can match, including reading traffic signs, detecting lane markings, and interpreting traffic signals. But cameras are vulnerable to glare, darkness, and weather conditions. Tesla famously bet everything on a camera-centric approach, abandoning radar and LiDAR. The results speak for themselves.

Aurora’s trucks combine all three sensor types through “sensor fusion,” with multiple redundant systems for braking, steering, power, sensing, controls, computing, cooling, and communication. Waymo uses a similar multi-sensor approach in its sixth-generation hardware. The key difference? Aurora spent four years validating that fusion with professional drivers who could intervene when the system made mistakes.

SAE Levels

The autonomous vehicle industry loves throwing around terms like “Level 2” and “Level 4” without explaining what they mean. Here’s the breakdown according to SAE International’s J3016 standard, the industry’s bible on automation taxonomy.

Level 0 (No Automation): The human driver does everything. Warning systems like blind-spot monitoring and lane departure warnings are still considered Level 0 because they don’t control the vehicle; they just alert you.

Level 1 (Driver Assistance): The vehicle can assist with either steering OR acceleration/braking, but not both simultaneously. Adaptive cruise control is Level 1. Lane-keeping assist is Level 1. The driver must remain fully engaged.

Level 2 (Partial Automation): The vehicle can handle steering AND acceleration/braking simultaneously in specific scenarios, but the driver must monitor at all times and be ready to intervene. Tesla’s Autopilot, GM’s Super Cruise, and Ford’s BlueCruise are all Level 2 systems, despite marketing that suggests otherwise. When crashes happen in Level 2 vehicles, the driver is legally responsible.

Level 3 (Conditional Automation): This is the critical inflection point. At Level 3, the vehicle handles all driving tasks within its “operational design domain”, but the human must be ready to take over when requested. Liability begins shifting from the driver to the manufacturer. Mercedes-Benz offers limited Level 3 in some markets. It’s the “uncanny valley” of autonomy that many companies are trying to skip entirely.

Level 4 (High Automation): The vehicle can drive itself without human intervention within a defined geographic area and under specific conditions. No human backup required. This is where Waymo’s robotaxis and Aurora’s trucks operate. The catch: Level 4 vehicles typically cannot operate outside their defined operational domain, hence the geofenced routes and highway-only trucking deployments.

Level 5 (Full Automation): The vehicle can drive anywhere, in any conditions, without human intervention. No steering wheel required. This remains the industry’s holy grail, and it doesn’t exist yet. Anyone claiming otherwise is lying.

Guardrails Coming, But Not Fast Enough

Federal Motor Vehicle Safety Standards were written for vehicles with human drivers. They specify everything from brake performance to lighting requirements, but they assume someone is sitting behind the wheel.

Autonomous vehicles operate in a regulatory gray zone. NHTSA requires crash reporting through Standing General Order 2021-01, but there are no federal performance standards specific to automated driving systems. No mandatory testing protocols. No minimum competency requirements. Companies essentially self-certify that their vehicles are safe.

In April 2025, Transportation Secretary Sean P. Duffy announced a new AV Framework with three principles: prioritize safety, remove unnecessary regulatory barriers, and enable commercial deployment. NHTSA has since announced rulemakings to modify Federal Motor Vehicle Safety Standards for AV-specific scenarios, updating requirements for transmission controls, windshield systems, and lighting that don’t make sense for vehicles without human drivers.

Several pieces of legislation are working through Congress: the AV Accessibility Act, the AV Safety Data Act, and the Autonomous Vehicle Acceleration Act. The Teamsters are pushing for requirements that all autonomous commercial vehicles have a human on board. California, which banned driverless trucks, is now reconsidering.

NHTSA has 70 rulemakings on its current agenda and is operating at a fraction of its normal staffing levels. According to Reuters, the agency has lost more than 25% of its employees. The timeline for comprehensive AV safety standards remains measured in years, not months.

Nearly 40,000 Americans died in traffic crashes in 2024. Human drivers are imperfect, often distracted, sometimes impaired, and frequently fatigued. The trucking industry faces a chronic driver shortage, with 3.6 million unfilled positions globally, according to IRU. Long-haul drivers spend weeks away from their families and face one of the most dangerous jobs in America.

