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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.

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

‘Project44’s vision has always been global’

Nuclear verdict alert: almost $50M against a mystery Texas trucking company

A Texas county jury has handed down a $49 million judgement against a trucking company that may no longer be in business, a figure about halfway between the $10 million minimum size of a verdict considered nuclear and some larger recent cases lost by trucking interests.

The jury verdict came last week in Ector County, Texas, home of the oil-rich city of Odessa. A Texas-based carrier, OPG Logistics, was the company defendant. But the jury also found negligence on the part of the driver, Biorkys Sanchez Fernandez. 

According to the summary of the crash from the Houston-based Ammons law firm that represented the family of 29-year-old Steffan Mick who was killed in the crash in January 2025, the truck driven by Fernandez “made an unsafe left turn and caused the crash.” The jury found that both OPG and Sanchez were “grossly negligent,” according to the Ammons firm.

In an email to FreightWaves, a spokesman for the Ammons firm, a practice led by Rob Ammons who successfully argued the case for the Mick family, said OPG had at least eight drivers at the time of the crash. But the attorney for OPG, according to the Ammons firm, had said the company was no longer in business even as a defense was mounted.

An email sent to Kurt Paxson, the attorney with the firm of Mounce Green who represented OPG, had not been replied to by publication time.

According to the Ammons firm, Paxson “argued against liability on the company while admitting that their driver was negligent.” He asked the jury to limit the verdict to an award to $5 million, but instead got about ten times that. 

Driver hit with 35% liability

The jury verdict breaks down as $40.5 million in compensatory damages, with 65% assigned to OPG and 35% to the driver. It also awarded $8.5 million in punitive damages, according to the Ammons firm.

A check of FMCA’s SAFER WEB records of OPG Logistics finds no company by that name. A company with a similar name, based in Nebraska–the company in the nuclear verdict was Texas-based–is listed as having one power unit. But its name, OPG Transport LLC, is not the same as the company involved in the Ector County case. 

According to the Ammons firm, it had “checked and found documents that seemed to indicate that there is still a trucking company based from the same address.” A representative for that company, according to the spokesman, told the Ammons firm that it was “her partner’s company.”

Is it collectible?

With a verdict that large, and a defendant whose very existence is in doubt, the question can be asked just how much the Mick family and its attorneys will be able to collect.

A recent $81 million verdict and appeal against a company that now is part of Brad Jacobs’ QXO was ultimately settled. That’s an example of the most collectible types of verdicts: a publicly-traded company as the defendant. 

By contrast, a more than $400 million verdict from 2020 against a carrier with one power unit was expected to result in a payout of no more than $1 million under the company’s liability coverage. Whatever insurance coverage OPG carried would be expected as core to any post-verdict settlement talks.

Besides the recent QXO-related verdict, which actually dates back to before QXO (NYSE: QXO) acquired Beacon Roofing Supply, other nuclear verdicts in recent years that came down against companies where collection might be possible was the $460 million award against trailer builder Wabash National (NYSE: WNC), later settled for an unknown figure, and a more than $40 million award last year against carrier New Prime for a wreck in Texas. That case is on appeal.

More articles by John Kingston

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Borderlands Mexico: Desteia using AI to ease looming customs compliance crunch 

Desteia using AI to ease looming customs compliance crunch

As U.S. companies brace for stricter enforcement of Mexico’s Manifestación de Valor Electrónica (MVE) requirements on June 1, supply chain technology provider Desteia is launching an autonomous platform aimed at reducing compliance headaches for importers moving freight south of the border.

Mexico’s mandatory electronic customs value declaration requires importers to file an MVE for every shipment entering the country before freight can clear customs. 

Beginning June 1, errors in filings can trigger fines and shipment delays, while liability now falls directly on the importer rather than the customs broker.

Mexico-focused trade technology company Desteia said its newly launched Auto-MVE platform automates much of the filing process by extracting shipment data from emails and logistics documents, organizing the information and preparing submissions for Mexico’s customs portal.

“We built the tool literally last fall,” Francois Lavertu, co-founder of Desteia, told FreightWaves during an interview. “The companies started telling us, ‘You’re already pulling the same documents we need for compliance. Why don’t you apply your technology to that flow?’”

Desteia, founded in 2023, is a New York-based startup with operations in the U.S. and Mexico. The company was founded by former Tesla executive Lavertu, along with Stanford engineers and entrepreneurs Diego Solorzano and Austin Poor. Desteia aims to simplify logistics operations by using AI to extract and organize information from unstructured data sources such as emails, messages and logistics document

Importers scramble for compliance solutions

Lavertu said many importers remain unprepared despite Mexico delaying MVE enforcement multiple times.

“They’re not ready,” Lavertu said. “A lot of customers first tried to handle it in-house or push the work to customs brokers. But the brokers couldn’t legally take on the responsibility because the liability sits with the importer.”

Under the MVE rules, importers must upload and validate multiple trade documents, including invoices, bills of lading, certificates of origin, insurance records and Carta Porte documentation. A discrepancy between documents can trigger penalties or shipment holds.

Desteia estimates that 37% of MVE declarations currently contain errors.

“The problem is not the submission itself,” Lavertu said. “The problem is automatically extracting, grouping and comparing all the documents before they’re ready for submission.”

Lavertu said concern across the market has intensified in recent weeks as companies realize the scale of the operational burden ahead of the June 1 enforcement date.

Desteia recently opened registration for an AI-focused webinar on MVE compliance scheduled for May 27 and received nearly 600 signups within days, according to Lavertu.

“Everybody is really anxious about what this means for their operation, for their teams and for the risk,” Lavertu said.

AI tool designed around cross-border operations

Lavertu, who previously worked at companies including Tesla, Walmart, L’Oréal and LVMH, said Desteia originally focused on helping companies manage unstructured logistics data tied to cross-border operations in Mexico.

The platform scans trade team inboxes, identifies relevant shipping documents and groups them into digital “pedimento bundles” tied to customs entries.

According to Lavertu, Auto-MVE also converts documents into the file formats required by Mexico’s customs systems, automatically checks for inconsistencies between documents and retains filing information if Mexico’s customs portal goes offline during submission.

