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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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TL stocks take wild ride into, out of Q4 earnings season

a red Knight Transportation tractor pulling a white Knight trailer on a highway

Truckload stocks appeared priced for perfection heading into the fourth-quarter earnings season. Shares ran more than 40% higher from the week before Thanksgiving to mid-January, when J.B. Hunt Transport Services reported. The move was in lockstep with rising tender rejections and spot rates. Earnings misses and lackluster outlooks were set to be punished until a surprisingly positive manufacturing update provided the group another shot in the arm. However, that bump was partially dashed by a tiny tech company touting plans to disintermediate the space.

Carriers reported decent peak-season demand, underscoring supply-side tightening from increased regulation of the driver pool. Winter storms in December further stretched the dynamic. However, improving fundamentals came late in the quarter, leaving the period more indicative of the prolonged downturn. While the space appears on the verge of an upswing, management teams were unwilling to bake a recovery scenario into their 2026 outlooks.

Table: Company reports

Following the 40% runup into earnings season (the S&P 500 was up only 6% over that stretch) shares moved sideways after the first couple of reports. However, TL and less-than-truckload stocks jumped in the first week of February after January’s Purchasing Managers’ Index report showed life across the manufacturing complex for the first time in a year.

The group then sold off following the Thursday release of a white paper from a largely unknown company, claiming its AI tools will significantly overhaul freight brokerage and generate large savings for users. Algorhythm Holdings (NASDAQ: RIME), a firm with a sub-$10 million market cap and better known for its days as a seller of karaoke machines, said its formula has unlocked significant reductions in empty miles and headcount.

A version of its platform in India is coming to the U.S.

Industry participants and analysts largely panned the claims. The operation appears to require mass collaboration from shippers, carriers and 3PLs to achieve the stated synergies. That seems unlikely as most intermediaries have spent billions building siloed tech stacks to garner market share. The news caused a mid-teen percentage selloff in 3PL stocks. It also dragged down shares of asset-based carriers by mid-single digits. Both groups were up low-single-digits in midday trading on Friday.

(The positive and negative updates skewed post-earnings stock reactions for some carriers.)

SONAR: Outbound Tender Rejection Index (OTRI.USA) A proxy for truck capacity, the tender rejection index shows the number of loads being rejected by carriers. Current tender rejections signal a tight truckload market. To learn more about SONAR, click here.
SONAR: National Truckload Index (linehaul only – NTIL.USA) The NTIL is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Spot rates stepped higher through peak season as new constraints on the driver pool took hold. Severe winter weather amid a tighter capacity backdrop is keeping rates elevated in recent weeks.

What did they say?

J.B. Hunt Transport Services (reported Jan. 15)

J.B. Hunt (NASDAQ: JBHT) delivered more positives than negatives in the fourth quarter. It again saw the fruits of a $100-million cost reduction program (80 basis points of operating margin). Adjusted operating income was up 11% y/y even as revenue dipped 2%.

It said it is taking market share but that the wins may have more to do with being aligned with winning customers than an overall lift in demand. It tamped down enthusiasm around an inflecting freight market—which analysts called “conservative”—noting too many head fakes in the past when trying to call this cycle.

It also flagged a couple of headwinds—a $90-million hit to 2026 revenue from the loss a final-mile customer, and a delay in net fleet growth in its dedicated unit. While it didn’t provide numbers around future cost elimination, it noted several additional opportunities. It also said work done at the brokerage unit has pushed operating costs down to 2018 levels, setting it up for a bigger pop in results in a recovery. (Brokerage gross margins were squeezed 490 bps as spot rates jumped to close the quarter.)

Shares of JBHT began to run in mid-October, ahead of most TLs, after belt tightening led to a big earnings beat in the third quarter.

Knight-Swift Transportation (reported Jan. 21)

Knight-Swift’s (NYSE: KNX) fourth-quarter adjusted earnings came in light of expectations (it reported a headline net loss) as operating margins eroded y/y across every business unit except intermodal. (Intermodal results improved but the unit still booked a slight operating loss.) Importantly, Knight-Swift’s first-quarter guidance was in line with consensus, and the company expects to achieve margin improvement in 2026 even if volumes and rates don’t improve.  

It has removed $150 million in expenses from its TL business, $50 million of which were fixed and not expected to return as volumes come back. (The fixed cost reductions represent 120 bps of TL unit operating margin.) The variable cost takeouts (maintenance, fuel and insurance) will return in an upswing but potentially not to the same magnitude once incurred. (These costs have moved lower as a percentage of revenue.)

Knight-Swift said a reduction in truck supply has tightened the market, noting network balance was trending ahead of normal seasonality through the first couple weeks in January. But management wasn’t ready to say the market has finally turned.

It noted some shippers have begun moving freight to asset-based carriers in efforts to lockdown capacity. It’s currently targeting low- to mid-single-digit contractual rate increases (leaning toward the upper end) during the 2026 bid season. It also sees the potential for premium spot market opportunities, which haven’t been around in a while.

Marten Transport (reported Jan. 27)

Refrigerated carrier Marten (NASDAQ: MRTN) reported y/y declines in operating results, but saw some improvement sequentially. Revenue was down 9% y/y with adjusted operating income falling 31%. However, adjusted operating income improved 70% sequentially from the third quarter.

Gains on equipment sales were a tailwind both y/y (nearly 9 times higher) and sequentially (74% higher). However, “aggressive cost controls” were also credited for the improvement. Marten has been focused on improving tractor utilization. Both revenue per tractor and miles per tractor improved sequentially.

Marten’s consolidated OR was 80 bps worse y/y but 110 bps better sequentially. The TL OR improved 310 bps sequentially to 99.1% while its dedicated OR slid 60 bps to 94.6%.

Schneider National (reported Jan. 29)

Schneider’s (NYSE: SNDR) fourth-quarter and 2026 outlook came in below expectations, sending shares as much as 18% lower in the trading session following the report.

