The freight market has undergone a significant shift in recent months. In the latest episode of Hit the Brakes, Fetch Freight President and Founder Mitchell Lewis and Vice President of Strategy and Innovation Brett Lankford discussed the factors driving today’s market and what shippers should expect as the year progresses.
Capacity conditions have tightened considerably in many segments of the market. After several years of excess supply, the market is now experiencing meaningful capacity contraction driven by carrier exits, stricter regulatory enforcement, ELD decertification, reductions in non-domicile CDL drivers, rising insurance costs, and increased scrutiny around carrier compliance. These factors have removed substantial capacity from the market and accelerated the shift toward a more inflationary freight environment.
Demand remains resilient, with several emerging growth drivers. While the current market recovery is primarily supply-driven, demand has shown resilience across several sectors. AI-related data center construction, infrastructure development, and energy projects are fueling strong flatbed activity, while consumer spending has remained stronger than many expected. At the same time, inventory levels have continued to normalize from elevated post-pandemic levels creating the potential for future inventory replenishment to support additional freight demand.
Rates are moving higher. Spot market rates have increased notably over the past several months, with contract rates beginning to follow. What began as a capacity story is now translating into higher transportation costs as carriers regain pricing power and shippers face a more competitive environment for securing capacity.
Looking ahead, the second half of the year is expected to remain challenging for shippers. While some temporary capacity relief could emerge as carriers add trucks ahead of upcoming EPA 2027 emissions requirements, the broader market outlook remains bullish for carriers. Continued regulatory enforcement, constrained capacity, and the possibility of stronger freight demand suggest that meaningful rate relief is unlikely in the near term.
For deeper insights into capacity trends, regulatory changes, demand signals, tariffs, rates, and the outlook for the remainder of the year, listen to the full Hit the Brakes Mid-Year State of Freight update. As always, the Fetch Freight team is here to help shippers navigate changing market conditions and develop strategies for securing reliable capacity in an evolving freight landscape.