2025 Freight Industry Review and 2026 Outlook

Evan Baschko
Nov 25
9 min read

Introduction

The freight industry in 2025 stood at a crossroads. It was recovering from the volatility of the post-COVID era while preparing for a new wave of geopolitical, regulatory and economic pressures. For logistics professionals and shippers alike, this year was marked by cautious optimism, strategic recalibration and a growing reliance on technology and data to navigate uncertainty.

As we look ahead to 2026, the freight landscape is set for transformation. Capacity constraints, pricing evolution and labor challenges will continue to shape the market. Trade tensions and energy dynamics, particularly across North America, will add complexity to cross-border operations. This review offers a comprehensive analysis of the key trends that defined 2025 and outlines strategic considerations for the year ahead. The focus remains on how ITS Traffic Systems, Inc (ITS) can lead through proactive planning and innovation.

Freight Volume and Capacity Trends in 2025: A Measured Recovery

Modest Volume Rebound Across North America

Following two years of subdued freight activity, 2025 delivered a modest rebound in volume. This resurgence was largely fueled by a return to normalized consumer demand, especially in durable goods and automotive sectors, which are key drivers of freight volume recovery in North America.

Real wage growth and easing inflation restored purchasing power, prompting retailers and manufacturers to cautiously restock inventories that had been depleted or misaligned during the pandemic and its aftermath. According to the U.S. Bureau of Economic Analysis, consumer spending rose 3.2 percent year over year in the second quarter of 2025, signaling a return to pre-pandemic behavior.

However, this recovery was tempered by persistent global trade tensions. The threat of renewed tariff wars, particularly between the United States and China, cast a shadow of doubt over long-term planning. While no sweeping tariff hikes were enacted, the threat alone influenced inventory strategies and sourcing decisions. Many shippers began favoring nearshoring and domestic suppliers.

Carrier Consolidation and Driver Attrition Shaping Capacity

Port and truckload capacity remained light throughout the year. This was not a reflection of weak demand but rather the result of carrier consolidation and driver attrition. The industry saw a continuation of the post-recession pattern observed in 2010, where capacity lagged behind demand recovery due to market exits and operational fatigue. FTR Transportation Intelligence reported that truckload capacity utilization hovered around 85 percent in the third quarter of 2025, below optimal levels for profitability.

LTL Competition and Regional Pricing Patterns

In the less-than-load (LTL) segment, heightened competition among regional carriers and tech-enabled entrants compressed margins. Yet volumes held steady, suggesting that shippers increasingly view LTL as a flexible and cost-efficient alternative to full truckload, especially for shorter hauls and fragmented shipments. In general, pricing trends varied regionally, though some markets experienced rate increases due to capacity constraints, while others saw compression driven by competitive pressure and carrier exits.

2025 was a transitional year for freight strategy and shipping operations. We saw several clients use this period to strategically position themselves for the anticipated demand resurgence in 2026 by increasing their shipping volumes while managing tight control over cost margins effectively. Timing the freight market is never easy, but with accurate freight data, predictive analytics and the right logistics partner network, transformational decisions can deliver measurable results.

What Shippers Should Expect for Capacity in 2026

Carrier Exits and Rising Operating Costs Tighten Supply

Looking ahead to 2026, capacity is expected to tighten significantly. Smaller carriers, already pressed by rising insurance premiums, compliance costs and fuel volatility, may be priced out of the market. This will likely lead to a more consolidated carrier landscape, with mid-sized and national players gaining a larger share. Anticipating and planning for these outcomes can make the difference between a successful or a lean year.

Strategies for Securing Reliable Capacity in a Tight Market

Pre-booking capacity, diversifying your carrier base, and leveraging predictive freight analytics tools to anticipate demand shifts will be essential to maintaining service levels and cost control.

Freight Rates, Pricing Pressures and Accessorial Shifts

Stable Base Rates Mask Rising Accessorial Costs

Despite underlying volatility in fuel and labor markets, base freight rates remained relatively stable in 2025. This was largely due to the prevalence of multi-year agreements negotiated during the downturn of 2023 and 2024. Shippers who locked in rates early benefited from predictability, but many found themselves exposed to a creeping rise in accessorial charges. Through our customer base, we saw significant increases, noting some saw their accessorial charges double year over year.