The company said “softer than expected market conditions” in November gave way to “material tightening in December” as severe weather gripped the Midwest. However, the late demand surge wasn’t enough to save the quarter. Its dedicated business also experienced some weakness from “unplanned auto production shutdowns.”

A jump in purchased transportation (TL spot rates) and weather-related costs to close the year, along with “heightened healthcare costs,” were the drivers behind the earnings shortfall.

A full-year 2026 adjusted EPS guide of 70 cents to $1.00 came in below the $1.07 consensus estimate at the time of the print. Management noted “some conservatism” at the low end of the range, but said it wasn’t ready to underwrite a meaningful recovery in the new year.

Schneider increased a cost-reduction program. After realizing $40 million in cost takeouts last year, it plans to remove a similar amount in 2026, which would equate to 70 bps of consolidated operating margin improvement.

Covenant Logistics Group (reported Jan. 29)

Covenant (NYSE: CVLG) said heightened regulatory enforcement is pushing capacity from the market and that supply and demand may already be balanced. The company posted a modest miss on an adjusted basis (a large headline net loss) in the fourth quarter as the government shutdown, higher insurance claims and elevated capacity costs were an overhang.

The company has tightened plans around capital allocation, intentionally shrinking its fleet to improve truck utilization and margins. It is moving away from the generic, commoditized TL market, but will continue to look for opportunities to grow exposure to specialized dedicated freight.

Covenant said revenue trends across its businesses improved during the first three weeks of January. Low- to mid-single-digit contractual rate increases in its expedited offering should begin to have an impact on results in the first quarter.

Heartland Express (reported Feb. 3)

Heartland’s (NASDAQ: HTLD) fourth quarter marked 10 straight net losses, excluding one-time real estate gains. However, the company has logged sequential margin improvement in each of the past three quarters.

Heartland does not host a quarterly call, nor does it provide operating metrics around utilization and pricing.

The company pointed to some “positive signs” around customer volumes and rates. It said truck capacity is leaving the market, but that a recovery is unlikely to occur “until some months later in 2026.”

Werner Enterprises (reported Feb. 5)

Werner (NASDAQ: WERN) reported a net loss before adjustments. However, the bigger story was the company’s decision to restructure its one-way unit as it continues to build out its dedicated offering.

The move is expected to improve fleet utilization and return the unit to profitability. The fleet included nearly 3,300 tractors in 2022 but stood at less than 2,400 units at the end of 2025. In addition to the downsizing, Werner is moving assets into its more profitable one-way offerings like expedited, cross-border, and long-haul delivery using driver teams.

The announcement followed Werner’s acquisition of dedicated carrier FirstFleet at the end of January. The $283 million deal added over 2,400 tractors and $615 million to the top line. Werner is now the fifth-largest dedicated provider in the U.S.

The deal is immediately accretive to earnings but headwinds and costs from the one-way restructuring will likely be a drag on results at least in the first quarter. Even after downsizing the one-way business, Werner still expects to be able to play in an improving spot market.

More FreightWaves articles by Todd Maiden:

Congress looks to fight ‘chameleon carrier’ trucking networks

trucks on the highway

WASHINGTON — Following a high-profile deadly truck crash in Indiana last week that uncovered a network of fraudulent trucking companies, legislation has been introduced in Congress to give the Federal Motor Carrier Safety Administration authority to use artificial intelligence to track them down.

U.S. Rep. Harriet Hageman

Introduced on Thursday by Harriet Hageman, R-Wyo., the bill directs the FMCSA administrator “to conduct a study on chameleon carriers in the United States and plan, develop, and test an advanced automation tool to help enforcement personnel detect chameleon carrier applications under the registration process of the Department of Transportation, and for other purposes,” according to the bill’s summary.

The official text of the legislation has not yet been published, but Hageman’s bill, according to Dallas TV station WFAA, “directs federal regulators to finally determine how widespread chameleon carriers are, and how many deaths, catastrophic injuries, and crashes have been tied to them.

“It would require the comptroller general to report back to Congress within one year,” WFAA’s report noted, and would direct FMCSA “to build an automated screening system designed to catch carriers trying to game the system before they’re cleared to haul freight again.”

Last week FMCSA began investigating the Indiana crash, in which four people were killed, after it was revealed that the driver of the truck was “an illegal trucker,” according to Transportation Secretary Sean Duffy, writing in a social media post.

The driver’s company was part of a network of carriers that “have all the markings of fraud and are accused of being chameleon carriers,” Duffy said. “This is when companies swap names and DOT numbers to avoid enforcement.”

Citing the same crash, U.S. Sen. Jim Banks, R-Ind., earlier this week launched a tipline for truckers and others in the trucking industry “to share concerns about carriers employing or contracting with drivers who are not legally in the United States, who are not authorized to drive a truck, or who cannot meet required English-language safety standards,” Banks stated.

“The TruckSafe Tipline gives people on the ground a way to speak up when they see carriers cutting corners and putting lives at risk.”

Rob Carpenter, an independent writer for FreightWaves and a regulatory compliance consultant, points out that identifying a chameleon carrier is not just a matter of looking for shared addresses in government databases.

“A chameleon carrier operation is about concealment,” Carpenter wrote in a FreightWaves article last week. “It’s about constructing a network of entities designed to evade regulatory detection and enforcement.”

The “connective tissue,” he said, can be any combination of a long list of identifiable information, including shared Vehicle Identification Numbers moving between authorities, common officers or registered agents across multiple DOT numbers, and identical or overlapping phone numbers and email addresses.

In the network implicated in the Indiana crash, “we found all of those indicators.”

Click for more FreightWaves articles by John Gallagher.

