Fuel costs, counter-seasonal truckload tightening, and regulatory changes are hitting the freight market simultaneously.
And, unlike a market that’s following seasonal cycles, these forces are converging across routing guides, LTL networks, and cross-border operations all at once.
Data from Uber Freight’s Q2 Market Update and Outlook Report points to a common theme: the window to get ahead of these conditions is narrowing, and the shippers best positioned for what’s ahead are adjusting their strategies now.
Key takeaways:
· The current market tightness is mostly supply-driven, with the FMCSA’s non-domiciled CDL final ruling expected to remove 40,000 drivers annually over the next five years, and tractor sales are down 27.2% year-over-year.
· Spot rates remain elevated by more than 25% year-over-year, excluding fuel, increasing supply-side pressure. But while the rise in spot rates has boosted Class 8 orders, new capacity won’t arrive immediately to ease current conditions.
· On the demand side, the ISM PMI remained at 52.7 in April, above the 50 expansion threshold, signaling sustained economic expansion. Additionally, the wholesale inventories-to-sales ratio is at its lowest level since COVID, which could potentially create a tailwind for demand as inventories are replenished.
· First-tender acceptance dropped from to 82% in April, increasing costs as rejected shipments move down routing guides or into the spot market, where volumes are up 44% year-over-year. As spot rates rose counter-seasonally across all three trailer types in April, further tightening is likely to continue through the June and July peak season.
· Supply-side pressures are only part of the story as geopolitical volatility continues to push diesel prices higher. April alone saw an 11.2% month-over-month increase, and the U.S. national average diesel hit $5.64 per gallon for the week of May 11, up from $3.72 in February. Multiple Midwest states also set records, with prices exceeding $6 per gallon in Michigan and Illinois.
· Higher fuel prices have contributed to spot rates rising 40-45% year-over-year. As carriers look to protect cash flow on high-fuel-cost corridors, lower margin lane rejections are increasing. And because fuel surcharges are usually calculated on a per-mile basis, carriers are now baking idling costs and deadhead moves into them. More importantly, while shippers are seeing these costs in their budgets now, they may not fully reverse once fuel stabilizes, due to other structural market pressures.
· As the truckload market tightens, partial loads and large LTL shipments are moving to LTL carriers. The LTL Producer Price Index is currently more than 20% higher than the comparable 2025 levels. Because the LTL market is absorbing this overflowing demand quickly, it’s impacting carrier service levels, especially as industry capacity hasn’t fully recovered from Yellow’s 2023 collapse.
· With these shifts, large industrial and CPG shippers are also beginning to reduce daily and premium LTL volume by focusing on consolidation and deferred options. As this is a structural change, it won’t show up in rate indices for another quarter. However, it will reshape the carrier yield mix as it spreads beyond CPG.
· There has been a significant increase in email threats as bad actors target credentials at mid-size and large fleets. Social engineering and change-of-ownership fraud are also on the rise. Change-of-ownership fraud saw a 169.6% year-over-year increase in Q1, with approximately half of Q1 theft incidents tied to carriers holding legitimate motor carrier numbers and previously clean operating histories.
· Overall, in ocean shipping, global service schedule reliability remained around 63%. With the Strait of Hormuz blockade, transits have fallen from about 138 vessels per day pre-conflict to almost zero since May 6. The disruptions to the Red Sea and Suez Canal have added 10-15 days to Asia-USEC and Asia-Europe transits. For key trades like Asia and Europe, the vessel orderbook points to medium downward pressure on rates, but geopolitical factors are keeping spot rates and reliability volatile.
· With IEEPA duties suspended, shippers are aggressively front-loading cargo. Volumes are well above normal seasonal patterns, contributing to increased booking pressure.
· Importers across North America are also focusing on the CAPE process. There are $166 billion in refunds for IEEPA duties across more than 330,000 importers. As of May 11, $35.46 billion in refunds are in the pipeline. Refunds depend on product and import volumes so they can range from a few thousand to several million dollars. So far, Uber Freight has recovered $3-$4 million in refunds year-to-date for our Mexico-exposed customers.
