The truckload spot market remained weak in the third quarter, and a modest peak season will likely limit rate increases in the fourth quarter, freight broker RXO explained in its quarterly outlook released Thursday, Freightwaves reports. However, the company said that increased regulatory action targeting non-compliant CDL holders or a rebound in demand could tip the scales next year, leading to “volatile freight rates.”
Read also: Truckload spot prices rise amid peak season
RXO’s Curve report showed that Turkish lira spot rates (excluding fuel) rose just 1.8% year-on-year in the third quarter – the third consecutive period of slowing rate growth. The index recorded year-over-year rate increases of 6.5% in the second quarter, 9.1% in the first quarter, and 11.6% in the fourth quarter of 2024.
The company’s overall interest rate index, which includes fuel, was also slightly inflationary in the third quarter. Contract prices rose 2.1% year over year during the period, an acceleration from the 1.1% increase recorded in the second quarter.
The Charlotte, North Carolina-based company summarized the third quarter as a period in which shippers “enjoyed relatively high bid acceptance rates, easy capacity and only minor increases in their RFP rates,” while carriers remained “under significant cost pressure.”
Rates data sets have been largely range-bound since Q3 2023, unable to retain any seasonal gains from events like the production season or Roadcheck. Moreover, while spot prices rebounded, they were “unable to consistently outpace contract prices,” a hallmark of a rising Turkish lira market.
“The trends we’ve seen for most of the past two years continued into the third quarter, including subdued freight volumes, declining carrier capacity, and lower spot rates that were unable to sustain any significant upward momentum,” said Corey Klugza, vice president of pricing and purchasing at RXO.
However, RXO said Turkish lira rates are unlikely to fall significantly as carriers are currently seeing rates similar to 2014 despite a 34% rise in operating costs since then. In addition, the supply side continues to shrink, bringing the market closer to equilibrium.
RXO said the market is “already seeing the first signs of tightening” with regulatory enforcement cliffs (non-local CDL restrictions and enhanced English proficiency requirements). While the legality of the recent rule change is being challenged, RXO said insurers may no longer be willing to guarantee coverage to carriers with non-resident CDL holders, effectively taking that ability out of the market.
The campaign is taking place amid existing carrier attrition due to unsustainable operating economics. Class 8 truck orders remain below typical replacement levels as most rental fleets have utilization efficiency initiatives. Private fleets, some of which rely on transportation to better control distribution during the pandemic, are shrinking as the cost of truck ownership rises.
“The capacity environment is more fragile than ever over the past two years, and a modest rise in demand and/or continued capacity exits could lead to price volatility in 2026,” said Jared Weisfeld, chief strategy officer at RXO.
The curve index started the fourth quarter with a straight decline but is expected to end the period “slightly higher than its current position,” with rates remaining inflationary.
RXO said it is seeing purchasing rates accelerate with network carriers, but shippers are not yet feeling “the pressure in their routing guides.” With little upside in contract prices available in the spot market, carriers have “little or no incentive to jeopardize shipper relationships in a weak demand environment.” Looking to 2026, the company cited the potential for “the largest structural change in the U.S. carrier market since industry deregulation in 1980” as capacity outages could be amplified by non-domestic CDL restrictions.
“Eventually, spot rates will exceed contract rates, and this divergence will drive volatility as cash-strapped carriers look to increase profitability after three very difficult years.” But she said the next peak would likely resemble 2014 rather than the boom we saw after the pandemic.
“Much of it will depend on the stability (or lack thereof) of trade policy, the extent to which drivers leave the market, and how shippers and consumers respond,” the report said.
RXO is the third largest TL broker in North America following its acquisition of Coyote Logistics last year.
Source: Market intelligence platform IndexBox