Tariff rethink? Trump reviews steel, aluminum duties as inflation looms

U.S. President Donald Trump is considering scaling back some tariffs on imported steel and aluminum goods amid concerns that the levies are pushing up consumer prices.

According to a report by the Financial Times, cited by Reuters, administration officials are reviewing a list of products affected by the tariffs and weighing exemptions for certain items.

Officials at the U.S. Commerce Department and the U.S. trade representative’s office believe some of the duties have increased prices for everyday goods such as pie tins and food-and-drink cans.

The potential rollback comes as inflation and cost-of-living pressures remain a key political issue ahead of the November midterm elections.

Trump imposed tariffs of up to 50% on steel and aluminum imports last year and has frequently used trade levies as leverage in negotiations with trading partners. 

The administration is now considering exempting certain products, pausing further expansions of the tariff lists and launching more targeted national security reviews into specific goods instead.

Canada and Mexico are among the largest foreign suppliers of steel and aluminum to the U.S, underscoring how closely integrated North American manufacturing supply chains have become. 

Canada is typically the top source of both imported steel and primary aluminum, accounting for roughly half of U.S. aluminum imports in some years, while Mexico consistently ranks among the leading steel exporters to the U.S. 

Much of that material moves by rail and truck across the northern and southern borders, meaning any changes to metals tariffs can quickly ripple through cross-border freight volumes and industrial production.

Logistics stock selloff Thursday brings assurances of calm

C.H. Robinson did two unusual things Thursday.

First, its high-flying stock, driven in part by investor enthusiasm over the 3PL’s embrace of AI, was one of the logistics companies that fell the hardest that day in a sea of red arrows that sucked in trucking firms as well. C.H. Robinson stock was down 14.54% on the day.

(For perspective, C.H. Robinson hit its 52-week high on February 6 at $203.34. Its 52-week low was April 9 at $84.68. It closed Thursday at $179.48.)

The second unusual thing it did was talk about it…sort of.

Companies across the spectrum are generally reluctant to say anything publicly about why their stock is doing well or doing poorly. There are plenty of regulations on “forward looking statements” that company managements strive to ensure they are in compliance.

The statement released by C.H. Robinson (NASDAQ: CHRW) did not specifically address the size of the stock price decline. But it defended its use of AI and looked to the future, saying the company believes continued adoption of AI “will only continue to strengthen our performance and widen our competitive moat.”

But in what could be seen as a subtle boost to the owners of its stock, the C.H. Robinson statement said “we remain confident in our strategy and continue to execute on our disciplined share repurchases from the past year.”

The enormous selloff also hit two other publicly-traded 3PL companies RXO (NYSE: RXO), whose stock already had been falling for a year unlike C.H. Robinson, fell more than C.H. Robinson, down 20.45%. Landstar (NASDAQ: LSTR) declined 15.6%.

Expeditors International (NYSE: EXPD) fell a whopping 13.18%. While it is not an over the road freight broker like RXO or C.H. Robinson, its business is an asset-light company that works to get freight from shipper/manufacturer to an end customer via an ocean or air carrier on assets owned by others.

Although the selloff across markets appeared to be directed at companies whose business can be even further disrupted by AI than what was expected already, both logistics and trucking companies felt the sting of the decline. 

Among the trucking companies whose stocks took a big hit Thursday, TFI International (NYSE: TFII) was down 8.11%; Forward Air (NASDAQ: FWRD) fell 8.75%; Werner Enterprises (NASDAQ: WERN) declined 5.34%; Heartland Express (NASDAQ: HTLD) fell 5.75%.

Among the bigger trucking companies, Old Dominion (NASDAQ: ODFL) fell 4.6%, J.B. Hunt (NASDAQ: JBHT) declined 5.06% and Knight Swift (NYSE: KNX) declined just 0.6%.

The S&P 500 fell 1.57% for the day.

Just before 11 a.m. Friday, some of those stocks had rebounded but only a fraction of the prior day’s decline. C.H. Robinson was up 3.42%; RXO was up 2.77%; and Landstar rose 0.81%.

The transportation research team at Baird Equity Research sought to figure out a reason for the decline in a published note.

“The transport complex has come under meaningful pressure this morning for reasons that are not immediately identifiable,” the company said in its research note. “That said, we would note that the weakness appears to be concentrated in the asset-light, technology-enabled brokerage platforms, both in domestic truck brokerage and international freight forwarding.”

It cited four possible causes for the selloff.

  • The most important, Baird said, was “emerging debate around open-source automation agents such as Molt Bot that offer increased potential to automate routine back-office tasks and help equalize the technology playing field for smaller operators.” The size advantage of companies like C.H. Robinson would presumably shrink if that were to occur. 
  • “Spot rates likely peaking following winter storm Fern and the bomb cyclone before the receipt of tax rebate checks that are expected to be meaningfully higher year-on-year.
  • The Self-Drive Act, which could speed autonomous trucking. 
  • And a reason that might seem counterintuitive: the FMCSA final rule on non-domiciled CDL holders. Some interpretations of the law have concluded that it will not reduce capacity as quickly as might have been expected.

Baird’s note was primarily to express skepticism as it reiterated its Outperform rating on several stocks. 

“Automation is not a new theme,” Baird said. “The digital brokers automated in the 2010-2015 period, but service dependability was lacking as was their ability to leverage high execution predictive analytics. Successful execution in digital brokerage requires a best in class data set, built over years across cycles. Only the large tech-enabled players like CHRW and EXPD possess that breadth and depth of shipment, pricing, and carrier performance data to deliver. Security is also a growing focus.”

A similar research note from the transportation research team at Barclays reiterated its Overweight rating on C.H. Robinson in addressing the causes for the selloff.

Its note linked to a tweet from the co-founder at Open Mercato regarding a freight management system built on Open Mercato. Barclays said it believed the promise inherent in this tweet from Tomasz Karwatka was a key driver in the decline in transportation stocks, particularly the 3PLs. 