Value-Based Pricing Expands Across Carrier Networks

To dive deeper, carriers introduced a range of new accessorial fees, a growing concern in freight cost management strategies for shippers. Peak season premiums, reclassification charges and residential delivery adjustments became more common in select markets. These changes reflect a broader shift toward value-based pricing, though adoption remains uneven. Carriers are increasingly monetizing service complexity, and shippers must adapt by auditing contracts and renegotiating terms based on volume leverage and performance metrics.

Fuel Costs and Surcharges Impacting Freight Budgets

Oil Market Volatility Driving Midyear Fuel Spikes

Fuel surcharges also became a particular pain point. Global oil prices rose sharply midyear, driven by the Organization of the Petroleum Exporting Countries (OPEC) Plus production discipline and geopolitical instability in the Middle East. According to the U.S. Energy Information Administration, crude oil prices increased by 18 percent year over year as of August 2025, prompting carriers to adjust fuel surcharge schedules upward. We also saw similar shifts in our customer base, although not as stark as the accessorial shift.

Shipper Responses to Fuel Pressure

Some shippers mitigated this spike by shifting routes and lanes, while others shifted modal concentrations to reduce the risk. Every strategy needs to be tailored to your specific freight profile and risk tolerance. We all know there is no such thing as a cookie-cutter solution in freight.

Looking ahead to 2026, pricing structures are expected to remain fragmented. While some carriers may experiment with bundled service packages, fuel and accessorial charges will continue to be itemized and can significantly affect total freight spending if not monitored closely. These components must be discussed explicitly during contract negotiations to avoid budget overruns and ensure transparency in freight rate negotiation best practices.

Contract Visibility and Auditing Become Essential

For shippers, this presents an opportunity. By re-negotiating contracts and leveraging the current carrier market trends, they have the chance to ensure cost control and align themselves with the most advantageous carrier networks that are working for them, not against them.

Labor Shortages and Compliance Challenges Affecting Freight

Driver Shortages and Hiring Delays Amplify Constraints

Labor shortages remained a defining challenge in 2025. The average age of U.S. truck drivers climbed to 49 ,and CDL licensing delays continued to hamper recruitment efforts. The American Trucking Associations (ATA) reported that the industry faced a shortage of more than 80,000 drivers, with projections indicating worsening conditions through 2026.

Operational Bottlenecks at Key U.S. Logistics Hubs

Inland logistics hubs, particularly in Chicago, Dallas and Atlanta, faced staffing gaps that led to cross-docking delays and drayage congestion. These bottlenecks occurred even though national freight volumes had not yet returned to peak levels, underscoring the structural nature of the labor issue.

Regulatory Uncertainty Driving Adoption of Automation

Compounding these challenges were regulatory uncertainties. Potential changes to emissions standards and labor laws loomed large, threatening to increase compliance costs and disrupt operations. Shippers and carriers alike began investing in technology to mitigate these risks. AI-driven routing, exception management, and advanced digital audit platforms gained traction as viable solutions.

Heightened Interest in Freight Audit and Payment Services

The demand for freight audit services surged, especially for shippers looking for heightened freight invoice review and greater cost control. With accessorial charges becoming more complex and less predictable, the ability to validate invoices and reconcile discrepancies became a competitive advantage. Firms like mine, ITS, offer shippers transparency and accuracy that are requirements in today’s advanced and ever-changing freight environment.

Looking to 2026, the labor landscape will remain tight, and regulatory pressure will likely intensify. Strategic investments in automation, compliance monitoring, and workforce development will be critical for both shippers and carriers.

North American Trade Dynamics: United States, Canada and Mexico

U.S.–Canada Tariffs Reshape Metal and Manufacturing Freight

One of the most consequential developments in 2025 was the resurgence of trade tensions between the United States and Canada. The reinstatement of selective tariffs on Canadian steel and aluminum imports, coupled with retaliatory measures from Ottawa, had a pronounced impact on freight costs and routing strategies. According to the U.S. Department of Commerce, these tariffs affected over $12 billion in annual trade volume.

Modal Shifts Toward Rail to Reduce Costs

Steel and aluminum shipments from Ontario and Quebec into the U.S. Midwest saw cost increases of 10 to 15 percent. These increases were driven not only by tariffs but also by carrier surcharges tied to the enhanced commodity risk. In response, many shippers shifted bulk metals from truckload to rail to mitigate costs and regulatory exposure. This modal shift, while effective in reducing per-ton-mile expenses, introduced longer transit times and reduced flexibility.