Autonomous technology, done right, could change that equation. Aurora claims its trucks can detect pedestrians hundreds of meters away in complete darkness. Its Verifiable AI approach includes guardrails specifically designed to yield for emergency vehicles. Waymo’s own data suggests its robotaxis are involved in 91% fewer serious injury crashes than human drivers. “Done right” is the operative phrase.

What we’ve witnessed with robotaxis is an industry that prioritized deployment speed over systematic safety validation, lobbied its way past local opposition, and treated public streets as testing grounds. When problems emerged, school buses, emergency vehicles, and pedestrians dragged under chassis, the response was software patches and PR statements, not a fundamental safety reassessment.

The autonomous trucking industry, whether by choice or necessity, has taken a different path. The consequences of an 80,000-pound vehicle failure are catastrophically worse than a 5,400-pound robotaxi error. Insurance requirements are higher. Federal scrutiny from FMCSA is more intense. And the trucking industry’s culture, forged through decades of DOT compliance, hours-of-service regulations, and CSA scores, is inherently more safety-focused than Silicon Valley’s “disrupt everything” ethos.

The Future

As of this writing, Aurora has completed over 100,000 driverless miles on public roads in Texas, operating commercial freight between Dallas, Houston, Fort Worth, and El Paso. The company plans to expand to Phoenix by year’s end and scale to hundreds of trucks by 2026. Kodiak’s driverless trucks are hauling sand in the Permian Basin. Volvo has purpose-built the VNL Autonomous platform with redundant systems throughout.

Meanwhile, Waymo continues expanding to new cities, Philadelphia, Tokyo, and London, while dealing with ongoing federal investigations, school bus violations, and the December 2025 San Francisco blackout that left its vehicles frozen at intersections throughout the city.

Will we learn from the robotaxi industry’s mistakes before repeating them at scale with 80,000-pound vehicles. That’s what we should be asking. 

Twenty children in Austin are lucky that Waymo’s school bus failures didn’t result in tragedy. One woman in San Francisco will carry the scars, physical and psychological, of being dragged under a robotaxi for the rest of her life.

The trucking industry can either follow the robotaxi playbook of rapid deployment and pray nothing goes wrong, or continue the methodical, safety-first approach that has characterized the sector’s best operators for generations.

So far, they’ve chosen wisely. Here’s hoping that continues.

Trucking market holds up in January

The typical January doldrums—a hangover from the frenetic November and December, when retailers rapidly replenish their inventories to maximize holiday sales—have stayed away from spoiling the U.S. trucking market so far.

(Chart: SONAR. For more information about SONAR, click here)

Tender rejections, as measured by STRI.USA, remain at 9.97%, meaning that nearly one out of every ten truckload shipments tendered to a carrier is being rejected for lack of capacity or better rates elsewhere on the spot market. That’s a level higher than any experienced by the trucking industry in all of 2025, 2024, or 2023, and only matched in 2022 during the rapid come-down from COVID highs. Carriers are still rejecting enough freight to cause problems for shippers’ routing guides and put upward pressure on spot rates.

Truckload spot rates are also remaining elevated at $2.62/mile, inclusive of fuel. Rates have come down from their absolute peak at $2.76 on December 30, but they appear to be staying higher for longer, indicating that the trucking market’s balance of supply and demand is still healthy.

Of the major truckload markets, Chicago and Harrisburg seem to be having the most trouble covering outbound loads, with tender rejection rates of 9.51% and 9.45%, respectively, while Los Angeles is the loosest of the the big five with a rejection rate of 4.33%. Import activity is still relatively muted, and what freight is coming in is likely to be scooped up by the railroads, who grew their intermodal volumes by 2% last year (in a year when truckload volumes were negative), adding to 8% y/y growth in 2024. 

There is some reason to think that shippers may shift their freight spend back to truckload in 2026. ISM survey results painted a picture of inventories contracting significantly faster than expected at the end of the year, causing the National Retail Federation to raise its expectations for imports. Consumer spending played a much larger role in the Q3 2025 impressive 4.3% growth GDP print than it did in Q2. 

If inventories continue to contract at the same time that consumer spending surges, urgency and velocity will return to shipper transportation networks; intermodal rail will be increasingly forsaken for the shorter transit times, door-to-door service, and end-to-end visibility of truckload, and spot rates will go up. 