“We don’t require anybody to change how they work,” Lavertu said. “Everything’s automated and pulled from the systems they already use.”

Desteia said the platform can reduce MVE preparation time from more than an hour to under five minutes per declaration. One customer handling more than 5,000 annual import operations reportedly saved more than 50 hours of manual work during its first week using the software.

Automotive, retail and manufacturing sectors face pressure

Lavertu said the platform was designed primarily for large multinational importers operating in sectors such as automotive, retail, consumer packaged goods and manufacturing.

The automotive industry faces particular challenges because every auto part imported into Mexico now requires its own MVE filing.

For manufacturers operating just-in-time supply chains, filing mistakes could create broader production disruptions.

“This has opened a Pandora’s box into checking that things are right in trade,” Lavertu said. “Companies are realizing suppliers may have been putting incorrect pricing into invoices or other documents.”

Lavertu said the broader trend reflects Mexico’s ongoing push to digitize customs enforcement and improve oversight of cross-border trade.

“The MVE is not an anomaly,” Lavertu said in Desteia’s launch announcement. “It is part of a deliberate effort by the Mexican government to modernize customs controls, reduce undervaluation and generate revenue through trade enforcement.”

Desteia, which has raised approximately $11.5 million in seed funding, said it plans to continue expanding its AI-powered automation tools for import compliance and logistics operations in Mexico.

Grocery chain plans $700M supply chain expansion in South Texas 

H-E-B plans to invest $700 million to expand its supply chain operations on San Antonio’s Eastside, a project expected to create more than 1,000 jobs over the next decade, according to MySA.com.

The San Antonio-based grocery chain said the expansion could add 720 jobs by 2028 and potentially grow to more than 1,200 full-time positions in the coming years. 

Preliminary plans include construction of a new bakery, refrigerated warehouse, transportation building and additional facilities tied to H-E-B’s growing manufacturing and logistics operations.

Construction could begin later this year, with some facilities becoming operational as early as 2028, according to the report.

CPKC, CSX upgrade Southeast Mexico Express for faster transit times

CPKC and CSX have upgraded their Southeast Mexico Express (SMX) rail service with faster transit times and expanded routing options aimed at shippers moving freight between the southeastern U.S., Texas and Mexico, according to a news release.

The enhanced SMX service launched May 4 and includes a dedicated train offering truck-competitive transit times between markets such as Atlanta, Charlotte and central Florida and destinations including Dallas and Monterrey, Mexico. 

Transit improvements include approximately one-day-faster service between Atlanta and Dallas and up to 2.5 days faster service between Atlanta and central Mexico.

The upgraded service now provides two-day rail service between Atlanta and Dallas, three-day service from Monterrey and four-day service from central Mexico to Atlanta. New origin and destination points include Charlotte, Jacksonville and central Florida.

CSX (NASDAQ: CSX) and CPKC (NYSE: CP)  launched the Southeast Mexico Express in December 2024 following the railroads’ acquisitions of portions of the former Meridian & Bigbee Railroad, creating a direct interchange near Myrtlewood, Alabama.

One Week After Landmark SCOTUS Ruling: Why Truckload Spot Rates Just Hit All-Time Highs — And Why This Is Only the Beginning

Front view of two tractor-trailers on a highway

One week ago today, the U.S. Supreme Court issued a unanimous 9-0 decision in Montgomery v. Caribe Transport II that is already reshaping the $800-billion-plus truckload brokerage sector. The Court ruled that the Federal Aviation Administration Authorization Act (FAAAA) does not preempt state-law negligent hiring claims against brokers. In plain English: brokers can now be sued in state courts for failing to properly vet the carriers they put on the road.

I’ve spent the past seven days talking directly with brokers, shippers, carriers, technology providers, and stakeholders across the industry. The general consensus is that this is the most impactful development since trucking deregulation. 

Spot Rates at Record Levels — And Still Climbing

On Thursday, truckload spot rates reached new all-time highs, even beating out the record high rates set during COVID. The SCOTUS decision may be having an impact at the margin, but the real cause is the massive compliance crackdown and resurgence of the industrial economy. 

A broader compliance crackdown has been underway for months. Reindustrialization and near-shoring trends have been pulling capacity inland. Those forces were already tightening the market. The Supreme Court’s decision removed the liability shield brokers had long relied on, but this will take months and years to work out. 

Why Unknown Carriers Carry the Highest Post-Montgomery Risk

Carrier vetting platforms and post-ruling legal analyses consistently identify the same core risk profile: a carrier with no operating history, no inspection record, and no prior relationship with the broker is the most difficult to defend as a vetting decision. The carrier may be perfectly safe, but the broker cannot demonstrate the affirmative basis for that conclusion at the time of selection. This is the core legal problem that load board sourcing creates: by its nature, the load board model brings the broker into contact with carriers it has not previously worked with.

This does not mean load boards cease to function. It does mean the operating model of load board sourcing — match a load to a carrier at the lowest cost without prior relationship — comes under direct legal scrutiny. Load board operators that build verified-identity, safety-credentialed, indemnification-backed marketplaces are positioned for the new environment. Load board models that remain neutral pipes between brokers and unknown carriers face the most direct legal pressure on their value proposition.

What I’m Hearing on the Ground

Here’s what the past week of direct conversations has shown me:

  • Brokers have turned sharply more selective. Highway, a major carrier-vetting platform, told me that several large brokerages are no longer accepting loads from non-domiciled CDL drivers — a complete reversal from just seven days earlier. The risk is now simply too high.
  • Shippers are nervous and reallocating freight. Several enterprise shippers have reached out because their incumbent brokers can’t secure trucks. Others have paused loading certain brokers while they reassess exposure. The most common move I’m seeing: shippers are considering shifting volume into managed transportation programs, where brokers take on more operational control and, critically, more structured risk mitigation.
  • Large brokers are bullish — and gaining share. The biggest brokerage houses are ecstatic. They see this as a generational opportunity to consolidate market share. Smaller “long-tail” brokers without deep balance sheets or sophisticated risk systems will likely struggle.
  • Insurance premiums are the sleeping giant. No one has final numbers yet, but early estimates I’m hearing from large brokers range from 3x to 10x increases in brokerage liability insurance. 
  • Conditional safety ratings have become radioactive. Carriers sitting on FMCSA “conditional” ratings are finding it dramatically harder to get loads. The agency is overwhelmed, and the frustration from small carriers is real. Interestingly, several large, compliant asset carriers have formally asked the FMCSA for more inspections so they can clear their names more quickly and capture the capacity now being withheld from marginal players.
  • Small claims are the hidden cost bomb. One asset carrier told me the real financial drag isn’t the headline-grabbing million-dollar lawsuits — it’s the volume of $20,000 nuisance claims that fall outside insurance. If brokers start getting pulled into even a fraction of those, the administrative burden could add more than $20 per load industry-wide.

