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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

Cass TL Linehaul Index climbs amid shipment decline

front view of several tractors on a highway

December shipments fell to a cycle low while truckload rates again stepped higher, according to monthly data from Cass Information Systems.

Cass’ multimodal shipments index dropped 7.5% year over year in December. The decline was on top of a similar move in December 2024, producing a two-year-stacked decline of 13.5%. The shipments dataset was down 7.2% from November (3.2% lower seasonally adjusted).

December 2025
y/y
2-year
m/m
m/m (SA)
Shipments-7.5%-13.5%-7.2%-3.2%
Expenditures-0.6%-4.0%-1.9%0.2%
TL Linehaul Index2.1%1.6%1.0%NM
Table: Cass Information Systems (SA – seasonally adjusted)

The Friday report blamed winter storms for the slowdown in volumes but noted that inventories have been drawn down.

“The three winter storms which hit the Midwest in the first two weeks of December slowed the highway network and created some pent-up demand that was still evident in the spot market in the first half of January,” the report said. “Holiday consumer spending data suggest retail inventories destocked in recent months as freight shipments across modes were below spending trends.”

Weather has been relatively mild so far in January. The report said volumes could come in above the normal seasonal trend for the month (down 5%) if the patterns hold.

J.B. Hunt Transport Services (NASDAQ: JBHT) stated during a quarterly call with analysts on Thursday that the market began to tighten the week before Thanksgiving with improvement continuing through the end of the year. Management from the company didn’t provide a firm outlook for 2026 given the numerous head fakes already seen in this cycle. However, it was encouraged that seasonal strength to start the year has occurred without inclement weather as a catalyst. It also said that customer inventories are lean.

SONAR: Van Outbound Rejection Index (VOTRI.USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line). A proxy for truck capacity, the tender rejection index shows the number of dryvan loads being rejected by carriers. Current tender rejections show a tightening truckload market. To learn more about SONAR, click here.
SONAR: National Truckload Index (linehaul only – NTIL.USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line). The NTIL is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Spot rates stepped higher through peak season as new constraints on the driver pool took hold.

Cass’ expenditures index, which measures total freight spend including fuel, slid 0.6% y/y. Compared to two years ago, the dataset was off 4%, which was the smallest two-year-stacked decline since July 2023.  

The expenditures subcomponent was off just 0.5% in 2025 while shipments were off 6% on average, implying freight rates were on the move higher throughout the year. Netting the change in volumes from the change in expenditures implies rates were likely up 7% y/y in December.

(However, Cass is assessing the impact of a changing freight mix from LTL to TL and has paused the release of its inferred rate data.)

The TL linehaul index, which tracks rates excluding fuel and accessorial surcharges, increased 1% from November, a fourth straight sequential increase. The rate index was up 2.1% y/y and stayed in positive territory in every month of 2025.

The report pointed to weather as the reason for the runup in rates during the month. It said mild weather to start the year has cleared the volume backlog and that the recent “rate momentum could be temporary” as the market has entered the seasonally slowest stretch of the year. However, it also reiterated that inventories will need to be replenished at some point and that “capacity continues to contract.”

Some public carriers and 3PLs have pointed to increased regulation of the driver pool (English-language proficiency requirements, non-domiciled CDL restrictions, and ELD and driver school crackdowns) as the reason for the recent spot market inflection.

“While the soft volume environment persists, after considerable destocking in Q4’25, we think the Supreme Court decision on IEEPA tariffs could provide a positive catalyst for freight demand,” the report said.

Data used in the indexes comes from freight bills paid by Cass (NASDAQ: CASS), a provider of payment management solutions. Cass processes $36 billion in freight payables annually on behalf of customers.

More FreightWaves articles by Todd Maiden:

Florida harbor pilot dies after fall from vessel

A Florida harbor pilot died Monday after he fell from the ladder of an outbound cargo vessel.  

Captain Phillip Brady, 46, fell into the water while disembarking a bulk carrier near Panama City, the St. Andrew’s Bay Pilots said in a social media post.

Phillip Brady (Photo: Andrew Glassing via GoFundMe)

Pilots guide ocean-going vessels in and out of ports, frequently scrambling over open water from smaller boats to climb temporary ladders unreeled by the host ship. 

Local media reported Brady, who had worked as a pilot for six years in the area, fell 15 feet into the water near St. Andrews Pass from the outbound bulk carrier Lowlands Luck. He was recovered by crew after two minutes but was unresponsive. Coast Guard transported Brady to a medical services facility where he was pronounced dead.