It’s a big ‘if’, though, and there are other factors at play in 2026: a SCOTUS decision on tariffs could upend the math of international trade overnight and give importers far more confidence in their mid- to long-term business plans. But those are speculations.

For now, we know that trucking is staying tighter for longer, and rates are better than they’ve been in some years.

Tennessee bill would impose strict penalties for unlawful commercial vehicle operation

Tennessee State Capitol in Nashville: Historic building where SB 1587 imposes penalties for unlawful commercial truck operation

Tennessee lawmakers announced legislation last week that would impose criminal and civil penalties on individuals and companies for the unlawful operation of a commercial motor vehicle (CMV) in the state.

Tennessee Senate Bill 1587 (SB 1587) would amend TCA § 55-50-403 by adding misdemeanor charges for those who knowingly allow a person unlawfully present in the United States to operate a CMV in the state. The bill would also create a new section, TCA § 55-50-419, imposing strict liability in accidents caused by persons unlawfully present in the United States operating a CMV in the state.

Each state has its own set of laws; in Tennessee, it is the Tennessee Code Annotated (TCA). TCA § 55-50-403 would receive added language making it an offense if a person knowingly allows a person unlawfully present in the United States to operate a CMV in Tennessee.

The bill also makes it an offense for a person unlawfully present in the United States to operate a CMV in Tennessee. Violations of these provisions are Class A misdemeanors, applying to both the person who knowingly allowed the operation and the person unlawfully operating the CMV.

Additionally, if a law enforcement officer arrests a person for unlawfully operating a CMV, the officer’s agency must ensure that federal immigration authorities are notified.

SB1587Download

Codifying this notification requirement into law is notable. Many law enforcement agencies have standing policies regarding Immigration and Customs Enforcement (ICE) detainers, but some departments may choose not to notify ICE and allow the person to post bond and appear on their court date.

The new section, TCA § 55-50-419, imposes strict, absolute, joint and several liability in accidents caused by persons unlawfully present in the United States operating CMVs. An employer who knowingly allows such a person to operate a CMV, as well as any official or employee of any state who issues a commercial driver license (CDL) knowing the person is unlawfully present, “shall be strictly, absolutely, jointly, and severally liable to any person who suffers personal injury or property damage caused by the unlawfully present person’s operation of a commercial motor vehicle.”

This provision is notable because it extends liability to officials or employees of any state who issued the CDL. An injured person is entitled to recover compensatory damages, punitive damages of not less than $1 million, court costs and reasonable attorney’s fees.

Notably, the bill would mandate that Tennessee law governs these tort cases, voiding any contractual choice-of-law clauses that select another jurisdiction.

The bill also authorizes civil penalties. The Tennessee attorney general may sue employers or state officials and their employees for violations, seeking civil penalties of at least $1 million per violation, among other relief.

Private citizens can also file a qui tam lawsuit on behalf of the state against alleged violators, even if no formal criminal charges exist. If successful, the qui tam plaintiff is entitled to receive between 25% and 50% of the recovered proceeds, depending on the extent of their contribution and whether the attorney general takes over the case.

The $1 million minimum punitive damages and qui tam provisions are considered aggressive by legal standards. The likelihood of this legislation passing is high, given Tennessee’s Republican supermajority, which controls both the House and Senate.

HwyHaul marks 7 years with AI-powered leap toward autonomous freight

Hwy Haul is celebrating its seventh anniversary by unveiling a suite of AI-driven tools designed to make freight management fully autonomous. The company announced the launch of its AI Agents and AI Teammates, along with a new cloud-native AI Transportation Management System (TMS) for freight brokers, shippers, and carriers.

The release marks Hwy Haul’s transition into an AI-first logistics company, leveraging machine intelligence to automate everything from load booking and customer updates to decision-making and performance optimization.

“Our goal is to make freight autonomous,” said Syed Aman, CEO of Hwy Haul, in an interview with FreightWaves. “Everyone’s racing to claim an AI story, but the real challenge, and the real opportunity, is in execution. Success comes from training AI to handle the complex, unpredictable 20% of freight cases that make or break performance.”