We already have the first legal signal of the new reality: a broker-liability case that had been dismissed was amended this week to bring the freight broker back in as a defendant.

Winners and Losers in the New Broker-Liability Era

Winners:

  • Well-capitalized, large brokers with strong risk-management systems
  • Managed transportation providers
  • Highly compliant, well-insured asset carriers
  • Public truckload carriers and established 3PLs (I continue to believe these are the stocks to own)
  • Load board operators with verified identity and indemnification-backed models

Challenged:

  • Small and mid-size brokers without scale or deep insurance resources
  • Non-domiciled or conditionally rated carriers
  • Neutral-pipe load boards that connect brokers to unvetted carriers
  • Shippers are overly reliant on spot-market capacity without robust vetting

The Bottom Line

The era of the broker as a low-liability “matchmaker” is officially over. Every load board just became a higher-stakes risk-management exercise. Capacity is tightening selectively but powerfully. Rates are already at record levels and have further to run.As one senior industry executive told me this week: “You haven’t seen anything yet.”

The FMCSA finally has a regulator who shows up — and the freight market is responding

Derek Barrs, the FMCSA Administrator, talks about how he is implementing law and order in trucking. The market is responding.

Federal Motor Carrier Safety Administration Administrator Derek Barrs sat down with me and Matt Leffler in our Chattanooga studio this week for a live taping of Freight Expectations. What I came away with — beyond the hour of substantive policy conversation — was the clearest articulation yet of why this administration is having a measurable, real-time impact on freight markets that previous ones did not.

To view the video:

The thesis is simple. For the first time in years, the agency tasked with regulating the trucking industry is doing the job: enforcing rules already on the books, dismantling the self-certification regimes that incentivized fraud, and showing up in person where the industry actually operates. 

The market is responding accordingly. Spot rates as measured by SONAR’s National Truckload Index (NTI.USA) have moved above their COVID-era highs over the past several days.

That is not a coincidence. All time high records are a result of tight enforcement and a change in market direction at the hands of the regulators. 

Why this administrator resonates

Barrs is the first FMCSA administrator in my career covering this industry to be recognized by name by working truck drivers. I told him so. “I have never seen any FMCSA administrator or FMCSA period have been able to accomplish” the kind of response he and Secretary Sean Duffy received walking the Louisville truck show, I said.

His answer cut to the operating philosophy. “You have to be engaged. And when you say that you want true partnerships, you have to go where the partners are,” Barrs said. “Things do not happen sitting behind a desk. You have to be out walking. It’s kind of like managing by walking around, if you will.”

That posture extends to the field structure. “Our division administrators, they know what’s going on in their states. They know who their partners are. They know who their association members are. They’re engaged with the people that they regulate,” Barrs said. He recounted a program from his Florida Highway Patrol days putting troopers in trucks and truck drivers in patrol cars to build mutual understanding. “I want them to respect that. But then again, I also want that driver to be in the cab or in the car of that patrol car with my trooper to understand the work that they’re doing.”

The “why” behind the work is personal. Barrs described, unprompted, his earliest 911 call as a teenage dispatcher — a log truck and a passenger car on an interstate overpass that killed a young woman. He drove to the scene after his shift. “So I took the 911 call and then I also went there and then I saw what was I was hearing.” Later, as a deputy, he pulled a man out of an overturned van in pouring rain who later died at the hospital. “I learned that he was a father, he was a son, he was a husband, and he was a member of his community. And if he’d only wore a seat belt that night, he’d still be here.”

About 60% to 70% of fatalities in commercial vehicle crashes involve someone not wearing a seat belt. “My point is, this is something we’ve been talking about forever. Put your seatbelt on,” Barrs said. “We have to do a better job.”

Enforcement, not new rules, is doing the work

When I asked Barrs what success looks like, he framed it around delivery. “What keeps me up at night is making sure that we deliver. I want to make sure that we deliver on the things that we say that we’re going to do that are number one is going to enhance safety, strengthen the market, root out the bad actors so the cream will rise to the top.”

Then he made the point that every compliant carrier in this industry has been waiting to hear from a federal regulator. “If we don’t enforce the rules that we have on the books, we can add all that we want to. But if we don’t enforce the rules that we have on the books, what good are we?”

The numbers tell the story. Between 20,000 and 30,000 drivers have been placed out of service for failure to meet the English language proficiency standard since enforcement was reactivated. That standard has been on the books since 1937. It was not a new rule. It was a dormant one, and the dormancy was a choice.

Barrs walked through why the standard matters operationally. “If I’m up under a truck doing an inspection, I ask a driver to apply your brake and they start cranking up the truck because there’s not understanding exactly what that means. So, that’s a safety issue.”

International Roadcheck week wrapped last week with a combined out-of-service rate around 30% — roughly 20% on vehicles and 10% on drivers. Barrs flagged that he is seeing more acute violations during investigations now than in prior years. Brake failures. Hours-of-service violations. “If we’re seeing more acute violations and we’re constantly seeing out-of-service rates at 20% and 10% for drivers and 30 combined, that’s too many. That’s too much.”

Three and a half million roadside inspections happen every year. The argument that the industry is unregulated is wrong. The argument that the wrong things have been regulated, and that genuinely dangerous operators have been allowed to compete on price against compliant carriers, is correct. Barrs is reversing that.

Killing self-certification

When I asked Barrs what he most wanted to accomplish during his tenure, his answer was unambiguous. “When I found out we had these self-certification programs, I said, ‘Well, if we could just get rid of self-certification, I will feel that we have done something.'”

