The trucking sector is facing mounting pressure from high diesel costs, shrinking capacity, tight driver regulations, and evolving emissions laws. At the same time, major railroads are seizing the moment, gaining share in intermodal freight, while administrative tweaks remove some barriers to autonomous trucking. These developments are affecting transportation rates and service options for shippers heading into the end of the year. 

High Fuel Costs Culling Smaller Carriers  

High diesel fuel costs are still the lead story in trucking late in the year, with no relief in sight as the Strait of Hormuz crisis continues, pushing smaller carriers out of the market and squeezing margins.

While diesel prices have dipped a bit early this month, at an average of $6.28 as of November 2 compared to $6.35 the prior week per AAA, the ongoing pain for carriers and the economy in general is real. According to The Drive, 16 carriers filed for bankruptcy in late August and early September; some were owner/operators, while others had dozens of trucks. 

Scott Perry of the Florida Trucking Association told FreightWaves that smaller carriers without adequate cost recapture mechanisms through surcharges are particularly vulnerable. According to WiseTech Global as reported in Transport Topics, carriers get into a cash flow crunch when they pay higher costs at the pump but aren’t reimbursed through surcharge plans until weeks later. Average fuel cost per mile is up 92% from a year ago, WiseTech reported, representing 22% of total transportation spend versus a long-term average of about 15%.

Truckload Capacity Tightening as Carriers Raise Rates

The truckload tender rejection rate on contracted loads, a good proxy for available capacity, hit 14% in October and is projected to reach 20% by December, according to Breakbulk News. 

According to Logistics Management, about 89,000 carriers have exited the truckload market since 2022, after a flood of new players rolled in to meet pandemic-era freight demand. A continuing supply-driven freight recovery, with pockets of demand in areas like data centers, has given carriers more pricing power. In LTL, this can be seen in general rate increases of 5.9% (OId Dominion) to 7.1% (Saia).

The ongoing federal CDL crackdown and strict electronic logging device (ELD) compliance continue to be gating factors for capacity, keeping out non-English speakers and reducing violations of the FMCSA hours-of-service regulations.

Railroads Capturing Share in Expensive Trucking Market

Railroads are seeing a pickup in intermodal freight and quarterly gains as shippers move some volume from the highways in a flight from higher costs and lower capacity. Union Pacific, Norfolk Southern, and CSX saw higher profits and revenue in the third quarter, according to Reuters. 

“Conversions from the highway remain strong, and the new service offering through Birmingham, Myrtlewood, Baltimore and other areas are performing well and attracting new business,” said Maryclare Kenney, SVP and chief commercial officer of CSX, on its earnings call per Supply Chain Dive. 

While truck-to-rail conversions are picking up, demand hasn’t shown up yet, Kenney said. Also, the intermodal shift varies by industry, with chemicals and petroleum a natural fit, forest products less so. Higher trucking costs may be creating conversion opportunities, but intermodal growth still depends on freight characteristics, lane suitability, and shipper demand. This helps distinguish increased interest from a broad-based shift in freight volumes. 

OEMs Among Groups Pushing for EPA 27 Violation Penalties

As the Environmental Protection Agency works toward final rulemaking on nitrogen oxide (NoX) emission standards, truck manufacturers, dealers, and a trucking association are hoping that noncompliance penalties (NCPs) are written into the document.

The Biden-era rule, known as EPA 27, calls for truck manufacturers to reduce NoX emissions from new engines by 80% from current levels, beginning on January 1. The EPA is considering an amendment that would allow OEMs to pay penalties ranging from $8,000-$10,000 per noncompliant vehicle. The NCP provision would be phased out over time.

William Rush, CEO of truck retailer Rush Enterprises, told analysts on a call his OEM suppliers will likely release compliant and noncompliant engines on staggered schedules if the NCPs amendment is baked into the final rule. “I’ve never seen an EPA law or decree where it was the same for everybody on one particular date,” Rush said, per FreightWaves. “Some will come in on January 1. Some may not do it until the following year.”

More impactful for OEM’s ledgers is another aspect of EPA 27: its “useful life” provision on how long a truck engine is expected to remain compliant with the NoX emission standard. In July, the EPA relaxed the standard so that model years 2027-2030 could adhere to a 435,000-mile useful life period, and thereafter it would revert to the 650,000-mile requirement. 

Proposed Rule a Mile Marker Toward Autonomous Trucks

Last month, the FMCSA made a rule change that granted makers of autonomous trucks a five-year exemption from a regulatory requirement that warning triangles be placed on the ground when a truck is stopped on the side of the road.

This rule change is an incremental step toward expansion of autonomous truck usage, allowing them to be equipped with cab-mounted warning beacons instead of using roadside triangles or flares. Aurora Innovation, a major manufacturer of autonomous trucks, applied to the FDA for the exemption in April. The FMCSA had denied a similar request from Aurora and Waymo in 2024.

In its decision, the FMCSA ruled that using the beacons versus triangles “would likely achieve a level of safety equivalent to, or greater than, the level of safety that would be achieved without exemption.” Still, autonomous trucks represent just a fraction of the 3 million power units on the road today. Goldman Sachs has a conservative projection of 25,000 in usage by 2030.

Managing Through Market Swings in Transportation

With tight capacity in their favor and pricing power that allows fuel cost spike pass-through, the spinning market needle indicator currently favors carriers over shippers. But that by no means points to an easy time for the former group, with smaller players more directly impacted by high costs, low demand, and fewer available drivers.

For shippers in need of a true logistics partner to manage through a disruptive market, TCG delivers turnkey solutions backed by deep expertise across transportation service models and warehousing. We work with mid-market manufacturers, distributors, and brands operating across the Midwest, Southeast, and core U.S. distribution corridors. Shippers choose us because they want to consolidate their vendor lists and work with a single phone number, a single SLA, and a single escalation path.

To learn more about how we can help you secure capacity at competitive rates, and meet the strict requirements of your transportation plan, contact TCG today.