Hwy Haul’s technology suite includes two unique AI offerings:

  • Miles, the AI orchestration layer that supervises specialized AI Agents and Teammates for load booking, dispatch, monitoring and compliance;
  • Core TMS: an enterprise-grade cloud-based Transportation Management System that supports the full freight lifecycle at scale.

The company reports that 75% of its freight loads are now managed by AI Agents, boosting margins by 30–35% per load and giving brokerages an estimated 75 hours of weekly time savings on 100-load operations.

Complementing these tools is Hwy Haul’s new AI-powered, cloud-native TMS, which integrates directly into logistics workflows and uses predictive intelligence to automate tasks across the freight value chain. The system can anticipate disruptions, recommend actions, and execute decisions autonomously, making it adaptable for both asset-based and non-asset-based logistics providers.

Hwy Haul has also achieved profitability in its digital freight brokerage business, a milestone the company attributes to the efficiencies of its AI-driven operations. It recently secured new funding to accelerate its “Agentic vision” and scale its AI capabilities globally.

“Our technology allows logistics providers to do more with less,” Aman said. “We’ve proven that AI can automate freight at scale, making it not only smarter, but more profitable and resilient.”

With its AI-first strategy and cloud-native infrastructure, Hwy Haul is positioning itself at the forefront of a shift toward truly autonomous logistics.

In Flowers Foods drivers’ case, employee arbitration vs. litigation issue can’t be overlooked

While the legal issue in front of the U.S. Supreme Court in the Flowers Foods case is whether a local delivery driver is engaged in interstate commerce, even if the worker’s vehicle never crosses state lines, the day-to-day legacy of the dispute is more likely to be an employee relations question: arbitration or litigation?

That point was driven home further late last week when lawyers for Angelo Brock, the owner of a final mile delivery company that services the baker of such foods as Tastykakes and Wonder Bread, made their arguments in a brief filed with the court. Flowers Foods filed its brief in December, backed by several amicus briefs including one from Amazon (NASDAQ: AMZN).

The legal question remains the same: can a worker who completes all of his or her tasks within the confines of a state be considered an interstate worker because they are at the tail end of an interstate process? 

“Interstate commerce is not merely the crossing of a state line,” Brock’s attorneys wrote. “It is the trade and traffic between the citizens of the different states of this country.”

No date has been set yet for oral arguments in the case. A full docket of can be found here. 

How the court defines a last-mile worker’s role in an interstate supply chain is likely to have a practical impact in transportation long after the Court hands down its decision. The nine justices’  ruling will help determine whether a delivery driver taking action against an employer will need to pursue those efforts through a federal arbitration process–a venue generally desired by management–or whether it can be taken into the court system.

The Brock case is before the Supreme Court because Flowers Foods (NYSE: FLO) lost a lower court case and then a Tenth Circuit appeal in which it was determined that Brock was engaged in interstate commerce, even though all his company’s work takes place in Colorado.

The Federal Arbitration Act (FAA), which mostly pushes disputes toward an arbitration solution and away from the courts, has an exemption for certain classes of transportation workers. It specifically mentions “seamen” and “railroad employees.” But it also says the exemption applies to “any other class of workers engaged in foreign or interstate commerce.”

Interpretation of what Congress meant in 1925 when it passed the FAA is the issue before the court, and specifically whether final-mile drivers are in the law’s category of interstate workers. If so, it should be easier for an employee to land in a courtroom and not an arbitration process.

Four circuit split

The Supreme Court is hearing the case presumably because the Tenth Circuit decision is part of what Ella Klahr Bunnell, now a law clerk in the Ninth Circuit, said is a four-way split among the circuits defining whether a worker who never crosses state lines could still be considered involved in interstate commerce. She made that observation in a 2024 article in the Illinois Law Review. 

Brock sought to pursue a legal battle with Flowers Foods primarily over whether he was an independent contractor (which Flowers Foods argued) or effectively an employee. But that issue is not before the Supreme Court. 

Brock’s choice of venue for his complaint was the legal system; Flowers Foods argued that there was a clause in its contract with Brock that required arbitration, which employers inevitably prefer to a lawsuit.