The fraud problem in trucking has always traced back to the same structural failure. ELD providers self-certify that their devices meet federal standards. Entry-level driver training (ELDT) providers self-certify that they have trained a new CDL holder competently. Substance abuse providers self-certify that they have evaluated a driver appropriately. The result has been a race to the bottom, populated heavily by overseas-controlled entities operating in regulatory gray zones.

“The self-certification pieces need to go,” Barrs said. “And of course that’s ELDs, that’s entry-level driver training. We’ve talked a lot back and forth with some of the folks about substance abuse providers where that is actually taking place as well where fraud is kind of rooting in the system.”

Matt pressed on the ELDT problem specifically — the idea that a CDL mill could certify a driver as proficient in 24 hours or two days. Barrs did not flinch: “We are, and that’s a self-certification piece, and we got to reform that. And that is on the horizon for us to get through.” He continued: “Driving a commercial vehicle and having a CDL should mean something. It should mean not that I just went down and I got them pushed out like cattle or like a candy machine. It should mean you actually have to go through a rigorous training to be able to be behind the wheel of the commercial motor vehicle.”

On the ELD ecosystem, Barrs confirmed FMCSA has active investigations with federal law enforcement partners, with attention on overseas-operated platforms that enable back-door log editing. “FMCSA is a regulatory agency. It has regulatory authorities. It doesn’t have criminal authorities. We have to work closely with our office of inspector general. We have to work with other law enforcement agencies. We have to work with Department of Justice.”

His commitment was unambiguous: “We have active investigations with our law enforcement partners on the federal level. And we will continue to go after these through investigations to determine how they’re defrauding the government, how they’re defrauding the overall industry.”

CORCA and the cargo theft problem

We spent time on cargo theft, which Barrs identified as no longer a routine cost of business but a structural threat. “This is not just a price of doing business anymore,” he said. “I think it’s way past that now.”

Matt made the legislative pitch. “There’s this thing called Combating Organized Retail Crime Act. It’s called CORCA. It’s fun to say, even more fun to explain. It has passed the House. It is in the Senate. CORCA is the single most important piece of legislation that talks about cargo theft and fraud. It creates a way for different local and state actors to collaborate on what is happening because these are criminal cartels that are doing these things.”

The bill has more than 160 bipartisan sponsors. Every major industry association supports it. As Matt put it: “From the ATA to TIA, every alphabet soup — they’re all supporting this. So that’s my pitch. Like, go do that thing.”

This is the legislation the freight industry should be calling its senators about this month.

The conditional safety rating problem

The most consistent question I received from drivers in advance of the interview was about the conditional safety rating regime. Roughly 300,000 trucks carry a conditional rating, and after the Supreme Court’s Cornejo decision opening brokers to negligent hiring liability, that rating is functioning as a scarlet letter. One driver described being assigned the rating after a single hours-of-service violation in a small fleet, and being unable to get a re-review.

Barrs acknowledged the problem directly. “We’re going to have to look at that closely. We have congressional mandates for high-risk motor carriers to have to go in and do investigations on high-risk motor carriers. And that’s what our investigators focus on.” Reviewing remediated carriers competes against that mandate for limited investigator bandwidth. “I will take that back to our team to try to figure out what that solution is going to look like.”

He also flagged a data hygiene issue underneath the headline statistic that 87% to 90% of carriers have no safety rating at all. FMCSA sent out 2.2 million letters about the MODUS registration system. “Over 400,000 letters that we sent out came back to us. So either that’s companies that are out of business, they either haven’t updated their MCS-150, they haven’t done the things that they needed to do.”

That cleanup will mechanically improve the percentage of active carriers with ratings. It does not solve the underlying problem.

Matt framed the broader implication after the Cornejo decision. “A lot of folks in the last week have said, ‘Well, the government says they’re not — they said they’re okay, they’re safe, or they don’t have a rating, therefore I should be able to book them.’ And clearly, we all know that that is not — that in itself is not a valid argument.”

There is a clear opening for private-sector audit and rating services to fill the gap that FMCSA cannot fill given its resourcing. Barrs was open to it. “We’re looking at all different ways to help us through different tools and mechanisms from the private industry to help us to identify who are our bad actors.”

Maintenance: the issue nobody is paying enough attention to

Matt pulled the conversation toward vehicle maintenance, which has been his consistent argument on the show — that the way a carrier maintains equipment is the truest signal of how it runs its business. He pointed to the international roadcheck data showing roughly 22% of commercial vehicles get placed out of service.

Barrs’s response was immediate. “For the last 20 plus years, brakes and tires. It’s the most common violation when it comes to brakes and tires.”

He framed the fix culturally. “Safety has to be number one, has to be the foundation, has to be the culture. No matter if you’re a small fleet or a large fleet, that has to be the culture.”

He invoked Admiral McRaven’s “make your bed” speech to make the point. “Small things lead to big things. If you’ll change that marker light before you when you do that pre-trip, and you check your brakes before you go, and you do a true pre-trip inspection, you do a post-trip inspection, and you make the necessary changes that need to be made — small things lead to big things.” Then: “Pick your hard. You can either pick your hard of doing on the front end, or it’s going to cost you on the back end.”

Matt’s proposed fix: doubling the FHWA’s required annual inspection to twice a year, raising minimum liability insurance from the 1985-set $750,000, and doubling FMCSA’s budget. All three require Congress.

MODUS: closing the front door

The structural fix for fraud at the registration level is MODUS. Barrs’s framing is the one to use. “I always just in layman’s terms, I like to say that it closes the front door for fraud. And we know who we’re dealing with is what I like to say. Because right now we have no way of knowing.” The system consolidates roughly nine legacy databases into a single registration platform with ID verification through IDEMIA, business verification, and the ability to track chameleon carriers across cycles of registration and de-registration.

“If you’re inactive, or say you’re a chameleon carrier, we placed you out of service, and then you try to come back into the system again, we’ll be able to understand and be able to see that data,” Barrs said.

There will be bugs. There already are bugs, and Barrs was candid that he is unapologetic about rolling out an imperfect system. “I am sorry, but I’m not sorry. This system is going to be — we knew there was going to be bugs to work through this, but you cannot fix things unless you roll it out, and let’s figure out what the bugs are.” Carriers should expect login problems in the near term and should engage anyway. MODUS is the foundation for every fraud-prevention measure that comes after.

