Rising Rates and Shifting Liability in Freight

In March, the U.S. Supreme Court heard oral arguments in Montgomery v. Caribe Transport II, LLC, a landmark case that could determine whether state-law negligent hiring claims against freight brokers are preempted by federal law under the FAAAA. Brokers argue they should not be liable for arranging transportation, while plaintiffs contend states retain authority to enforce safety standards. Justices appeared divided on the scope of federal preemption, with a decision expected by June 2026. The ruling could have significant implications for broker risk exposure and contractual practices in the freight market.

FTR forecasts active truck utilization to continue increasing steadily, with levels expected to reach 97–98% by mid-year. Sonar’s Logistics Managers’ Index (LMI) for Transportation Capacity also indicates tightening capacity compared to February 2025. The current index sits at 41, where 50 represents neutral conditions, readings above 50 indicate increasing capacity, and below 50 signal declining capacity. Readings below 40 typically indicate capacity is tightening rapidly. The only recent lower reading occurred in December, which is seasonally expected due to holiday-related disruptions.

FTR is forecasting a modest increase in freight volumes for 2026 of approximately 1.9%. This projection is slightly higher than prior forecasts, primarily due to a downward revision of 2025 volume estimates. February saw stronger volume levels, likely driven by freight disruptions and delayed shipments resulting from the winter storms that impacted large portions of the U.S. in January and February.

Despite this temporary lift, most industry experts are not expecting a significant increase in overall freight demand in 2026, as consumer demand remains relatively sluggish. The most notable areas of expected growth are within the flatbed sector, where stronger outlooks for building materials and industrial loadings are projected to drive demand.

The truckload rate outlook for 2026 is significantly stronger, with market conditions shifting back in favor of carriers and less favorable for shippers. Spot rates have risen sharply, driven largely by increased tender rejections. Contributing factors include widespread winter storms, capacity exiting the market following recent tight conditions, and continued enforcement of English Language Proficiency (ELP) screenings. FTR expects rates to remain elevated in the coming months, though the pace of increases is not expected to accelerate further.

Outbound tender rejections reached a multi-year high in February, climbing to 14.12%. All modes saw increases, with flatbed tender rejections hitting an all-time high of 47.03%—the highest in the eight years of available reporting. February is typically one of the lowest-volume months and usually experiences minimal disruption, making these numbers particularly notable. Several factors combined to create this “perfect storm” of rising rejections and escalating rates, including winter storms, stronger demand for building materials and industrial freight, and ongoing capacity exits from the market. While many see this as a potential turning point for the freight market, not all experts are convinced these increases are sustainable. Ongoing geopolitical tensions in the Middle East may further prolong elevated rates, as diesel prices rise and global trade routes face disruptions.