When the Court granted certiorari to Flowers Foods, the transportation-focused Scopelitis law firm summed up the “other” issue in beyond whether a last mile driver can be considered an  interstate worker.

“The Supreme Court’s decision is likely to impact transportation providers that use arbitration to resolve disputes with their drivers (whether employees or independent contractors),” the law firm wrote in an email commentary on the case. “Where the FAA applies, businesses benefit from more predictability with respect to the enforceability of key terms in arbitration agreements, including class waivers. That said, even if a given worker is exempt under the FAA, businesses may still pursue arbitration under state arbitration law.”

Why the exemption anyway?

The Brock brief has an extensive recap of the reasoning and motivation behind the passage of the FAA in 1925 in making its case that last-mile delivery drivers should be considered part of the exemption. 

Citing language in earlier legal precedents involving the FAA, Brock’s brief said the FAA “governs ‘a wide range of written arbitration agreements,’ including those requiring arbitration of employment disputes.” Further quoting precedent, the Brock brief says the Supreme Court “has found it ‘beyond dispute’ that ‘the FAA was designed to promote arbitration’ and ‘embodies a national policy favoring arbitration.’”

But it also includes that transportation carve-out, and that is what is before the court.

In her law review article, Bunnell spelled out what’s at stake from the perspective of drivers. 

Final-mile drivers “are indiscriminately subjected to individual forced arbitration clauses,” Bunnell wrote. “Yet, drivers’ claims are uniquely ill-suited to individual arbitration due to their low individual monetary value and identical theories of harm.”

Driver efforts to fight arbitration and push a dispute into the legal system–where there is always the prospect of a big payout–are “typically to no avail,” she wrote. The possibility of securing a large financial award in the court system can come from aggregating claims into a class-action lawsuit, which is possible but difficult in arbitration. 

Bunnell said the FAA’s exemption, which she referred to as the “transportation workers’ exemption…may offer them some relief.”

In its brief, Brock’s attorneys address the question: why is there a transportation carve-out?

Congress might have written that exemption, Brock’s attorneys say, “at least in part, to avoid disrupting other federal dispute-resolution schemes that existed in 1925. At that time, seamen on intrastate voyages in intrastate waters and railroad employees who worked on local lines were typically excluded from those schemes.”

Do definitions of a century ago translate to today?

Brock’s attorneys argue throughout their brief that modernizing the definition of “seamen” and “railroad employees” to 2025 would include last-mile delivery drivers. Quoting the Tenth Circuit decision, the brief said Brock’s “intrastate delivery route forms the last leg of the products’ continuous interstate” journey from Flowers’ manufacturing plants to its retail-store customers.” What railway workers and seamen were doing in 1925 was similar, according to the brief’s argument.

Brock’s brief contrasts today’s last mile workers with restaurant deliveries, “where goods…were not themselves in interstate transportation (and) the workers who delivered them were not engaged in interstate transportation.”

Bunnell, in her law review article, summed up the argument.

“Exploring the contemporary meanings of ‘seamen’ and ‘railroad employees,’ the Court would find that, at the time of the FAA’s passage, any person working on a vehicle transporting goods or passengers in foreign or interstate commerce qualified for the exemption’s protections,” she wrote.

But Bunnell also notes that the phrase “any other class of workers engaged in foreign or interstate commerce” has no other “guidance” on what it means. 

Flowers Foods’ argument boils down to the issue of what the drivers do on a day-to-day basis. In its brief filed in early December, it said the exemption should apply to workers who “must be part of the interstate transportation of goods.”

Flowers Foods in its December brief criticized the decision of the Tenth Circuit. The baker said under that ruling, “workers who perform exactly the same work—delivering goods intrastate—may or may not be exempt depending on the transaction prompting the goods’ delivery.”

The specificity of the exemption–railway workers and seamen and the general “other class of workers”–could have been written in such a way that it would have focused on “goods or transactions” rather than the worker’s work in defining who is covered. But (Congress) chose narrower language. That variance cannot be disregarded.”

The opposite view in the Brock brief is that “goods…remain in interstate transportation—in interstate commerce—until they reach that destination, even during intrastate portions of the journey.” 