Resources remain the binding constraint

FMCSA operates on roughly a billion-dollar budget, half of which flows to states as grants. Roughly 300 federal investigators cover an industry of more than a million motor carriers. Barrs noted, correctly, that the agency could not function without state partners. “If I and our agency did not have the support of our state partners, we’d be in bad shape. They’re just an arm of us in all 50 states.”

Adjusted for inflation, FMCSA’s allocation is down approximately 60% over the past 15 years while the carrier population has roughly doubled. The mismatch is structural and politically uncomfortable. The agency is producing measurable market impact with a fraction of the resources it had in real terms a generation ago. That is a credit to Barrs and his team. It is not a sustainable model.

When I asked whether he’d take more funding if it were offered, Barrs allowed himself a smile. “Of course I’d like to have more. But I want to make sure that we also are being very frugal with our funds. I want to make sure that we are putting our dollars where they need to be spent to make sure that they are all in a safety component that is making meaningful change.”

What this means for the freight market

The freight downturn that began in mid-2022 was driven principally by a 28% capacity expansion that arrived during a demand collapse. That overhang has been the central feature of the market for nearly three years. What we are watching now in NTI.USA and FTI.USA is the unwinding of it — not because demand has surged, but because the enforcement environment is finally pushing non-compliant capacity out of the system.

Barrs’s own framing on the market response was characteristically restrained. “I’m happy the markets are going where they’re going. I always revert back to I have to make sure that they are safe and then let that kind of work itself out, because that’s out — I can’t control a lot of that.”

He went further on the people doing the criticizing on social media. “I see comments like, ‘You’re not making a dent, you’re not doing anything.’ I do not ever want anyone — I’m not sticking my head in the sand and say we don’t have a problem. We need to address all of these issues to try to root out these bad actors.”

Higher insurance minimums, full ELDT reform, the death of ELD self-certification, MODUS at full scale, and a credible enforcement posture on English language proficiency, hours of service and vehicle maintenance — none of these have run to completion. Barrs has two and a half years left.

His closing argument was about narrative. “We can continuously say that we have bad and the people who are listening, people who are looking, will constantly say, ‘Boy, the trucking industry is bad.’ If you constantly say that teachers are bad or cops are bad or doctors are bad — guess what’s going to happen? There’s a lot of celebration that needs to be done in the trucking industry because there’s so many people who are doing a lot of really good things.”

The compliant carriers in this industry have been waiting a long time for a regulator who actually regulates. They finally have one, and the market is voting with its dollars.

Phillips Connect names Mark Wallin president and general manager

Long row of white semi-trailers parked on landing gear in a large gravel lot under a partly cloudy sky.

The trailer has long been a reliable but less glamorous partner in freight operations. Powered by a tractor, it was hooked, loaded and dispatched as a largely low-cost, low-technology affair until something went wrong.

Phillips Connect is betting that era is over. The Irvine, California-based smart trailer technology company announced Thursday that Mark Wallin, the principal architect of its technical roadmap and customer strategy, has been named president and general manager. The move comes as the company positions itself at the center of connected and autonomous freight.

Phillips Connect’s platform already powers daily trailer operations at several of North America’s top 10 enterprise trucking companies, according to the company. The promotion signals the company’s intent to expand that footprint as fleets demand more intelligence from every asset on the road.

Smart Trailers: Once a Differentiator, Now a Baseline

Wallin has spent the past 18 months reshaping how Phillips Connect approaches the market. This has included expanding the platform’s capabilities while lowering barriers to adoption. The strategy is part of a fundamental shift in how enterprise fleets view trailer technology.

“Smart trailer technology isn’t a nice-to-have anymore. What’s a differentiator today becomes a minimum requirement for how fleets operate tomorrow,” Wallin said. “Our job is to keep solving the real problems our customers wake up to, whether that’s tires, safety, cargo, or the shift toward autonomous freight, and to keep leading where this industry is going.”

Rob Phillips, founder and CEO, noted the appointment as both a recognition of Wallin’s contributions and a statement about where the company is headed.

“Mark is the kind of leader you build a company with,” Phillips said. “He has a rare gift for turning ambitious ideas into solutions our customers benefit from in their day-to-day work, and for building a team of remarkable people to work alongside him. We have real opportunity in front of us to define what smart trailers become for this industry, and Mark is exactly the person to lead us into it.”

Platform Expansion: From Driver Safety to Cargo Intelligence

Under Wallin’s product leadership, Phillips Connect has rolled out a series of solutions designed to make trailer intelligence actionable at every point in the operation. The company has released multiple features, from trailer health to roadside solutions, all built into a centralized platform.

DriverAssist puts trailer health information directly in drivers’ hands during pre-trip inspections and on the road. TrailerID automatically confirms the correct trailer is hooked at the moment of connection. This eliminates a common source of yard delays and dispatch errors.

CargoVision Insights delivers real-time intelligence from inside the trailer, while Roadside Safety solutions help protect drivers, cargo and nearby motorists when trailers are stopped on the shoulder. The SolarNet 8000 series, launched in late 2025, consolidates location tracking, cargo intelligence and tire pressure monitoring (TPMS) into a single solar-powered unit.

The platform aggregates data on cargo, brakes, tires, lights, liftgates, trailer identification, location and usage patterns. The goal is to give fleet operators a current and accurate picture of every trailer they run.

Wallin joined Phillips Connect in January 2024 as general manager and senior vice president of product. He brings more than two decades of product leadership across connected fleet, IoT and enterprise software-as-a-service (SaaS) markets, including senior product management roles at Verizon Connect, Telogis and Kofax. He is a member of the Forbes Technology Council and holds a bachelor’s degree in computer science and electrical engineering from Stanford University.

“I’m grateful to Rob and the team for the confidence, and I’m looking forward to what comes next,” Wallin said.

Coupa adds Tonkean in latest AI acquisition push 

Cloud-based spend management platform Coupa announced Wednesday it is acquiring workflow automation startup Tonkean, marking the company’s second AI-focused acquisition in less than two weeks as it expands its push into autonomous supply chain and procurement technology.