Barclays also suggested a press release from Algorhythm Holdings (NASDAQ: RIME) that its SemiCab platform “in live customer deployments” was able to “scale freight volumes by 300% to 400% without a corresponding increase in operational headcount” was a factor in the selloff.

Algorhythm released a white paper on its findings in conjunction with the press release. (A link to the white paper was not functional early Friday).

But Barclays said the key disruptor in transportation logistics remains C.H. Robinson. 

“We see the moves in asset-light transportation stocks as disproportionate to the risk and would be significant buyers of weakness, especially in CHRW shares,” it said.

C.H. Robinson’s statement repeated many of its own boasts about where it stands in the cycle of AI adoption. It wrapped up its defense by alluding to its financial position without mentioning the stock price. 

“Our leadership in AI enhances the already strong fundamentals of our company,” C.H. Robinson said. “We have outperformed the freight market for eight consecutive quarters. Our strong balance sheet, liquidity and investment-grade credit rating allow us to continually invest in innovation, even when competitors can’t, while also buying back our stock. We are a dividend aristocrat, returning higher dividends to our investors for 27 consecutive years.”

More articles by John Kingston

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DP World chairman resigns after Epstein links revealed

The chairman of one of the world’s biggest container terminal operators resigned Friday after his links to convicted child sex offender Jeffrey Epstein were revealed this week.

DP World in a brief announcement said Group Chairman and Chief Executive Sultan Ahmed bin Sulayem resigned from the Dubai-based company, effective immediately. 

Sultan Ahmed bin Sulayem (Photo: DP World)

Essa Kazim has been appointed chairman and Yuvraj Narayan Group CEO.

Sulayem, of the United Arab Emirates, was instrumental in DP World’s $6.8-billion acquisition of P&O in 2006, and helped transform the company into a dominant operator with container terminals on six continents handling 1 million containers per year, as well as a network of supply chain services 

In the U.S. it maintains logistics and warehouse operations at four locations. 

Canada’s second-largest pension fund and a British investment fund this week announced they were suspending investments with DP World – the first business fallout from the Epstein scandal.

Quebec pension fund La Caisse and Canadian National Railway are partners on a major container terminal project at the Port of Montreal. A CN spokesperson in an email to FreightWaves said that the company had no comment. The Montreal Port Authority did not respond to emails for comment.

On Monday Democratic Rep. Ro Khanna revealed Sulayem’s identity among previously redacted Epstein emails released by the Department of Justice. 

Sulayem maintained ties with Epstein for a decade after the financier was convicted of two child prostitution charges in Florida in 2008. The two discussed sex and business in thousands of emails, and Epstein helped connect Sulayem with high-powered individuals including former Israeli Prime Minister Ehud Barak.  

Find more articles by Stuart Chirls here.

Related coverage:

Lower freight shipments weigh on world container rates

Investors halt deals with DP World over CEO’s Epstein ties

New MOL executive team to succeed CEO

Asia-U.S. ocean freight rates give up 2026 gains

Trucking Risk Control Could Become the New Entrant Gate

There’s an old saying in the “fake rich” world: you can rent the Bentley, rent the mansion, shoot the video, post the lifestyle, and for a little while, you can make people believe you’ve arrived. But there’s one thing most people can’t fake. A jet. It’s too expensive, too scrutinized, and too many people have to sign off before you get the keys.

For decades, insurance was trucking’s jet.

You could get a USDOT number for free. You could file a BOC-3 for a small amount. You could lease a truck for a thousand bucks a week and a trailer for less. You could fake a lot of things on the way in. But you could not fake your way past an underwriter. That was the one door in this industry that actually required you to prove something before it opened.

When I started my own authority, I got put through the absolute ringer. Loss runs. MVRs. Operations questions. Safety management controls. Dispatch practices. Maintenance programs. Drug and alcohol testing. Driver qualification files. Someone actually wanted to know whether I had the business maturity and the risk controls to be trusted with 80,000 pounds next to families on I-95.

That gate has eroded. I think it’s time we talk about how to put it back.

What The Front Door Used To Look Like

Traditional insurance underwriting focused on screening risk. Before you could bind coverage and activate your authority, underwriters examined your operation. They reviewed your driver qualification process, MVR standards, drug and alcohol compliance, hours-of-service oversight, maintenance discipline, accident register, claims handling, organizational structure, and supervisory controls. That was the baseline.

At renewal, the process went even deeper. Agents and brokers assembled a full marketing package. They told your story. This is who they are. This is how they operate. This is how they manage risk. Here are the improvements they’ve made. They sold you to underwriters the way you’d sell a prospect to a captive group. That process enforced accountability, rewarded improvement, and created a natural barrier to entry that kept out those with no business operating 80,000-pound equipment on public highways.

Was it perfect? No. But it required the risk to prove itself before it received cheap access to the system.

What The Front Door Looks Like Now

Today, a growing slice of the market runs on self-attestation and instant-issue workflows. Especially the nefarious and poor performers. A new entrant goes online, self-declares a handful of details, who they are, what they have, how they operate, where they’re located, pays a premium, and walks away with a policy. No underwriter conversation. No document review. No verification of anything they just told you.

That policy, paired with a $300 authority filing fee, a free USDOT number, and a $25 BOC-3, is enough to put a truck on the highway. The industry has moved toward connected and telematics-driven programs that can be activated quickly for new policyholders. 

I’m not anti-tech. I work with captives and insurers constantly. Innovation in underwriting is necessary and overdue. But when speed replaces verification at the entry point, we’re moving the risk test from the underwriting desk to the highway.

The public is funding that experiment.

Timing Mismatch

FMCSA’s New Entrant Safety Assurance Program was an important step forward. New carriers are supposed to receive a safety audit within the first 12 months of operation and are considered new entrants for 18 months. That program is designed to verify whether a carrier has the basic safety management controls in place to operate.