More articles by John Kingston

Supreme Court: Drivers hauling baked goods are in transportation, not baking

Louisiana staged truck accident indictment widens as trials and sentencings loom

C.H. Robinson makes its legal written case before SCOTUS on broker liability

Borderlands Mexico: Volatile trade, rising carrier costs reshaping shipping strategies

Borderlands Mexico is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week, Volatile trade, rising carrier costs reshape retail shipping strategies; Cainiao launches U.S.–Mexico cross-border logistics service; and Speedora launches white-glove logistics service in Arizona.

Volatile trade, rising carrier costs reshape retail shipping strategies

As tariffs fluctuate and shipping costs climb, retailers are increasingly turning to technology, multi-carrier strategies and greater price transparency to protect margins and customers, according to Josh Steinitz, chief strategy officer at ShipStation.

“Customer expectations are high and always getting higher, and that hasn’t changed despite all of the thrash in the shipping environment,” Steinitz said. “Speed, service and transparency are still key differentiators.”

Austin, Texas-based Shipstation, powered by Auctane, is a global company focused on providing e-commerce shipping and fulfillment solutions for businesses.

SMBs diversify carriers to manage risk

ShipStation, which works with hundreds of thousands of small- and medium-sized merchants (SMBs), is seeing customers move away from reliance on a single carrier or static rate card. 

Instead, merchants are increasingly adopting diversified carrier mixes, regional providers and rate-shopping tools to regain control over shipping costs.

“Merchants are needing to take the wheel a little more of their own shipping destiny,” Steinitz said. “That means using automation and analytics to optimize their carrier mix and manage risk instead of relying on one provider.”

Cross-border complexity remains a major hurdle

International shipping remains one of the biggest challenges for smaller retailers, particularly as tariffs and customs rules change frequently. Steinitz said many SMBs lack the resources that large enterprises use to manage duties, taxes, currency conversion and customs brokerage.

“Historically, it’s been very hard for the average small or medium business to sell globally,” he said. “They don’t have massive software teams or the volumes needed to justify custom solutions.”

To address that, ShipStation has been investing in tools designed to simplify cross-border commerce, including delivery-duties-paid (DDP) capabilities that allow customers to see full landed costs at checkout. Steinitz said transparency is critical to driving conversion and reducing abandoned carts.

“If I don’t know what the total cost is to get the item to my front door, I’m just not going to buy it,” he said. “Surprise duties or fees kill conversion.”

Margin protection is about “best value,” not just lowest cost

While slower shipping is often cheaper, Steinitz cautioned that lowest cost isn’t always the best strategy. Instead, ShipStation is helping merchants focus on what he described as “best value” — balancing speed, cost and customer expectations to maximize overall efficiency.

“Sometimes offering a slightly faster, slightly more expensive service is actually better because it drives higher conversion,” he said. “It depends on the product and the situation.”

He compared the tradeoff to everyday consumer behavior: shoppers may pay a premium for urgent items but wait longer for nonessential purchases.

Adapting to a volatile trade environment

Steinitz acknowledged that policy shifts, including changes to de minimis rules and ongoing tariff disputes, have forced many carriers and retailers to rethink their networks. Some cross-border sellers, particularly those shipping from China to the U.S., have responded by investing in domestic fulfillment as regulations tighten.

“Tariffs aren’t a good thing for the world,” he said. “But what we can do is make the complexity easier for merchants to navigate.”

Take control, or fall behind

For retailers facing continued uncertainty in 2026, Steinitz said the biggest mistake is passivity.

“Don’t rely on a single carrier, a single rate card, or a single service,” he said. “Think of shipping as a portfolio and use software to constantly ensure you’re getting the best price, best service and best customer experience.”

As volatility becomes a permanent feature of global trade, retailers that invest in flexibility, transparency and automation are more likely to protect margins — and customer loyalty — in the year ahead.

Cainiao launches U.S.–Mexico cross-border logistics service

Cainiao, the logistics unit of Alibaba Group, has launched a cross-border supply chain service connecting the U.S. and Mexico, expanding its footprint in one of North America’s busiest e-commerce corridors.

The service, Cainiao’s first cross-border offering in the Americas, is designed to handle parcel flows between the two countries and is expected to reach 99% of Mexico, according to a news release. 