The acquisition follows Coupa’s May 12 announcement that it had acquired intelligent document processing firm Rossum during the company’s Inspire 2026 conference in Las Vegas.

Financial terms of the Tonkean deal were not disclosed.

Coupa executives said the acquisition adds advanced workflow orchestration and AI-driven automation capabilities to the company’s growing “agentic trade network,” which is aimed at automating procurement, invoicing and supplier transactions across global supply chains.

“The acquisition of Tonkean is game-changing for Coupa and the market,” Coupa CEO Leagh Turner said in a news release. “With the acquisitions of Rossum and Tonkean, in short order, we have now amassed all the assets to make this promise possible for both buyers and suppliers at a time when buying and selling is getting more complex and costly.”

Founded in 2015 and headquartered in Palo Alto, California, Tonkean developed a no-code workflow automation platform that helps enterprise procurement, legal and operations teams automate intake, approvals and internal processes using AI-powered orchestration tools.

Coupa said Tonkean’s technology includes more than 250 native connectors and supports multi-agent orchestration and agent-to-agent coordination, allowing enterprises to automate complex workflows without replacing existing software systems.

Executives said the platform can reduce operational cycle times by 50% and save operations teams more than 30 hours per week by eliminating manual handoffs and repetitive tasks.

The acquisition is part of a broader AI expansion strategy Coupa outlined during its Inspire 2026 conference earlier this month in Las Vegas. During the event, executives unveiled several AI-focused products, including Coupa Compose and Coupa Catalyst, while emphasizing the growing role of AI agents, orchestration and automation in supply chain management.

Coupa executives said the company has processed more than $10 trillion in cumulative spend data over the past two decades and is leveraging that dataset to build AI-native procurement and supply chain applications.

Tonkean becomes the fourth strategic acquisition tied to Coupa’s autonomous spend management strategy, following earlier acquisitions of Cirtuo, Scoutbee and Rossum.

Salvatore Lombardo, Coupa’s chief product and technology officer, said the company is building what it describes as the “#1 agentic trade network.”

“With Tonkean natively embedded in Coupa, customers get best-in-class orchestration and the best spend platform they already trust, in a single, unified agentic architecture,” Lombardo said in a statement.

Leading roofing manufacturer uses AI to speed network optimization 

LAS VEGAS — AI-powered analytics and digital supply chain modeling are reshaping network optimization and scenario planning across manufacturing operations, according to Marianna Vydrevich, supply chain network design & optimization expert at GAF.

Vydrevich said AI tools are helping supply chain teams automate data engineering workflows and reduce dependence on IT departments for routine analytics tasks.

“It’s really an enhancement of capabilities,” Vydrevich told FreightWaves in an interview at the Coupa Inspire 2026 conference on May 13. “The main enhancement so far has been on the data engineering front.”

GAF is one of North America’s largest manufacturers of residential and commercial roofing and waterproofing materials, operating more than 30 locations across the continent. The company is headquartered in Parsippany, New Jersey.

Coupa Inspire 2026, held May 11 through May 13 at ARIA Resort & Casino in Las Vegas, brought together hundreds of procurement, finance and supply chain executives focused on spend management, sourcing and supply chain technology. 

Coupa is a cloud-based, AI-native platform designed for total spend management and supply chain optimization.

Vydrevich said AI has already become ‘an absolute game changer’ for business analytics and data engineering workflows.

Vydrevich said AI delivers the greatest value in analytics-heavy functions such as inventory optimization, procurement classification and supply chain scenario analysis. 

Vydrevich said AI’s role in supply chain network optimization is more complicated than simple text generation or basic automation because it requires digital models that closely mirror real-world supply chains.

“Doing network design, applying AI to network design is a higher bar than for other tasks,” she said. “You’re creating a digital twin which might not have all the exact details as your actual supply chain because it’s a model.”

She also highlighted Coupa’s Navi AI assistant as a tool capable of acting like a “junior modeler” to help analysts interpret network changes and operational bottlenecks.

“A lot of people are misusing it,” Vydrevich said of some enterprise AI adoption. “They’re trying to apply it to the wrong use cases.”

Vydrevich also predicted that coding and data engineering knowledge will become foundational skills for future supply chain professionals.

“Every office job will require it; every person will need to understand the basics of data engineering,” she said. “Like it was with coding 10 years ago.”

Short line rail hits T&I truck benefits, costly safety mandates

A short line rail trade association said positive aspects of surface transportation legislation contrast with elements that favor trucking and burdens railroads with costly safety mandates.

The House Transportation & Infrastructure Committee on Thursday released its markup of the surface transportation reauthorization bill, rebranded as the BUILD America 250 Act. It’s part of the Infrastructure Investment and Jobs Act (IIJA)  passed in 2021 that authorizes multi-year investments in infrastructure including highways, transit, rail, broadband, water systems, and energy transmission.
Calling the text a “first draft” ahead of full congressional debate, ASLRRA President Chuck Baker welcomed robust authorization of the Federal Railroad Administration’s Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant that helps fund rail projects, as well as continuation of funding for the Section 130 grade crossing upgrade program.

“However, if the final legislation provides only an authorization for CRISI without the guaranteed funding included under the IIJA, it will represent a step backward for short line rail investment,” Baker said.

Baker’s critique echoed disappointment among railroads, shippers and other rail stakeholders.

“[W]e were disappointed to see an amendment accepted to increase truck weights to 91,000 pounds in some states through a 10-year pilot program. Heavier trucks would shift freight from the safer and more sustainable rail network onto the more dangerous and already overburdened and heavily subsidized highway network,” he said.

It’s an annual ritual for rail interests to lobby against bigger and heavier trucks, as well as for revenue streams obligating truckers to pay their fair share of publicly-funded highway maintenance. Most rail infrastructure is privately-owned and operators have to pay real estate and other taxes on it.

The adoption of the Railway Safety Act following its endorsement by President Donald Trump is problematic for the biggest railroads and their short line partners.

“While short line railroads were not directly targeted, these provisions would nonetheless impose costly and inflexible mandates on the rail network as a whole if passed into law,” Baker said. “At a time when the public is concerned with rising costs, these amendments do not serve our nation well.”