But the timing is the problem. Chameleons and bad actors have stolen millions in freight and burned their bridges; they’re often closed or off to the secret side entity before any new entrant can audit them. 

Under the current structure, a carrier receives authority, begins operations, moves freight, hires drivers, and accumulates exposure on public roads for months before anyone assesses whether it has the infrastructure to do so safely. That’s backward. We’re essentially telling people: get on the road now, and we’ll take a closer look later.

We all know what happens in that gap. Carriers with weak controls, weak maintenance, weak hiring, weak oversight, or outright fraudulent operations rack up miles, violations, and sometimes tragedies before the system even sees them.

The enforcement bandwidth to close that gap doesn’t exist. I’m not throwing rocks at FMCSA investigators. They’re doing the job with the resources they’ve got. But the math is unforgiving. Federal and state partners conducted roughly 12,300 compliance reviews in 2024. That’s roughly 1.5 percent coverage of the active carrier population. We cannot physically audit our way out of this at the front door using only government headcount.

So the jet disappeared at the same time our ability to catch the worst actors early stayed flat.

How Do We Spend The Money We Do Have 

Before I lay out what I think we should do, I want to raise a question about what we’re already doing, because it matters.

FMCSA has previously contracted pre-authority screening work. The Crash Preventability Determination Program, administered under the Volpe Center, is one example of the agency using outside resources to support safety determinations. That contract was competitively bid. I know, because I bid on it.

We were not selected. The contract was awarded to a company that quoted roughly one-quarter the rate for the same scope of work, tens of thousands of crash preventability determinations over two years, for approximately $400,000. There’s no way you can hire enough US citizens to do that many reviews objectively in two years and still meet federal wage guidelines. It’s a literal impossibility. 

There are only two ways you do that volume of work at that price. You’re either outsourcing the labor or you’re running an AI model with limited context outside the parameters used to determine causation. Both of those are problematic. Crash preventability is not a bulk processing exercise. It requires an understanding of crash dynamics, regulatory context, carrier operations, and on-the-ground reality. If we’re making those determinations on the cheap, we need to ask what we’re getting for our money and whether the quality matches the stakes.

I raise this not to relitigate a contract, but because it speaks directly to the broader problem: when we try to cut costs on safety verification, we tend to get what we pay for. If we’re going to build a front-door screening model for new entrants, it has to be grounded in legitimate expertise, not lowest-bid economics.

Make Contextual, Pre-emptive Risk Control Great Again

The answer isn’t shutting the door on new drivers or new businesses. The answer is making sure they’re actually ready before we hand them the keys to 80,000 pounds on a public highway. And we can do this without adding a single federal employee to the payroll.

Here’s what I’m proposing, and it’s modeled on the exact process that works in the private insurance market every day. I know because I built one of the few fleet-exclusive risk control programs for captives and insurance providers. 

Raise the entry fee to fund the screening

The current authority application cost is roughly $300. Let’s be honest: $300 is not a barrier to anything. That’s your rented Rolls-Royce. It’s enough to look the part, but not enough to prove you belong.

Increase it to $1,000. That’s still entirely accessible for any legitimate operator who is serious about starting a business. But it’s enough to filter out the undercapitalized, the unserious, and the opportunistic entries that clog the system and create risk for everyone else.

A portion of that fee funds mandatory pre-authority risk-control screening. No new tax dollars. No additional appropriations. Those entering the system pay for verification that protects everyone already in it. 

This is what we currently do for captive group member prospects. You don’t join a captive group as a member without a screening and proof that your risk profile is acceptable. 

Require a pre-authority risk control assessment

Before authority is activated, every applicant completes a standardized, off-site review of basic safety management controls. This is not a full compliance audit. This is a minimum viable control review, the same kind of assessment I perform for captive insurance groups when they’re deciding whether to admit a new member.

The review covers the fundamentals: driver qualification file process, drug and alcohol compliance program, hours-of-service oversight, preventive maintenance and inspection program, accident register and claims reporting, safety policies and supervisory structure, and proof of operational control. That last one matters more than people realize; it’s how you catch ghost leasing setups and paper operations before they ever touch a highway.

Outcomes are straightforward. Approved. Conditional, with required corrections and a monitoring period. Or deferred, meaning the applicant has fundamental gaps that need to be addressed before they can operate. Authority activation is tied to completing this baseline verification.

I built this exact system for my own practice because I’m a one-person team, and I still assess thousands of fleets a year for captive groups and insurers nationwide. It’s an electronic intake with standardized questions, required document uploads, automated routing into a backend system with alerts and scoring, cross-checks against FMCSA safety history, and a clear outcome with reasons and corrective actions. It’s not magic. Its structure. And it scales.

Keep the existing new entrant audit, and make it better

Nothing in this proposal eliminates the 12- to 18-month new-entrant audit. It stays. But its role changes. Instead of being the first meaningful contact between FMCSA and a new carrier, it becomes a validation checkpoint. The carrier has already been screened. The fundamentals have already been verified. Now the audit confirms whether the carrier is actually doing what they said they’d do.

That’s a much more efficient use of limited enforcement resources. You’re not starting from zero with every carrier you walk into. You have a baseline. You have documents. You have a score. You know what to look for.

Monthly risk monitoring after the authority

This is the other half of the solution, and it’s where the system goes from reactive to preventive.

Every new entrant receives a monthly risk profile scorecard. What changed in your FMCSA profile this month? Violations. Crashes. BASIC indicator movements. ISS trends. Maintenance patterns. Paired with corrective recommendations. DataQs guidance where needed. Coaching triggers when patterns emerge.

This isn’t punitive. This isn’t enforcement, this is a review. This is the same service I provide to my captive and insurer clients right now. A monthly report card that says: here’s what changed, here’s what it means, here’s what to check in your program, and here’s how to fix it. It turns the system from one that punishes failure after the fact into one that catches drift early and gives carriers the tools to correct it.