The bulk carrier a week ago was involved in an emergency at the Port of Panama City. After unloading bagged cement at East Terminal, nine SSA Marine workers were transported to a local hospital after suffering suspected effects while using a chemical solution to clean the ship.

Brady was a Mobile, Ala. native and 2001 graduate of the United States Merchant Marine Academy. 

The St. Andrew’s Bay Pilots said Brady is survived by his fiancee and two young children. A GoFundMe has been started in Brady’s memory.

The incident remains under active investigation.

Find more articles by Stuart Chirls here.

Related coverage:

Asia-US shippers could see lower rates from Red Sea return

Maersk returns to Red Sea with India-US service

Flat volumes a win for Port of Oakland in unstable year

Canada port, DP World complete $178M modernization

New bill gives Trump power to blacklist foreign ports

Vessel with tugboat

WASHINGTON — A revamped version of a bill introduced last year that was aimed at amending federal trade laws has been streamlined into an enforcement measure that would give President Trump exclusive power to designate “prohibited” ports and terminals located in foreign countries.

The original version of the Defending American Property Abroad Act, a bipartisan bill introduced in July 2025 by Reps. August Pfluger, R-Texas, and Terri Sewell, D-Ala., sought to punish foreign governments that violate U.S. trade agreements, and in retaliation of Mexico’s efforts over the last several years to seize control of a deepwater port in Mexico owned by Vulcan Materials Co., a U.S.-based construction company.

“Under the leadership of Mexico’s previous president, Manuel Lopez Obrador, and now the current president, Claudia Sheinbaum, the Mexican government is committing a blatant theft against a major American company and, by extension, the United States itself,” commented Sen. Bill Hagerty, R-Tenn, in introducing companion legislation to the original bill last year. “No nation should be allowed to bully an American firm without consequences.”

The new version of the bill, introduced on Thursday, strips out the trade restrictions and replaces them with restrictions on foreign ports and the vessels that call on them.

Specifically, the legislation empowers the U.S. president to designate any port, harbor, or marine terminal in a Western Hemisphere country as “prohibited” if a foreign trade partner has nationalized or expropriated property owned by a U.S. citizen or corporation. The port or terminal must also be accessible through land that is owned, held, or controlled by a U.S. citizen or corporation.

The 2026 bill emphasizes that a vessel’s transit through an expropriated terminal can trigger a total ban from U.S. waters, creating a deterrent for international carriers that was not included in the original bill.

The new language is designed to protect specific supply chains – particularly for bulk industrial materials – by identifying specialized “port infrastructure” like conveyor systems and silos as protected assets.

The legislation requires that the president lift the U.S. port entry ban and remove the designation of a port, harbor, or marine terminal if any of the following conditions are met:

  • The initial conditions that led to the designation are no longer present.
  • The foreign country has officially returned the property to the owner and has ended all measures that resulted in the seizure of that property’s ownership.
  • The foreign country has provided “adequate and effective compensation” for the seized property.
  • The underlying dispute has otherwise been resolved in a manner that is “satisfactory” to the president.

Once the designation is removed, vessels that previously transited the facility would no longer be subject to port entry restrictions, according to the legislation.

Click for more FreightWaves articles by John Gallagher.

2026 Trucking capacity: Why it will tighten and who gets trucks first

Trucking capacity has been steadily exiting the market over the past couple of years. These exits, however, came on the heels of the massive COVID-era oversupply, cushioning their impact on the market. With capacity continuing to tighten going into 2026, the industry will start to feel the effects of this long-term constriction. 

Underneath the day-to-day, capacity is being trimmed in ways that have not always shown up in weekly rate charts due to the market’s highly saturated starting point. Fleets continue to quietly close up shop, while others cut their numbers. At the same time, new equipment investments are being delayed and financing remains tight. The result is a market that still feels loose but is not built for shocks.

This year, carriers will once again find themselves in a position of relative power. This not only allows companies to secure higher rates, it also gives them the opportunity to make decisions designed to protect their networks and future cash flow. During this time, carriers will be able to prioritize working with shippers who have proven their relational value during the downturn. 

Shippers should understand how carriers decide who gets trucks when the market turns, as well as how they can make sure they are on the short list when it does.

While the most high-profile – or poorly handled – carrier closures often make headlines, not every exit attracts attention. Many carriers simply stop renewing their authority, sell their equipment and wind down after one more season of thin margins. Each time that happens, the market loses more trucks. 