Rail service reliability, particularly in the Midwest, remains inconsistent and must be factored into planning. Some chose to strike when the iron was hot, attempting to ship as much as they could before tariffs were enacted, while others played the day-to-day game of waiting for the right moment to ship. Both strategies had their own shares of benefits and consequences, but with uncertainty comes the hard choice of doing what makes the most sense in the moment.

Energy Pricing Disputes Impacting Industrial Freight

Electricity pricing also became a flashpoint. Disputes over hydroelectric exports from Canada to the United States led to energy cost spikes in manufacturing-heavy regions. The Canadian Energy Regulator reported a 9 percent increase in export pricing to U.S. utilities, which in turn affected production costs in steel fabrication and automotive assembly. These delays created irregular freight flows and complicated load planning even further.

Mexico’s Growth as a Nearshoring and Manufacturing Hub

While tensions with Canada strained traditional supply chains, Mexico emerged as a strategic counterbalance. The continued expansion of nearshoring, particularly in automotive, electronics, and consumer goods, positioned Mexico as a critical partner in North American logistics. According to the National Association of Manufacturers, U.S. imports from Mexico rose 7.4 percent in 2025, driven by lower labor costs and proximity advantages.

The U.S.–Mexico freight corridor, especially through Laredo and El Paso, saw increased volume and investment. Mexican carriers, many of which operate in partnership with U.S. firms, offered competitive rates and flexible capacity. However, this strategy is not without risk. Cross-border tensions with Mexico, particularly around immigration policy, labor standards, and cartel-related security concerns, can disrupt freight flows.

Cross-Border Delays and Security Risks Affecting Flows

In 2025, intermittent protests and customs slowdowns at key border crossings led to delays averaging 18 to 36 hours, according to FreightWaves Border Operations Tracker. Moreover, while Mexico offers a robust labor pool, the driver shortage is not exclusive to the United States.

Mexican carriers face similar challenges in recruiting and retaining qualified drivers, especially for long-haul and cross-border operations. The International Road Transport Union (IRU) reported that Mexico’s driver shortfall reached 28,000 in 2025, with safety and wage concerns contributing to attrition.

To capitalize on Mexico’s growing role while mitigating risk, shippers can research and develop dual-border carrier partnerships, invest in bilingual transportation management and customs integration tools, monitor labor and security conditions in key Mexican logistics hubs, and explore bonded warehouse strategies near the border to buffer against customs delays. This tri-national freight strategy will be essential for resilience and growth in 2026 and beyond.

Lessons From Recent Freight Cycles and Market Disruptions

Prior Capacity Crises Offer Guidance for 2026 Planning

The freight industry’s cyclical nature offers valuable lessons for the future. The 2017 to 2018 implementation of the Electronic Logging Device mandate created a capacity crunch and rate spike that caught many shippers off guard. Those with diversified carrier relationships and visibility tools fared better, maintaining service levels and controlling costs.

Inventory Management Lessons From the Pandemic Era

Similarly, some companies overstocked inventory during the COVID recovery period from 2021 to 2022 in anticipation of demand surges, only to face write-downs and storage cost spikes when consumption patterns shifted. Strategic inventory planning and demand forecasting proved critical in avoiding these pitfalls.

Why Redundancy and Historical Data Will Matter in 2026

The takeaway is clear. Avoid overreliance on single carriers or lanes and use historical data to model demand volatility. Having the depth of information available to make these decisions is only half the battle. Building redundancy into sourcing and routing strategies will be key to resilience in 2026.

Strategic Takeaways for Shippers Entering 2026

Data-Driven Planning and Flexible Operations

2025 was a year of recalibration. The freight industry, while still grappling with the aftershocks of the pandemic and global trade instability, began to stabilize and evolve. As we enter 2026, the market will demand greater agility, deeper data integration, and a proactive approach to risk management.

Building Stronger Carrier Networks and Diversified Options

In summary, success in 2026 will hinge on strategic foresight, operational flexibility and data-driven decision-making. As the freight landscape continues to evolve, shippers and logistics leaders will require more than transactional support to remain competitive. The challenges outlined in this review, including capacity tightening, pricing volatility, cross-border complexities and labor constraints, demand a proactive and data-driven approach.

How ITS Supports Shippers Through Market Shifts

ITS offers a wide range of audit and payment, reporting and consulting services that help organizations navigate these shifts with confidence. Whether the need is optimizing carrier strategy, auditing pricing structures or managing regulatory risk, our team is prepared to serve as a strategic partner in your planning for 2026. We invite you to engage with us to explore tailored solutions that align with your operational goals and long-term growth strategy.

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