Cainiao said the service will be priced at about 60% of the current market average, aiming to lower cross-border shipping costs for e-commerce platforms and merchants.

Cainiao plans to directly control key logistics nodes, including sorting, line-haul transportation and last-mile delivery, relying on self-operated local networks in both the U.S. and Mexico rather than outsourcing, the company said

Speedora launches white-glove logistics service in Arizona

Speedora has launched an asset-owned logistics service in Arizona, targeting the big-and-bulky white-glove delivery market, according to a news release.

The Phoenix-based company said it will operate its own fleet and employ a dedicated delivery workforce to provide greater control over final-mile performance for high-value shipments such as furniture and specialized equipment. 

Speedora is launching operations across Phoenix and Southern California, with plans to expand into Northern California as it builds a West Coast delivery network.

Speedora founder and CEO Bob Smith said the goal is to improve accountability and customer experience in a last-mile sector often marked by inconsistent service.

Spot-contract gap collapses to near four-year low

Chart of the Week:  Spot (linehaul) to contract rate spread (fuel base at $1.20/gal) SONAR: NTIL12.USA

The spread between dry van truckload spot rates and contract rates shrank at its fastest pace since the onset of COVID this past December, offering a clear signal of the trucking market’s growing fragility.

The spot-to-contract spread is defined as contract rates (excluding fuel surcharge) minus the spot rate equivalent, with fuel surcharge removed from both. Contract rates—longer-term agreements—have averaged well above spot rates since early 2022, with the gap narrowing only gradually as capacity has rebalanced.

One reason spot rates typically trade below contract rates is the structure of the brokerage-driven spot market. Freight brokerages thrive on identifying carriers that are less visible to shippers and can operate at lower costs. Their success depends on sourcing capacity below prevailing market averages.

As a result, brokers often target smaller carriers with lower overhead or carriers whose network imbalances run counter to broader market conditions. In a loose market—when capacity exceeds demand—spot rates tend to form the market floor because they are the most heavily negotiated. This relationship reverses when capacity tightens, as it did during the holidays.

Spot rates are also transactional by nature and short-lived. Carriers can accept lower rates in one-off situations where all variables are known, far more easily than committing to year-long pricing amid changing conditions. Contract rates, typically negotiated on a 12-month cycle, must account for future market risk and network uncertainty. As a result, they are much slower to adjust due to lengthy negotiation and evaluation processes.

When the truckload market tightens, spot rates usually rise above contract rates. Available capacity falls short of demand, forcing shippers and 3PLs to compete for trucks. This competition quickly drives up transactional rates, while contract pricing becomes less relevant—often leading to rising tender rejection rates.

When the market collapsed in 2022, contract rates were at all-time highs, averaging roughly 30% above spot rates. That spread widened to nearly 40% by spring 2023 before beginning a slow contraction.

By mid-November of last year, the spread had narrowed to approximately 15–20%. By Christmas, the aggregate spot rate index was just 1% below the contract rate index—its lowest reading since March 4, 2022.

For context, the spread fell from roughly 18% in early 2024 to about 8% later in the year. In 2023, it declined from 35% in November to around 25% during the holiday period.

Spot rates are now rising relative to contract rates and becoming increasingly responsive. The holiday surge suggests rates are behaving like a coiled spring, as carriers—after years of playing defense simply to stay afloat—have kept pricing lower than sustainable. Spot rates lead the contract market and this trend puts contract rates’ stability into question in the coming year.

The trucking market resembles a group of people standing on a melting iceberg, waiting for the next ice age. This latest spot rate surge shows just how thin the ice has become.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

Trucking rates have dropped 27% versus CPI

The U.S. trucking industry continues to face a harsh economic reality: spot rates have failed to keep pace with inflation, squeezing carrier margins and contributing to significant financial pressure on truckers nationwide.

Here’s a clear visual of the disconnect — spot trucking rates (via the SONAR National Truckload Index) overlaid against the Consumer Price Index (CPI):

Truckload spot rates (SONAR: NTI.USA) vs. CPI (SONAR: CPI.USA). Source: GoSONAR.com

As of mid-January 2026, national trucking spot rates are showing signs of strength following a late-2025 rally, with recent levels approaching multi-year highs (the National Truckload Index is at $2.75 per mile according to SONAR, inclusive of fuel). 

