The U.S. freight market is at a crossroads. A mix of government action, geopolitical instability, and weather-related delays is changing the price and availability of trucking services across the country. Congress is working on Dalilah’s Law that could take tens of thousands of CDL holders off the road. Meanwhile, the war in the Middle East is driving fuel surcharges up so quickly that they could blow up shippers’ budgets. And rejected tenders have reached volumes not seen since the pandemic. 

Dalilah’s Law Clears First Hurdle in the House   

The House Transportation and Infrastructure Committee voted to pass Dalilah’s Law, which could prevent people without legal status from obtaining a commercial driver’s license. Named after Dalilah Coleman, a 5-year-old girl from California who was hurt in a crash involving an unlicensed truck driver, the bill focuses on the ability to speak English, read highway signs, and talk to police. 

Capacity Tightens and Freight Rates Climb

The Logistics Managers’ Index climbed from 59.6 in January to 61.5 in February. It was one of the strongest expansion readings in recent years. On the spot market, the picture is more complicated. Diesel prices went up by almost $1 per gallon in the two weeks after the start of the war in Iran. 

However, national dry van linehaul spot rates (not including fuel) fell by 8 cents a mile to $1.92. Fuel surcharges went up 36%, from 44 cents to 60 cents per mile, but carriers are having trouble passing those costs on to each load. Rates are still 18% higher than they were last year.

Diesel Spike, Capacity Crunch Signal End of Trucking Recession

Spot rates are holding steady along the East Coast and Midwest after the spike caused by the winter storms in January and February. Across the country, diesel prices are now close to $4.90 a gallon. In California, they are over $6 a gallon. This has added 15 cents to 20 cents to the average fuel surcharge per mile.

The Journal of Commerce reported that spot rates rose 15% to 20%. But the increases weren’t the same across the board. From November to February, rates for Midwest originations went up 52 cents per mile. In the Southwest, it only went up 10 cents. Josh Allen, the chief commercial officer of ITS Logistics, says the number of tender rejections has increased by 13% to 15%. Brokers are also said to be turning down loads under contracts signed as recently as January 1 unless the rates are changed.

Trucking’s Capacity Squeeze and Diesel Surge Open the Door for Intermodal Rail 

Intermodal rail is likely to benefit from tighter truckload capacity and higher diesel prices. Couple diesel prices the highest they’ve been since November 2022 with the crackdown on CDL rules, and you have rising transportation rates.

Mark George, the CEO of Norfolk Southern, said that higher truck rates are a good sign for intermodal shipping prices. Darren Field, on the other hand, said that J.B. Hunt is working hard to get shippers to switch from trucking to rail. 

Tender Rejections Hit COVID-Era Levels 

Derek Leathers, CEO of Werner Enterprises, said at Stifel’s 17th Annual Transportation & Logistics Conference that the double-digit tender rejection rates were “COVID-level type.” Winter storms played a role, especially in the Midwest, where rejections were over 18% in early February. This was the highest level since March 2022. More than 20% of reefer shipments in the area were turned down as of February 10.

However, the numbers were already high before the bad weather hit. The SONAR and Ryder System March report said that the 9.8% readings from late January support the idea that a longer-term tightening cycle may be taking shape. Leathers agreed that the weather had something to do with it, but he also said that spot rates are still too high for seasonal patterns to explain.

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