The bill includes first steps toward creating a user-pay system for the Highway Trust Fund (HTF) – the first new HTF revenue stream in decades – but Baker pointed out that federal funding is still needed to make up the $50 billion annual shortfall between planned contract authority spending of $95 billion per year and HTF revenue of approximately $45 billion per year.

He called on Congress to restore a sustainable user-funded model for HFT, or restructure the system which heavily subsidizes highways while rail relies on discretionary appropriations.

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Read more articles by Stuart Chirls here.

Related coverage:

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Rail on a roll as ag, metals, chemicals lead traffic

Sen. Cotton urges DOJ investigation of China-backed parcel carriers

A man in a red shirt and red cap checks a stack of packages in the back of his van.

Republican Sen. Tom Cotton has asked the Department of Justice to investigate whether Chinese controlled parcel delivery companies pose a national security and supply chain risk, claiming they leverage unfair foreign subsidies, vast amounts of granular data and shady import practices to take business from American companies.

Logistics analysts acknowledge that Chinese-backed last-mile delivery carriers with an ultra-low cost business model and lower compliance standards are rapidly gaining market share, putting pressure on FedEx, UPS and regional carriers like Veho and OnTrac.

Some say that characterizing Chinese-influenced couriers as a security threat overstates the problem and is a way to appeal to the America-first tendencies of the Trump administration for action. But others contend these alternative carriers are taking away American jobs by offering below-cost pricing, made possible by deep-pocketed Chinese investors and low labor rates.

In a May 19 letter to Acting Attorney General Todd Blanche, Cotton complained that U.S.-incorporated companies like Gofo, funded by the Zongteng Group, and SpeedX, founded by a veteran of the Chinese freight industry, had “infiltrated” the United States to provide logistics services for e–commerce platforms like Shein, Temu and TikTok Shop. Other carriers of concern to the Arkansas senator include Canada-based UniUni, Indonesia’s J&T Express, which counts Chinese multinational technology conglomerate Tencent as an investor, and Zongteng subsidiaries YunExpress and Cirro Logistics.

The carriers typically use independent master contractors, also known as delivery service providers, or app-based gig drivers to make front-door deliveries, as do many independent U.S.-owned delivery companies. 

“These companies move through American neighborhoods, commercial districts, and roads near critical infrastructure. They collect detailed data on routes, businesses and homes while undercutting American competitors on price. This is a familiar playbook: Chinese firms enter the United States at subsidized prices, capture market share, and embed themselves into daily American commerce,” Cotton wrote.

Startup parcel carriers began proliferating five years ago on the back of the pandemic-fueled e-commerce boom as Chinese marketplaces took advantage of a previoussly overlooked import loophole to rapidly ramp up B2C sales in the United States.

U.S. policymakers in recent years have similarly investigated China’s near monopoly on ship-to-shore cranes at ports and their potential to be used as spy platforms for the Chinese government and the Trump administration last year pressured a Hong Kong-based company to divest from two port facilities in the Panama Canal over concerns China could control trade flows in the event of a broader conflict. Cotton is a China hardliner who has sought to prohibit federal funding for universities that conduct research in partnership with foreign adversaries, who he says exploit the system to conduct espionage.

A coalition of five regional U.S. parcel carriers, including Hovership, has been working behind the scenes on Capitol Hill to bring attention to the Chinese couriers. Hovership shared a copy of the letter with FreightWaves. 

Data privacy and competiton questions

Large-scale delivery operations inherently generate high-resolution, street-level data with images of homes, access points, delivery patterns and consumer behavior. When aggregated at scale, that data becomes infrastructure intelligence — raising questions about where it is stored, how it is used, and who ultimately has access, Hovership founder and CEO John Zendejas said in an interview. He likened the problem to TikTok and why the U.S. government in January forced Byte Dance to sell its U.S. assets to a majority American-owned joint venture. And since virtually all Chinese companies receive financial backing from the government to improve their global competitiveness, those carriers could be forced to share their data with authorities because there are no private sector firewalls there, he added. 

“I think that with package delivery, you could infer consumer buying habits in the same way [as TikTok] because the name of the shipper is on the outside of the box. The delivery companies know who the shippers are. They know what people are buying, as well,” Zendejas said. U.S. delivery companies and their customers sign rigorous data protection agreements, but the Hovership CEO suggested that Chinese counterparts might sell that data to a customer’s competitors or the Chinese government.

And American firms can’t compete with Chinese firms whose primary interest isn’t about making money and who are leading a race to the bottom on pricing in a sector with razor-thin margins, he argued.

“Everybody wants to know what they could do with data that’s being sent abroad where we’ve got less legal control,” he told FreightWaves. “But the main issue, for me, is really the takeover of the supply chain itself and the leverage that could be had if you’re a foreign government owning big chunks of the U.S. supply chain.”

Analysts say none of the China-connected startups are making any money yet and will need to raise more funds from investors to continue building out their delivery networks, including parcel distribution centers. Trying to understand who is behind these companies is very difficult because they often don’t disclose their investors, many of whom are often interconnected.

One consultant active in express parcel logistics, who asked not to be named in order to speak freely, dismissed the notion that China-backed parcel carriers have special data-collection techniques that can be used for nefarious purposes.

“Anyone that has Google Maps and Google Street View can see the same thing. You don’t need to have thousands of drivers delivering packages to understand where people live. People’s addresses, home values, etc., it’s all public record in America, and anyone from the Chinese government can have that,” he said. 

A more legitimate line of inquiry would look at the labor practices of startup couriers and how their low driver and warehouse compensation gives them an advantage over more mature carriers, the industry professional added. And any examination of these carriers gets tricky when CEOs of Chinese descent, who were born in America as U.S. citizens,  secure venture capital from overseas in the same way U.S.-based companies are legally allowed to act.

Gofo, for example, was founded in 2023 by Chuan Zheng, a U.S. citizen of Chinese heritage with extensive experience in logistics and cross-border e-commerce. A significant share of historical volume has come from e-commerce merchants linked to China, but the U.S. business is rapidly expanding its presence among North American retailers and smaller online sellers. The company’s website shows Amazon, Walmart marketplace, Shopify and eBay include Gofo in their list of approved carriers for retailers using their shipping platforms.