Over the past couple of years, carrier exits have looked more like a slow erosion of capacity than a dramatic tightening. As this trend continues, however, disruptions will start to expose how little slack is left.

Why this is a real risk for shippers

  • Less slack: Fewer extra trucks are sitting around waiting for a load.
  • Faster flip to tight: A weather week, a compliance change, or a seasonal pop hits harder.
  • Carrier selection gets stricter: Freight still moves, but some shippers are prioritized over others.

If a shipper relies on spot coverage as their “plan,” that is essentially betting that extra capacity will always be available at the exact moment they need it. That is the bet that fails first in a tightening market.

It is also important to note that the market does not need mass bankruptcies to tighten. It also tightens when healthy fleets stop expanding. Many operators are shifting from growth to discipline and running lean to protect margins. When that mindset spreads, capacity can become more fragile.

What this looks like in practice

  • Parked equipment: Older tractors get sidelined instead of rebuilt.
  • Lean dispatching: Fewer trucks held for surge capacity.
  • Conservative hiring: Fleets avoid adding seats they cannot keep filled.
  • Replacement-only budgets: Buy what you must, skip what you can.

When fleets pull back on new trucks, the market does not feel it immediately. It can become apparent later when demand stabilizes and the market realizes the replacement pipeline is thin. 

How to win carrier partners in a tight market

When capacity tightens, carriers regain a sense of control that they lack in looser markets. Given the freedom to choose their partners, carriers ask questions like: “Where do we get paid cleanly? Where do our drivers lose the least time? Where do we avoid claims, chaos, and surprises?”

What carriers remember (long after the rate is forgotten)

  • Detention patterns: who burns driver hours and shrugs
  • Payment behavior: late pay, short pay, disputed accessorials
  • Facility experience: unsafe yards, no appointments, broken check-in processes
  • Tender integrity: last-minute changes
  • Market behavior: who dropped partners the moment the spot market got cheaper

When demand returns, carriers do not pour their energy into rebuilding burned relationships. They run their best freight with the customers they already trust.

Think of carrier allocation like a scorecard. Rates matter, but they are only one line item.

FactorWhat “good” looks likeWhat breaks trust fast
Time at shipper/receiverFast turns, reliable appointments, quick check-in/outChronic detention with no process improvement
Payment qualityOn-time pay, clean docs, predictable accessorialsLate pay, disputes, “we’ll look at it later”
ConsistencyRepeat lanes, stable volume, clear forecastsRandom spikes with zero lead time
Network fitBalanced lanes that keep trucks movingDeadhead-heavy, hard-to-cover freight
Operational clarityAccurate pickup/delivery details, minimal surprisesRecons, changes, and “figure it out” loads
Relationship historyFair during soft markets, respectful during tight onesChasing pennies, switching weekly, burning bridges

If shippers want priority coverage, they should build their operations to score well before the market tightens. It is impossible to outbid a broken process forever.

This means working to fix dentation at the source by tracking dwell times, setting real targets, and adjusting processes. Carriers notice when shippers actually make improvements. Payments matter, too. Fast, predictable, and simple wins every time.

Shippers should commit to their carrier partners through market cycles. The shippers who stay steady when things are slow are the ones who get reliable trucks when capacity tightens. Give real lead time—an 80% accurate forecast is far better than silence. Finally, build flexibility into appointments. Tight windows don’t enforce discipline, they just create missed service and frustration.

How MigWay can help

MigWay is built for shippers who want control, not surprises. The company runs an asset-based fleet with 300 trucks and 500 trailers, supported by 24/7 in-house dispatch, live tracking, and zero outsourcing.

For shippers reviewing their 2026 lane strategy, Migway can help tighten up execution now, before the market forces it.

  • Get a lane check: what breaks first when capacity tightens?
  • Build a coverage plan: core carriers, backups, and surge options.
  • Reduce friction: fewer touches, fewer delays, cleaner handoffs.

Use this freight rate calculator to sanity-check a lane, or call Migway at +1-980-255-3200 to talk coverage.

Cargo thieves sentenced to prison for hijacking trucks

Trucks fueling at a truck stop. Side view.

Six people were recently sentenced to prison terms up to 13.5 years for participating in a multi-state conspiracy to steal millions of dollars of cargo from tractor trailers during transit, the Department of Justice said Friday. 

Juan Perez-Gonzalez, 51, a Cuban national living in Florida received the most prison time. One of his co-conspirators was sentenced to seven years and 11 months in federal prison. Three individuals received sentences of about three years and one person was punished with time served. 