Who Does The Work

This is where the scalability lives. You don’t need to hire thousands of new federal employees. You contract with accredited, fleet-focused risk control professionals who already exist and already do this work in the private market and have done it for years. 

I work for roughly 200 insurance groups, from large captives down to small regional insurers, agents, and brokers. The risk control professionals supporting this market understand FMCSRs, loss drivers, crash dynamics, and operational realities. We’re not generalists. We’re not industrial hygienists who got handed a fleet account. We are specialists who can assess a carrier’s operations and determine whether the risk profile is acceptable.

A vetted pool of these professionals, operating under standardized protocols and a standardized intake and scoring methodology, could process the volume of new-entrant applications without straining government headcount. The infrastructure exists. The expertise exists. The technology to automate and scale the intake exists. What’s missing is the decision to use it.

Why It Matters

Trucking is not a private club. But it is a shared-risk ecosystem. Whether we like it or not, this industry operates like a captive group. The losses are shared across insurance markets, courtrooms, enforcement actions, and communities. Every nuclear verdict, every preventable fatality, every chameleon carrier that slips through the cracks, we all pay for it. In premiums. In public trust. In regulatory backlash. And in families that never make it home.

In any captive, admission standards matter. You don’t let a high-risk member into the pool without verifying that they meet the group’s minimum expectations, because everyone else bears the cost when you get it wrong.

That’s the principle we’ve lost at the entry point. That’s the principle we need to restore.

I’m writing this as both an article and a proposal. The framework I’ve described here is not theoretical. It’s operational. We run a version of this system every day for the private insurance market, and it works. It scales. It catches what needs to be caught. It does it without requiring a single additional government hire.

This is a conversation worth having. The current entry model was built for a different era, when insurance underwriting provided the scrutiny that the application process didn’t. That scrutiny has diminished in parts of the market. The application cost hasn’t changed meaningfully. The enforcement infrastructure can’t address both gaps simultaneously.

A user-funded, pre-authority risk control screening model is cost-neutral to taxpayers, scalable through existing private-sector expertise, and aligned with how risk is already evaluated in the markets that insure these carriers. It doesn’t replace anything FMCSA already does. It adds a layer of verification at the one point in the process where it matters most: before the truck hits the road.

The goal isn’t to make entry impossible. The goal is to make entry responsible.

A modest increase in the cost of authority, paired with a standardized pre-authority risk-control review and ongoing monthly monitoring, rebuilds a modern version of the gate that insurance once provided. One that uses today’s technology and today’s data, but restores yesterday’s discipline.

We don’t need more paperwork. We need a smarter front door. Once we protect the door, we have an entire other team to clean up what’s already inside. 

Insurance used to be that door.

It can be built again if we choose to.

Lower freight shipments weigh on world container rates

The Drewry World Container Index (WCI) fell 1% to $1,933 per forty-foot container (FEU), the fifth consecutive weekly decline, as rates continue to weaken on benchmark trade routes from Asia to the United States and Europe.

The London-based analyst said spot rates from Shanghai to major U.S. ports declined 1% from the previous week due to lower cargo volume, to $2,214 per FEU to Los Angeles and $2,800 to New York.

To balance capacity amid weak demand ahead of factory closures for China’s Lunar New Year, Drewry said carriers announced 57 blank sailings over the next two weeks on the trans-Pacific trade lane to the U.S. East and West Coasts – “much higher than in previous years. Hence, we expect spot rates on this trade to decline slightly in the coming weeks.”

Blankings are scheduled sailings that are postponed or cancelled, and can play havoc with carefully-planned shipping logistics that depend on coordinated connections across the supply chain.

Sharply weaker rates cut against expectations of rising demand and increasing spot rates ahead of Lunar New Year. But demand peaked earlier than usual as shippers manage an unsettled global trade outlook and widespread economic uncertainty. Normal seasonal patterns could further depress rates, Drewry said.

Spot rates usually apply to on-demand freight as shippers seek transport at the last-minute or to accommodate changes to scheduled services, but also serve as an indicator for higher-volume contract prices. Shippers and carriers are currently negotiating 2026 agreements.  

Spot rates on the Asia-Europe trades also continued their decline. Rates on Shanghai to Rotterdam, Europe’s busiest container gateway, decreased 2% to $2,127 per FEU, while Shanghai-Genoa, Italy dropped 3% to $2,965.

Drewry said carriers have announced 24 blank sailings on the Asia-Europe/Mediterranean trade routes over the next two weeks due to ongoing market volatility and Lunar New Year. The analyst expects spot rates on this trade to decrease slightly in the coming weeks.

Read more articles by Stuart Chirls here.

Related coverage:

Investors halt deals with DP World over CEO’s Epstein ties

New MOL executive team to succeed CEO

Asia-U.S. ocean freight rates give up 2026 gains

Red Sea torpedoes Hapag-Lloyd rates

New territory: RXO debt rating from Moody’s now below investment-grade cutoff

RXO has lost its investment-grade credit rating from Moody’s, knocked down one notch to a level below the cutoff below which corporate debt is considered non-investment grade.

However, the new Moody’s debt rating for the 3PL, announced Tuesday, is still above the equivalent at S&P Global (NYSE: SPGI). S&P Global’s rating for RXO (NYSE: RXO) is at BB, which is considered one notch less than Ba1, the new rating handed down by Moody’s. 

The Moody’s (NYSE: MCO) rating had been Baa3, which means that before the reduction there was a two-notch gap between the ratings of the two agencies. That much of a difference is considered unusually wide.

The Ba1 rating will be for RXO’s senior unsecured notes, its corporate family rating and its probability of default rating. The Ba1 rating will also be put on the company’s new $400 million senior unsecured notes, a recently-announced financial step by the company.