“Gofo is an independent operating entity incorporated under the laws of the State of New York, lawfully operating across multiple U.S. states. Our leadership and core operations are based in the United States, under U.S. corporate governance, and we operate in compliance with applicable U.S. federal and state laws,” Gofo said in a statement to FreightWaves.

Gofo stressed that its “pricing reflects market-based operations and operational scale. We do not engage, and have not engaged, in any form of subsidized or predatory pricing. Customer data is stored and processed in line with applicable U.S. data protection laws and our existing compliance framework, which includes strict access controls and audit mechanisms.”

UniUni, based in Vancouver, Canada, was co-founded by Peter Lu, who went to university and started his career in Shanghai. In March, the company received a $30 million equity investment raised by Rockets Capital, a China-based private equity firm that opened in 2022. The company’s lead Canadian investor is Celtic House Venture Partners. The carrier recently announced it plans to go public in partnership with a special purpose acquisition company in a deal that values the company at $1 billion.

“The facts here are straightforward: UniUni is a Canadian-founded, Canadian-controlled, and Canadian-headquartered company operating transparently across North America. We are proud of the business we have built in both Canada and the United States, where we continue to invest in our operations, workforce, and customer partnerships. Our focus remains on serving customers, supporting our employees and delivery partners, and continuing to build one of the most innovative last-mile logistics companies in North America,” UniUni said in a provided statement.

SpeedX was unable to respond in time for publication.

Mark Waverek, a veteran parcel industry operator and managing partner at PlaidMark Management Consulting, said Cotton raised valid concerns.

“Should legislators wait until it’s too late or do they try to circumvent that now and say, ‘Hey, we’re not going to allow foreign governments to come in here and take away market share that could impact jobs,” he told FreightWaves. “The bottom line of the whole inquiry is, if this costs American jobs, how is this good for America?”

The huge Chinese marketplaces that rely on the startup parcel carriers get rates below the actual cost of delivery, Waverek alleged. It might be possible to make money on some routes if there is enough volume density, but in most cases they lose money and can only survive with subsidies. The fact that most low-cost delivery companies don’t charge fuel surcharges at a time when diesel fuel prices are skyrocketing proves the point that their goal is to drive competitors out of the market, he said.

And what China-connected parcel carriers do with their data is a big question mark, Waverek added.

“When you train delivery robots [as some companies are experimenting with] they capture geo-location data. So it tells you where people live, what they receive. You can build an algorithm on everything that someone does. I don’t think Google Maps tells what you receive at your house every day,” he said.

The last-mile delivery space has become so commodified in recent years that FedEx and UPS are shifting their attention to higher margin B2B logistics services and cross-border, or long-distance domestic e-commerce shipping, which are more complex to execute and command higher rates. 

Meanwhile, Chinese marketplaces like Shein, Temu, Alibaba, TikTok Shop and JD.com are actively leasing large warehouses, stocking them with China-made goods shipped by ocean and fulfilling orders from U.S. soil. The trend accelerated last year when the U.S. government closed the de minimis privilege that provided duty-free, informal entry with limited paperwork for low-dollar imports, significantly reducing the advantage of direct-to-consumer fulfillment from China, with individual shipments moving by aircraft directly to partner parcel carriers for home delivery. 

“I think it’s really more theatrics than it is national security. There’s probably something to be said about these companies undercutting others with their pricing, but it’s not a national security play. It’s a typical competitive play. The Chinese model has been going on for a long time with tariffs and with some of their import practices,” the consultant added.

Cotton urged the Justice Department to examine the ownership and control of Chinese-linked last-mile delivery companies, the data they collect and the Chinese government’s access to it, whether their subsidized, “predatory” pricing violates federal antitrust laws and whether the firms or their parent companies facilitate tariff evasion and customs fraud.

“Chinese-owned third-party logistics companies make a business out of helping their clients evade [tariffs] through transshipment, undervaluation, and ghost importers of record, then undercut domestic firms with the savings. That’s not competition. It’s industrial displacement,” the senator said. 

While many Chinese companies have been officially accused over the years of various types of duty evasion, the illegal activity is not limited to Chinese exporters and their freight agents. 

Gofo said it is only focused on last-mile delivery and doesn’t engage in cross-border customs clearance. “All shipments handled by Gofo enter our network only after they have already cleared U.S. Customs. The letter’s [import-related] accusations therefore do not apply to Gofo’s actual business. Those characterizations are factually inaccurate as they relate to us,” the company said, while adding it takes the broader policy conversation seriously.

“We should make sure that these parcel carriers are on an equal playing field before they have an adverse effect on U.S. companies,” but using the specter of a Chinese communist threat to national security is political “theatrics,” the parcel expert said.

(UPDATED at 7 p.m. ET)

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

Write to Eric Kulisch at ekulisch@freightwaves.com.

Startup courier Gofo acquires Cirro E-commerce for access to retailers

Independent parcel carriers continue network, tech investments

Saia opens terminals in Pacific Northwest, Midwest

a Saia trailer at a warehouse

Less-than-truckload carrier Saia announced the opening of terminals in Washington and Indiana. The Johns Creek, Georgia-based company has invested more than $2 billion into its network over the past couple of years, growing its terminal count to 216 and establishing a true national footprint.

A new service center in Edinburgh, Indiana (40 minutes south of Indianapolis) began operations earlier this week. The location supports Saia’s (NASDAQ: SAIA) broader service offering across the Midwest. A facility in Marysville, Washington (40 minutes north of Seattle) launched service on May 4. It was integrated into the carrier’s Pacific Northwest operations.

“These openings reflect our focus on getting closer to the customer and building density in the right places to better support shipper needs,” said Patrick Sugar, executive vice president of operations at Saia. “By adding capacity in both the Pacific Northwest and the Midwest, we’re able to create more efficient routing opportunities and deliver a more consistent service experience.”

Last month, Saia opened a 74-door terminal in York, Pennsylvania. The service center sits between key markets in the Mid-Atlantic and the Northeast.

Saia previously acquired approximately 30 terminals valued at $250 million from bankrupt Yellow Corp.

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