According to court documents, between November 2021 and May 2023, Perez-Gonzalez and his partners conspired to steal tractor-trailers containing high-end electronics and other items, which they later resold at a discount for profit.

The co-conspirators traveled from Florida and Kentucky to distribution facilities used by national companies such as Meta, Microsoft, and L Brands located in Indiana, Kentucky, and Ohio. The group then spied on the facilities and followed semi-trucks as they departed. When a driver stopped to rest, refuel, or park, the conspirators stole the entire tractor-trailer.

In many instances, the group abandoned the stolen tractor nearby and reattached the trailer to a different tractor they operated. To evade law enforcement, they painted over logos and identifying numbers and used different license plates on the stolen trailers.

The group transported stolen cargo to Miami where it was sold to buyers, including co-defendant Richard Alameda, for a fraction of its retail value. The group carried out at least 14 separate cargo thefts, the theft of over $2 million in Oculus virtual reality headsets from a Meta facility, $940,000 in Microsoft products, $1 million in Bath & Body Works and Victoria’s Secret merchandise, $669,000 in Harmon-JBL audio products, $180,000 in Logitech products, and $480,000 worth of Bose audio speakers.

“These thefts had real consequences for consumers and businesses, increasing costs and disrupting the flow of goods across the country. What this group attempted was a sweeping attack on the backbone of U.S. commerce, but it was ultimately dismantled through the unified work of federal, state, and local law enforcement,” said Tom Wheeler, United States Attorney for the Southern District of Indiana, in a news release.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

Ceva Logistics loses high-value shipments amid rise in cargo theft

Union Pacific CEO tells customers they will benefit from merger

SCHAUMBURG, Ill. – You could say that Jim Vena’s latest salvo in the war of words over the proposed Union Pacific-Norfolk Southern merger was downright Shakespearean.

Which is to say that the Union Pacific CEO thinks the other Class I railroads doth protest too much.

“If your competitor was doing something stupid, what would you do?” Vena said during an entertaining but often digressive talk Thursday to open the second day of the Midwest Association of Rail Shippers winter meeting. “I know what I would do and hopefully you’re all the same … You would shut up and let them do it. Because at the end of the day they’re going to screw up and you’re going to have a better place in the marketplace and win more business.

“The reason the railroads are so up in arms is they have a new competitor. They have a competitor that’s going to be faster, going to be able to move products seamlessly in a better way, and that competitor is going to drive them to compete at a higher level. … So bottom line is you would only complain, and complain as hard as they are without true facts, if you thought that your competitors have something that’s going to give them an upper hand.”

Vena’s appearance came the day after CEOs Keith Creel of CPKC (NYSE: CP) and Katie Farmer of BNSF (NYSE: BRK-B) took aim at the merger with NS (NYSE: NSC) on a number of fronts. That apparently left enough of a mark that UP felt compelled to issue a press release as Vena spoke, saying the company “set the record straight” at the meeting.

Vena sprinkled responses to some of their contentions throughout his talk:

  • “I’ve heard people talk about [how] we haven’t been able to grow as an industry. I don’t like talking about the rest of them. They can worry about their own freaking business. I’ll tell you this much: In 2025, we grew 100,000 carloads more just with the railroad that we have.”
  • “I’ve heard them say that Union Pacific (NYSE: UNP) has increased prices 17% over the last five or 10 years. Well, against inflation running at 30%, son of a gun. I called our chief marketing officer and said, what the hell are you doing? You need to increase prices more than that.”
  • On other railroads’ filings with the Surface Transportation Board arguing the merger application is incomplete: “We’ve put in exactly what the STB asked us to put in, and that’s real important for us. And listen, if they want more information on something, we’ll give it to them. Some of the things that the lawyers try to find that they want us to give are things that are not necessary. It’s like the piece of paper that talks about what our limits are if we want to walk away from the deal. What the hell does that have to do with it? If it’s competitive, it’s competitive.” [CN (NYSE: CNI), CPKC, and CSX (NASDAQ: CSX) all said this was grounds for the STB to reject the application as incomplete.

He also explained why the railroad believes it can convert 2 million truckloads of traffic to rail.

“Fifty percent of our business at Union Pacific is premium business.  That is absolutely truck competitive. We compete against trucks for that 50% of the business every day. And we think and our experts that put in over 5,000 pages of information in our application — plus 2,000 pages of people that supported us — they think the opportunity is there for us to grow that business.”

