Freight Transportation: After the Storm Comes the Calm

The freight transportation sector is experiencing one of the most significant inflection points in its history, according to industry experts, and unfortunately, not in a positive way for most market participants. Carriers and freight brokers across the spectrum are feeling the impact of declining freight volumes and a rapidly changing operating environment. What we are witnessing appears to be the calm before a major storm, with indicators pointing to what could become the largest capacity contraction in the history of over-the-road trucking.

With the risk that the market could eliminate approximately 600,000 active drivers in the United States, the industry may be heading toward the largest capacity purge ever, with spot rates resembling those seen during the pandemic. The pressure-release valve for carriers and brokers has effectively shut, meaning carriers will be forced to pay more in the form of higher wages and increased driver bonuses. At the same time, finding available capacity will become significantly more difficult.

Contributing Factors

Freight volumes have dropped sharply, with year-over-year figures showing declines between 18% and 20%. This contraction has created severe challenges for trucking companies struggling to secure loads as well as for freight intermediaries operating at minimum volumes just to keep their businesses afloat.

Small trucking companies are facing additional pressure, particularly those that have hired non-domiciled CDL drivers, who may no longer meet regulatory requirements, such as English Language Proficiency (ELP).

Fraud continues to rise as bad actors have learned how to exploit system vulnerabilities. This has driven an increase in fraudulent activity, and brokers having learned the hard way — no longer overlook even the slightest red flags. As a result, even legitimate carriers can be harmed if they are flagged by false positives in compliance and fraud-detection systems.

Any company identified by these fraud-mitigation systems risks being shut out of nearly all freight brokerage services, which effectively amounts to a death sentence for businesses already fighting to survive.

Capacity Reduction, Regulatory Shifts

The anticipated capacity reduction is being driven by several converging factors, most notably recent changes in US immigration policy and enforcement. According to a study by J.B. Hunt, these policy changes, particularly those affecting nonresident commercial driver’s licenses (CDLs) and ELP requirements, are expected to reduce the number of CDL holders in the United States by 5% to 12% over the next two to three years.

On Sept. 26, 2025, the Federal Motor Carrier Safety Administration (FMCSA) issued an emergency order that immediately restricts the issuance and renewal of CDLs for nonresidents. The FMCSA estimates that 97% of the approximately 200,000 current nonresident CDL holders will be unable to meet the new requirements, likely forcing them out of the industry within one to three years. This represents roughly 5% of all CDLs registered in the United States.

At the same time, stricter enforcement of ELP rules has resulted in more than 23,000 violations, over 5,000 of which led to vehicle out-of-service orders. According to industry analyst Avery Vise, this enforcement effort alone could remove approximately 20,000 drivers from the labor pool each year.

When factoring in drivers affected by nonresident CDL restrictions, ELP enforcement, undocumented drivers, and limits on new hiring, the total population at risk could exceed 600,000 drivers. This represents approximately 17% of the active driver workforce, according to transportation economist Noël Perry.

Trucking companies that rely heavily on immigrant labor or fail to comply with the new regulations are likely to face insolvency.

Economic Implications

The combination of regulatory changes and a prolonged freight recession is creating conditions ripe for significant market disruption. Industry experts anticipate a wave of bankruptcies among both carriers and brokers in the coming months as financial pressures intensify.

The market rationalization expected after this capacity reduction will likely favor larger trucking companies with the financial strength and operational scale to weather the downturn and adapt to the evolving regulatory landscape. This marks a notable shift from recent market dynamics, when access to immigrant labor allowed many small operators to expand their fleets.

As the market resets, carriers will need to offer higher wages and stronger incentives to attract a shrinking pool of qualified drivers. This return to a more traditional supply-and-demand balance should ultimately lead to improved profitability for the companies that survive, although the transition period will be difficult.

Recovery: Navigating the Road Ahead

The freight transportation industry stands on the edge of a transformative period. The expected capacity contraction, driven by regulatory changes and sustained market weakness, will likely result in rising spot rates and greater stability in contract rates.

While the timing of this transition remains uncertain, the end state points toward a market operating under more traditional supply-and-demand fundamentals. For shippers, this means preparing for potential rate volatility and tighter capacity. For carriers, particularly larger fleets capable of navigating the regulatory environment, it represents an opportunity to return to more sustainable operating conditions.

If freight volumes surge, which is not the case today, be prepared. It could become one of the strongest freight markets the industry has seen in a long time. The road ahead will be challenging, but the industry may emerge stronger once this capacity contraction runs its course.

In this environment of financial pressure and tighter margins, operational discipline and information control are no longer optional, they are critical. One of the most costly yet easiest mistakes to correct within trucking operations is the loss of billing-support documentation: proof of delivery (PODs), delivery receipts, or formal service requests. When this information is missing, invoicing is delayed, negotiating leverage is weakened, and the impact is felt directly in cash flow.

Solutions like ROUTECH by LIS enable carriers to centralize and secure this documentation in real time, supporting both field operations and back-office processes. In a market where every load matters and every dollar counts, having complete, reliable information can make the difference between weathering the storm — or being forced off the road.