Moody’s already held a negative outlook on RXO; that did not come off with the downgrade. That is a double whammy on RXO, as a negative or positive outlook is a sign that conditions are in place for either a downgrade or upgrade, respectively, in the near to medium term (though the negative outlook on Moody’s has been in place for almost two years.). 

Once the change in debt rating is actually implemented, more times than not the outlook is changed to stable. That did not occur with the Moody’s RXO downgrade.

S&P Global also has a negative outlook on RXO. The BB rating has been in place since May 2024. 

Freight market still an issue

The reasons given by Moody’s for the downgrade were not surprising: a lack of improvement in RXO’s financial outlook due to conditions in the freight market. While spot rates are climbing, a positive sign for carriers, it has been an extremely negative development for brokers who have contract commitments to shippers at lower rates, and they now are facing covering that need for capacity at higher prices than what prevailed when the business was booked. That was evident in RXO’s fourth quarter earnings report.

“The downgrade and negative outlook reflects RXO’s inability to meet operating performance expectations set when the outlook was revised to negative, primarily due to weak earnings driven by persistent softness in transportation freight volumes,” Moody’s said in its report on the move. “This has been prolonged by excess truck capacity, leading to lower freight spot rates and reduced profitability for its brokerage operations.”

The one positive statement by the ratings agency was that it “(recognizes) that RXO’s growth strategy remains positive over the long term, driven by a modestly improving outlook for the trucking and brokerage industry and RXO’s strong market position within the brokerage sector.”

RXO’s reaction

Asked for a comment on the Moody’s action, RXO issued a statement to FreightWaves. 

“The ongoing soft freight market continues to impact the entire industry,” the company said. “RXO has a strong balance sheet, access to significant capital, and a low leverage ratio. We remain well positioned to drive significant long-term earnings and free cash flow growth.”

The Moody’s downgrade noted that leverage at RXO “remains high at 4.0x debt-to-EBITDA for fiscal 2025.”

By contrast, when Moody’s affirmed a Baa2 rating for C.H. Robinson (NASDAQ: CHRW) last year, it said its debt-to-EBITDA rating was expected to be 2X through 2026. C.H. Robinson’s debt rating from Moody’s is Baa2, now two notches more than Moody’s  RXO rating and above the investment/non-investment grade cutoff. 

But with conditions changing in the market, Moody’s expressed some optimism for RXO. “The reduction of excess carrier capacity and an increase in brokerage volume are essential for sustained growth,” Moody’s said. 

Moody’s also was optimistic about the company’s EBITDA margin, which it said would “remain tight in 2026 at approximately 3.4%.” But that would be an improvement over the fourth quarter, when the EBITDA margin was 1.2%, down from 2.5% in the fourth quarter of 2024.

The negative outlook remained on the company, Moody’s said, as it “reflects RXO’s weaker credit metrics, breakeven free cash flow and the uncertain trajectory of its earnings recovery amid a volatile freight transport market.”

A new debt instrument

S&P Global coincidentally weighed in on RXO on the same day Moody’s issued its downgrade, assigning a BB rating to the unsecured $400 million debt offering, due in 2031. That BB rating is S&P’s prevailing rating on RXO, so the move would have been expected.

The $400 million offering is replacing a $600 million revolving asset backed lending revolving facility. S&P said the new debt offering at RXO is “credit neutral, with a modest reduction estimated in interest expense.”

On the company’s recent earnings call with analysts, CFO James Harris said the new line of credit would save about $400,000 in “annual unused commitment fees.”

CEO Drew Wilkerson said on the call that the new debt line “is rightsized for our needs, decreases our cost and provides us with increased flexibility across all market cycles.”

In its statement to FreightWaves after the Moody’s action, RXO also addressed the recent debt offering. 

“On Feb. 11, RXO issued $400 million of unsecured Senior Notes due 2031 to finance the redemption of our 7.5% Notes due 2027, as well as for general corporate purposes,” the statement said. “The offering was well received with an orderbook multiple times oversubscribed, which highlights investor appetite. This issuance further strengthens RXO’s balance sheet.”

More articles by John Kingston

Amazon’s LTL offering reaching out to shippers as possible customers: report

Wall Street reacts to Proficient’s earnings: a 25% stock decline

Kodiak acquired by QXO: a strategic $2 billion-plus leap in building products

Court Challenge Filed After FMCSA Finalizes Non-domiciled CDL Rule, Legal Fight Continues

A new legal battle is underway following the U.S. Department of Transportation’s final rule tightening eligibility standards for nondomiciled commercial driver’s licenses, setting the stage for continued litigation in the D.C. Circuit Court of Appeals.

One day after the Federal Motor Carrier Safety Administration published its final rule formalizing restrictions on nondomiciled CDLs, a coalition of labor unions and individual drivers filed a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit. The case, Jorge Lujan et al. v. FMCSA et al., No. 26-1032, challenges the rule’s legality and requests judicial review of the agency’s action.

The petitioners include the American Federation of State, County & Municipal Employees (AFSCME), the American Federation of Teachers (AFT), and truck drivers Jorge Rivera Lujan and Aleksei Semenovskii. They are represented by attorneys from the Public Citizen Litigation Group and in-house counsel for AFSCME.

The filing marks the latest chapter in an ongoing legal dispute that began in late 2025, when the FMCSA issued an emergency interim final rule addressing non-domiciled CDL screening standards. That interim rule was paused by the D.C. Circuit in November while the court reviewed claims that the agency had bypassed standard notice-and-comment rulemaking procedures.

The newly published final rule, dated February 11, incorporates many of the same restrictions contained in the interim measure. According to the FMCSA’s final regulatory text, the agency concluded that prior state-level practices created what it described as an “unacceptable bifurcated standard in driver vetting.”