Mostly, though, he touted the benefits he said the merger will bring. It will decrease the number of touches to move a car, he said. As an example, he used a shipment moving from North Platte, Neb., to Conway, Pa., which would no longer require switching by UP in Chicago or NS in Elkhart, Ind.

“There are 10,000 movements a day that we can absolutely do it this way, let alone what we’re going to grow,” he said. “That’s what we’re offering our customers. And I don’t know about all of you. If I’m a customer and you can get your product to market quicker, you can carry less inventory, you can have less ownership in cars or the amount of money that you spend on rail cars. You get to have one bill. You get to deal with one railroad. You get to deal with one customer service center. We think that that’s a win for you.”

And, he said, such movements will have financial benefits. Because of merger-related operational efficiencies, UP’s cost structure will be reduced and, as a result, “we’re going to have an opportunity to not price as much.”

Ultimately, he boiled down UP’s case for the merger to a quick summary near the end of his talk.

“We needed to have the railroad running financially, operationally at the right level, which we’ve done. We are the most efficient railroad in North America. That’s fact. We have the highest level of service of anybody in the industry. That’s fact. We have the capability to be able to open marketplaces for customers that they don’t have today, because we’re going to make it less complicated. That’s fact. And we want to compete against the world, and have our customers … win in the marketplace.

“You win, we win. That’s what it’s all about.”

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

Related coverage:

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

Rail key as Canada port completes $178M modernization

Retail optimism boosting trans-Pacific container rates

Why Charleston drayage drivers should care about Iran protests

Asia-US shippers could see lower rates from Red Sea return

Major ocean carriers, after two years of sectarian violence that reconfigured regional shipping and the broader global supply chain, reopened services on a key Mideast route that could mean lower rates for shippers from Asia to the United States.  

The announcement Thursday by Maersk (MAERSK–B.CO) that it is restarting scheduled services via the Red Sea and Suez Canal was a welcome sign of normalization amid years of violence and political turmoil across the region. 

Maersk’s reconfiguring of its MECL service connecting Asia and the U.S. was by all appearances a conservative approach and one likely to be emulated by other container carriers as they reintroduce significant capacity into an uneven environment that could further undercut weakened ocean rates.

One major carrier, CMA CGM of France, mostly continued scheduled services throughout the Houthi offensive.

“Maersk has generally been the most risk averse out of the major carriers regarding a return to the Red Sea, so this is a turning point,” said Xeneta analyst Peter Sand. “The services announced by Maersk as returning to the Suez Canal are smaller ships operating outside an alliance, but the fact it is Maersk making this move is highly significant.”

Maersk over the past week revealed it had operated at least two vessels in the Red Sea. Sand implied that the carrier turned off satellite location equipment in order to conceal the ships’ exact locations – similar to that of the ‘dark fleet’ of sketchy ships with questionable provenance carrying sanctioned cargoes.

Houthi rebels based in Yemen since late 2023 have attacked Red Sea shipping in a show of support for Gaza.

“Xeneta data has shown Maersk testing the water in recent weeks with ships scheduled to sail around the Cape of Good Hope ‘going dark’ and instead sailing through the Red Sea,” said Sand. “Clearly these sailings were deemed successful and the risk now low enough to announce services through the region on official schedules.”

Sand said that while Maersk has re-opened the door to the Suez route, it’s unlikely other carriers will rush in. 

“This does not mean an immediate large-scale return of container shipping to the Red Sea region. Depending on how quickly carriers want to move, it could take three to five months for schedules via the Suez Canal to be fully reinstated. We could also see significant disruption and port congestion during that time as services adjust to new routes and transit times.”

The timing of the return is critical and carries with it a host of factors that are certain to weigh on contract negotiations now underway between carriers and shippers. Diverting ships on longer voyages away from the Red Sea and around the tip of Africa effectively removed substantial capacity from the global market. 

“A large-scale return to shorter sailing distances via the Suez Canal would effectively free up 6-8% of global container shipping capacity,” Sand said. “The implications of this are clear for both carriers and shippers, with overcapacity placing significant downward pressure on freight rates.”

Global container traffic totaled 183 million twenty foot equivalent units (TEUs) in 2024, so that could mean close to 2 million TEUs of capacity back in circulation.

“Average spot rates from the Far East are down 43% into the U.S. East Coast and 30% into North Europe compared to a year ago,” said Sand, “while long term rates are expected to fall back to pre-Red Sea crisis levels in December 2023 even without a large-scale return to Red Sea.”

Find more articles by Stuart Chirls here.

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