However, if spot rates had simply matched the cumulative growth in CPI since March 2020 — before freight markets initially surged early in the pandemic — they would be significantly higher, closer to the equivalent of $3.50 per mile or more. That’s a substantial gap of roughly 27%. 

This disparity isn’t abstract. It translates directly into real-world pain for owner-operators and small to mid-sized carriers, who bear the brunt of escalating operational costs. Fuel prices, truck maintenance, insurance, tires, driver wages, and regulatory compliance have all risen sharply since 2020, yet revenue per mile has not kept up. Many truckers are operating at breakeven or worse, with some exiting the industry entirely — a trend that has contributed to gradual capacity tightening observed in late 2025 and into early 2026.

The chart highlights the dramatic post-pandemic trajectory:

  • Spot rates peaked sharply in 2021–2022 amid supply chain chaos and booming demand.
  • They then collapsed through 2023 and much of 2024, bottoming out well below pre-pandemic adjusted levels.
  • Recent months have shown upward movement, with spot rates climbing through the 2025 holiday season and into early 2026, reaching multi-year highs driven by seasonal demand, winter weather disruptions, and tighter capacity.

Despite this late-2025 rally, the long-term picture remains clear: trucking has absorbed inflationary hits without corresponding rate increases. This has been exacerbated by a massive capacity glut in prior years, fueled by an influx of new entrants — including many drivers who may not meet the compliance standards expected of veteran American truckers from a decade ago.

Truckers are the backbone of American freight, yet too many are struggling because rates have not kept up with inflation. They deserve better — fair compensation that reflects the true cost of moving the nation’s goods.

As the industry enters 2026, several factors could influence whether this gap begins to close:

  • Ongoing FMCSA compliance enforcement, including crackdowns on training providers, non-compliant CDLs (e.g., language proficiency issues), and illegal practices, which could remove thousands of drivers and authorities from the market.
  • Years of difficult operating conditions, with carrier costs far outpacing trucking rates — obliterating balance sheets for many.
  • Continued capacity discipline among carriers.
  • Potential demand recovery in industrial and housing sectors.
  • Persistent regulatory pressures and rising equipment costs.

For now, the data speaks volumes. Shippers have benefited from years of suppressed rates, but that era appears to be ending as compliance actions and natural attrition put pressure on capacity.

With spot rates showing signs of life and a continued compliance crackdown, 2026 should offer a window for carriers to claw back years of lost profits. Shippers are advised to prepare budgets for a very different environment this year.

STB rejects “incomplete” UP-NS merger application

Union Pacific and Norfolk Southern have more homework to do after federal regulators late Friday gave their 7,000-page merger application an incomplete instead of a passing grade.

The Surface Transportation Board in a 15-page decision (PDF) rejected the merger application, and two related applications, as incomplete. UP (NYSE: UNP) and NS (NYSE: NSC) can file a revised application, subject to the same 30-day completeness review, but must notify the board of their refiling plans by Feb. 17.

“Union Pacific will provide the additional information requested by the Surface Transportation Board,” the Omaha-based company said in a statement to FreightWaves.  

The STB said that UP and NS omitted post-merger market share projections, as well as other documents required by law.

The rejection caps a tumultuous period since the partners filed the application Dec. 19, during which rival carriers and shippers used their own filings to show why the application fell short, and reiterate their opposition to consolidation of the industry.

UP and NS kept up their own campaign, insisting that a merger would modernize the national rail network, help grow rail freight, and spur industrial development.

“We applaud today’s STB decision to reject the UP/NS merger application based on the application lacking core information critical to determining the proposed merger’s impact on competition,” said Zak Andersen, BNSF chief of staff and vice president of communications, in a statement. “We also appreciate the STB’s willingness to consider the views of all stakeholders as part of the regulatory review process.”

Subscribe to FreightWaves’ Rail e-newsletter and get the latest insights on rail freight right in your inbox.

Find more articles by Stuart Chirls here.

Related coverage:

Union Pacific CEO tells customers they will benefit from merger

New year, new gains for U.S. rail freight

Rail key as Canada port completes $178M modernization

Retail optimism boosting trans-Pacific container rates