From the end of 2022 through most of 2025, shippers benefited from a freight market saturated with truck capacity. Conditions have changed, but not due to a traditional demand-driven cycle.

Truckload and less-than-truckload rates have roared back to life as capacity has fled the market due to tighter government regulations, driver shortages, skyrocketing fuel prices and aging equipment.

Freight demand has improved moderately, but carriers have been struggling to add capacity to keep pace. For shippers, the market is shifting quickly, making it increasingly difficult to secure reliable, long-term transportation capacity at competitive rates.

Tightened conditions will likely persist through 2026 and beyond. Yet shippers can proactively secure storage and transportation capacity to optimize their networks amid the following four factors driving the capacity crunch.

Rising fuel costs. Recently, fuel costs surpassed driver wages as the largest operating expense for carriers, with diesel prices surging nearly 50% since the outbreak of the conflict in Iran.

Record diesel prices have dramatically altered freight economics, especially for carriers operating older equipment. Contract rates negotiated earlier this year no longer cover their margins on many lanes, particularly on longer-haul routes.

As a result, carriers are becoming increasingly selective about the freight they accept. Some are prioritizing short-haul loads, while others are avoiding lanes with excessive empty miles. These and other factors are spilling more freight into the spot market due to routing guide failures.

For shippers, fuel volatility has created budget uncertainty, as contract carriers are rejecting loads that are no longer profitable.

Regulatory changes. The trucking industry is facing one of the most significant periods of regulatory enforcement in years regarding driver qualifications.

Since June, 2025, more than 18,900 drivers have received out-of-service orders related to English language proficiency enforcement. March, 2026 recorded the highest monthly total to date. The industry is now averaging roughly 1,200 out-of-service orders per month.

Restrictions on non-domiciled commercial drivers’ licenses continue to tighten. The Federal Motor Carrier Safety Administration has cracked down on approximately 13,000 improperly issued non-domiciled CDLs in California, and has implemented additional regulations that further restrict eligibility. Over the next five years, roughly 45,000 non-domiciled CDLs are expected to expire each year.

The industry's driver pipeline is also narrowing. More than 7,500 entry-level driver training schools have been removed from federal registries since late 2025, and audits have cut the number of Class-A training programs by nearly half.

These changes are intended to improve safety and accountability. However, they are significantly reducing the number of qualified drivers at a time when fleets are looking to grow.

Aging equipment. Many carriers delayed truck replacement cycles during the freight downturn to preserve capital and control costs. Rising fuel prices are now accelerating the downsides of that decision.

Older trucks consume more fuel, require more maintenance, and incur higher operating costs. At the same time, equipment and financing costs have risen significantly.

Fleets operating older equipment are being squeezed from both directions. Operating costs are rising while their balance sheets are still recovering, making it difficult to invest in newer, more efficient equipment.

Fewer new trucks are entering the market as carriers delay expansion plans, reducing their flexibility to respond to improving freight demand.

Freight demand. Capacity growth isn’t keeping pace with the recovery rate of demand.

In April, the Cass Freight Index, which tracks shipment volume, declined 4.4% year over year but increased 0.4% month over month. On a seasonally adjusted basis, shipments rose for the third consecutive month, strengthening the case for a second-half recovery.

Truckload rates are responding to the market imbalance. The Cass Truckload Linehaul Index increased 5.6% year over year in April, and spot truckload rates rose 25%.

Rate pressure that initially emerged in dry van truckload markets has spread to the reefer and flatbed segments. LTL and intermodal markets are also facing sustained pricing pressure.

When capacity is shrinking, even modest demand growth can create significant upward pressure on transportation costs.

Fuel costs are reshaping carrier behavior. Regulatory changes are reducing driver availability. Equipment replacement challenges are slowing fleet growth. Capacity simply isn’t expanding quickly enough to meet increasing demand.

As transportation markets tighten, many shippers are reevaluating how they position inventory across their supply chains. Moving products closer to customers reduces transportation miles, lowers fuel exposure, improves service performance and reduces dependence on increasingly constrained truckload capacity.

This shift is driving greater interest in integrated transportation and distribution strategies that combine transportation, warehousing and fulfillment capabilities within a single network.

In current market conditions, organizations that wait to secure warehousing space and transportation capacity will continue to compete for increasingly scarce resources at higher prices.

Shippers have an opportunity to partner with a national third-party logistics provider to secure storage and capacity commitments, position inventory closer to customers, and optimize their network. Failing to do so before market conditions tighten further will leave them more susceptible to cost overruns and budget uncertainties.

The next phase of the freight cycle will reward preparedness. By combining capacity, distribution, and network optimization within a single solution, shippers can improve flexibility, reduce transportation costs and position themselves for whatever market conditions come next.

Brant Seaton is president of Knight-Swift Supply Chain.