LTL’s paper gains

The fuel surcharge is the whole story for now

First, the honest accounting of where the LTL gains actually came from. When diesel averaged $3.50 per gallon in May 2025 — using a generalized fuel surcharge table that starts at 0.5% when the DOE’s weekly figure is at $1.20 and increases 0.5% for every $0.06 increment — fuel costs were estimated at roughly 19.5% of the base linehaul rate. By May 2026, diesel had surged to $5.60 per gallon, a 60% increase, pushing the surcharge to 37.0%. On a median LTL shipment, that swing alone added more than $5.80 per hundredweight to the invoice, more than accounting for the entire year-over-year all-in rate increase.

Strip the fuel surcharge out and the picture inverts. SONAR’s LCWT1.USA index, which tracks initial contract base rates on paid invoices with fuel excluded, shows base rates flat to slightly negative year-over-year. Carriers have actually been cutting rates across nearly every freight class — Class 50 (dense, efficient freight) by as much as 21% — to compete for volume in what has been, beneath the fuel noise, a buyer’s market at the base rate level.

This is the defining characteristic of the current LTL moment: the all-in rate is at a multi-year high, the underlying rate is not, and the gap between them is almost entirely diesel.

The Yellow exit set the floor

That divergence did not begin in a vacuum. The circled annotation on the chart marks the exit of Yellow Freight,  the Yellow liquidation in mid-2023 that removed roughly 10% of U.S. LTL capacity overnight. The event was widely expected to produce an immediate repricing of the market. It produced a floor instead. The remaining carriers — Old Dominion, Saia, XPO, ArcBest, Estes and others — absorbed the displaced volume with unusual discipline, holding GRI cadence steady and preventing the kind of base rate collapse that hit the truckload market during the same period.

Look at the white line on the chart in the months immediately following that annotation. LTL.USA held its level through late 2023 and into 2024 even as the freight recession continued — a notable divergence from the deep trough truckload rates were experiencing at the same time. The Yellow exit did not ignite an LTL pricing surge. What it did was ensure there was a base from which to launch one, once the broader freight cycle turned.

That turn is now visible on both lines of the chart simultaneously.

The truckload recovery is the signal

The VCRPM1 move of the past eight months is not a rounding error. Van contract rates fell from a peak above $2.90 per mile in mid-2022 all the way to roughly $2.24 per mile at the trough, a decline of more than 20% over nearly three years. The recovery off that floor has now retraced approximately half of that decline in less than a year. The slope of the orange line since October 2025 is the steepest sustained upward move in the five-year window outside of the 2021-22 boom.

This matters directly to LTL because every major LTL carrier is also a significant purchaser of truckload capacity. Full trailers or doubles running between breakbulk hubs and service centers are functionally indistinguishable from standard TL moves, and a meaningful share of that linehaul is outsourced to third-party carriers. When VCRPM1 rises, LTL purchased-transportation costs follow — typically with a lag of one to two quarters — and carriers eventually push those costs into base rates and GRI filings rather than absorb them.

The forward market is flashing the same message even louder. SONAR’s Outbound Tender Rejection Index (STRI.USA) sits at 16.9% — more than double its six-month average of 8.28% and at a multi-year high — signaling that TL capacity is being absorbed faster than the market can replenish it. The National Truckload Index (NTI) hit a 13-quarter high in Q1 2026. Spot rates lead contract rates by several months, and that gap is already wide. The conditions that historically precede another leg up in VCRPM1 are all present.
A sustained move in van contract rates toward $2.65 or $2.70 per mile — plausible given the current trajectory — would represent a meaningful increase in LTL linehaul costs that fuel surcharges alone cannot fully offset. That is the mechanism by which TL tightening becomes an LTL base rate story.

Carriers are already pricing the future

The market is not waiting for those thresholds to be formally breached. ArcBest implemented a 5.9% general rate increase effective June 22, 2026 — approximately six weeks ahead of its prior 11-month cadence — continuing a multi-year trend of compressing GRI calendars. Most major LTL carriers moved GRIs roughly one month early in 2025; by 2026, that lead time is stretching toward six weeks. The industry is pulling pricing actions forward, which is exactly what carriers do when they believe the underlying rate environment is about to shift in their favor.

Q1 2026 carrier earnings told a story of strategic divergence that is now starting to converge. Old Dominion shed nearly 8% of its daily shipments while growing revenue per hundredweight by 4.4% ex-fuel,  a deliberate yield-over-volume posture that is increasingly looking prescient. XPO balanced volume growth with yield improvement. ArcBest appeared to grow shipments at the cost of a 4% base rate decline, then reversed course with its June GRI and a Q2 guidance raise that cited pricing initiatives explicitly. When the carrier most aggressively chasing volume pivots to pricing in the same quarter that TL rejection rates double, it is worth paying attention.

It should be noted that in the same Q1 report, ArcBest cited a 6.3% increase to contract rates, which superficially contradicts the revenue-per-CWT decline. This is an inherent limitation of using revenue per CWT as a pricing benchmark, since a shift toward lower freight classes or shorter haul distances will reduce the figure even when contract rates are rising. The most likely reading is that ArcBest added new business at lower rates while simultaneously improving its existing contract book, a dynamic that aggregate metrics tend to obscure rather than illuminate. 

The two-act structure of this market

The five-year chart above is best understood as two separate stories overlaid on each other. The first story is fuel,  a transitory but massive surge in diesel prices that has inflated all-in LTL revenue per hundredweight to levels with no precedent in the prior four years of the chart. That story has a shelf life. Diesel has already eased from its May peak, and SONAR’s ULSDR.USA wholesale rack price was at $3.77 as of this writing, suggesting further retail declines are possible. If diesel retreats meaningfully, the LTL.USA headline compresses quickly, not because anything structural changed, but because the arithmetic of the fuel surcharge works both ways.

The second story is structural, and the truckload contract trend is telling it. The truckload market spent nearly three years working off the excess capacity accumulated in 2021 and 2022, and it is now tightening faster than most of the industry expected. 

The LTL market is a piece of the total surface transportation market and as such is heavily influenced by each mode. Part of that capacity is overlapping and in this sense, the LTL carriers are like the shippers who procure capacity. They are subject to the same pricing pressure and will subsequently have to offset it. The market will also demand it as service deteriorates. So far, the hyperreactive fuel surcharge is doing most of the work, but that will most likely have to shift into a more sustained mechanism. 

SONAR subscribers have access to the latest Sitrep on the LTL market for a deeper dive.  

About the Chart of the Week

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