Under the final rule, nondomiciled CDL eligibility is now limited to individuals holding specific nonimmigrant visa classifications — H-2A (temporary agricultural workers), H-2B (temporary nonagricultural workers), and E-2 (treaty investors). The rule eliminates employment authorization documents (EADs) as sufficient proof of eligibility and requires applicants to present an unexpired foreign passport along with designated Form I-94 documentation.

The FMCSA states that the rule aims to address what it characterized as oversight gaps in verifying foreign driving histories. According to the agency’s published explanation, domestic CDL applicants are subject to checks through the Commercial Driver’s License Information System (CDLIS) and the Problem Driver Pointer System (PDPS), while nondomiciled applicants previously did not undergo equivalent screening of foreign driving records. The agency asserted that this discrepancy potentially shielded serious violations or crash histories that occurred outside U.S. databases.

Transportation Secretary Sean Duffy defended the rule in a public statement accompanying the final action, stating that the administration intended to close what it described as a safety loophole involving foreign driver licensing standards.

The legal petition filed Thursday argues that the final rule remains legally flawed. Petitioners contend the agency exceeded its authority and failed to properly adhere to administrative rulemaking procedures. They are asking the D.C. Circuit to review and ultimately vacate the rule.

The court has not yet issued a response to the new petition, and no briefing schedule has been publicly announced as of this writing.

The regulatory changes follow months of heightened federal attention on nondomiciled CDLs. In 2025, the FMCSA initiated audits of state licensing agencies to assess compliance with federal credentialing standards. The agency’s enforcement efforts were tied to a broader executive order issued April 28, 2025, titled Enforcing Commonsense Rules of the Road for America’s Truck Drivers, which directed increased scrutiny of English-language proficiency and CDL vetting practices.

The agency also cited concerns following a fatal crash in Florida in August 2025 involving a commercial driver who authorities reported was not lawfully authorized to operate in the United States. That incident intensified federal review of certain state-level licensing practices and prompted threats to withhold federal highway funding from states deemed noncompliant with revised standards.

In its final rule publication, the FMCSA maintained that tightening documentation and eligibility criteria was necessary to ensure uniform safety screening across jurisdictions. The agency stated that nondomiciled CDL holders must meet equivalent vetting standards as domestic applicants and emphasized that licensing authorities are responsible for verifying lawful presence and visa classification before issuing credentials.

The petitioners, however, argue that the rule improperly narrows eligibility categories and may conflict with existing federal immigration statutes governing employment authorization. Their filing signals that the matter is far from resolved and that judicial review will determine whether the rule remains in effect or faces further modification.

The D.C. Circuit’s prior pause of the interim rule adds additional procedural complexity to the case. If the court determines that the final rule cures the alleged procedural deficiencies, it could allow the regulation to stand pending further litigation. Alternatively, the court could extend its review to address the substance of the new restrictions.

For now, the final rule remains published, and its implementation timeline will depend on any subsequent court orders or injunctions issued in response to the petition.

The FMCSA has not issued additional public comment in response to the latest filing. Agency counsel information was not immediately available in court records at the time of publication.

The case continues to draw national attention, as the nondomiciled CDL issue intersects transportation policy, immigration law, administrative procedure and highway safety oversight. The outcome will likely shape future federal guidance on commercial driver credentialing standards and the extent of state discretion in issuing nondomiciled licenses.

With the petition now formally before the D.C. Circuit, the regulatory fight moves from agency rulemaking into federal appellate litigation. Whether the court ultimately upholds or strikes down the new restrictions, the legal back-and-forth over non-domiciled CDLs appears set to continue.

Trump EPA ends basis for heavy-duty truck emissions rules

Donald Trump and Lee Zeldin at White House 12 Feb 2026

WASHINGTON — The Trump administration has formally rescinded an Obama-era policy that effectively kills emissions standards that have loomed over the heavy-duty trucking industry since 2011.

By finalizing the repeal the 2009 “endangerment finding” – which classified greenhouse gases as pollution that endanger public health – the U.S. Environmental Protection Agency removed its authority to enforce GHG-related emissions regulations, including the aggressive Phase 3 greenhouse gas standards finalized in 2024 under the Biden administration that has been characterized as an electric vehicle mandate for truckers.

“Today the single largest act of deregulation in the history of the United States – over $1.3 trillion dollars – is signed, sealed, and delivered,” said EPA Administrator Lee Zeldin at a White House signing ceremony on Thursday, alongside President Trump.

“The 2009 Obama-era endangerment finding and all greenhouse gas emissions standards on light, medium, and heavy duty vehicles that followed is eliminated.”

During a 52-day public comment period held last year by the Trump administration on the proposed rescission, industry groups like the Owner-Operator Independent Drivers Association argued that the Biden administration’s reliance on the 2009 finding ignored the practical costs of the regulations: high sticker prices for new trucks and a “pre-buy” frenzy that flooded the market with older, less efficient equipment.

Finalizing the policy change, the group contends, will directly affect equipment purchasing decisions and operating costs for small trucking companies.

“Electric commercial trucks remain prohibitively expensive and impractical for small carriers due to the upfront cost, reliability concerns, and lack of charging infrastructure,” said OOIDA President Todd Spencer, commenting on EPA’s announcement.

“Equipment affordability and uptime are essential to keeping small trucking businesses operational. We will continue working with EPA to address other nonsensical rules requiring faulty DEF [diesel exhaust fluid] systems that have sidelined small-business truckers for too long.”

For heavy-duty trucking, the cost savings cited by Zeldin are expected to translate into lower acquisition costs for new internal combustion engines and the elimination of EV sales quotas required of truck makers.

Critics and environmental groups will likely challenge the rescission in court, arguing that climate change science remains settled.

However, EPA’s legal strategy relies on recent Supreme Court rulings that limit the power of federal agencies to promulgate economically significant regulations without congressional approval.

Click for more FreightWaves articles by John Gallagher.