Trade Shifts, Capacity Tightens

U.S.-Mexico trade reached a record $94.8 billion in July, according to U.S. Census Bureau data, up 27.5% year-over-year. This milestone pushed Mexico past Canada and China to become the United States' top trading partner for the month, with imports from Mexico climbing 33.5% to $60.55 billion. Laredo, Texas remained the nation's busiest trade gateway, handling $36.95 billion in two-way commerce, its strongest July on record, while outbound tender rejections in the market rose to 11.18%, pointing to tightening truck capacity along the corridor. Automotive freight continued to drive much of the growth, with motor vehicle parts, diesel engines, and engine exports all posting strong year-over-year gains. The data reinforces a broader trend: nearshoring activity is translating into real freight volume, and capacity is likely to remain tight as cross-border trade continues its record pace.

Active Truck Utilization forecasts have been revised, with Q3 2026 now expected to peak at 99%. Following that peak, forecasts show utilization easing to around 96% by Q2 2027. The Logistics Manager's Index registered a score of 40 in August, signaling continued contraction in capacity. That said, the pace of decline slowed 11.6x from July to August, a sign the contraction may be stabilizing. Any score under 50 shows a significant contraction of capacity in the market.

Mixed economic indicators in July prompted a downward revision to truckload demand forecasts, now sitting at +1.0% y/y growth. Strong automotive loadings continue to keep dry van volumes steady, while flatbed loadings keep trending lower. Temperature-controlled food outlooks point to a slight dip in refrigerated volumes. Tender rejections have fallen to roughly 13.5% overall, even with tightened capacity, softer demand is cushioning some of the market impact.

Despite falling tender rejections and softer volumes, rates remain elevated: forecasts are holding steady at +18.3% y/y. Flatbed rates look slightly softer, while dry van rates remain firm. All equipment types are posting 17%–19% y/y increases. 2027 forecasts have eased slightly to +7.8%. SONAR data shows rates up roughly 3% month-over-month from July to August.

The freight market in August continued its push-pull dynamic: capacity keeps tightening (LMI at 40, utilization forecast to peak near 99% this quarter) even as demand growth stays modest (+1.0% y/y). That combination is keeping rates elevated across the board, up 17%–19% y/y depending on equipment type, with SONAR showing an additional 3% month-over-month gain into August.

Adding to the pressure, diesel prices have climbed more than $1/gallon over the past seven weeks, reaching their highest level of 2026. Continued conflict in the Middle East is injecting volatility into fuel forecasts for the remainder of the year, which could add further upward pressure on all-in freight costs even if underlying linehaul rates hold steady. The net picture: capacity contraction is decelerating, demand is soft but stable, and rates remain firm, but diesel volatility is now the wildcard to watch heading into Q4.