After nearly three years of carrier oversupply and depressed rates, the freight market fundamentally shifted in December 2025. Industry forecasts now project dry van truckload rates will increase 6% year-over-year in 2026, with refrigerated rates climbing 5%—signaling the end of the extended freight recession and the return of a carrier-favorable pricing environment that demands strategic adjustments from enterprises managing transportation spend.
Major Forecast Revisions Signal Market Turn
According to the December 2025 LMI Report, industry respondents predict transportation capacity will remain in contraction territory at 40.5 over the next 12 months, while transportation utilization is expected to jump to 70.3 and transportation prices to expand to 76.8. These predictions collectively point to sustained carrier pricing power through 2026.
Historic Freight Inversion Validates Market Shift
December 2025 data provides concrete evidence in support of bullish rate forecasts. The 29.8-point gap between transportation prices (66.7) and transportation capacity (36.9) represents the largest positive freight market inversion since March 2022, confirming that December delivered the tightest freight market in over three years.
This freight market inversion—where prices significantly exceed available capacity—represents a fundamental shift in market dynamics. Transportation capacity contracted 13.1 points to 36.9 in December, marking the first contraction since March 2022 and the lowest reading since October 2021. Simultaneously, transportation prices expanded to 66.7, matching January 2025 levels when the year began with inventory pull-forward strategies.
Transportation utilization increased 6.7 points to 58.2, with notable divergence between upstream and downstream segments. Upstream utilization expanded robustly to 62.1 as suppliers drove replenishment activities, while downstream utilization contracted mildly to 47.6 as retailers held steady following their holiday inventory buildup.
Tender rejection rates corroborate the capacity tightness indicated by LMI data. FreightWaves reported rejection rates climbed to nearly 9.5% in mid-December, up from the same period in 2024. This increase reflects genuine capacity constraints rather than carriers opportunistically rejecting low-rate tenders, as the rejection rate increases occurred across diverse lanes and carriers.
Labor Market Dynamics Support Capacity Constraints
Transportation sector employment trends provide additional evidence that capacity tightness reflects structural changes rather than temporary disruptions. Transportation unemployment fell to 3.6% in December 2025, down from 4.3% in December 2024—a 0.7-percentage point improvement that positions transportation below the overall U.S. unemployment rate of 4.1%.
Employment by transportation mode reveals varied conditions across segments. Truck transportation employment held flat month-over-month at 1,513,300 but declined 0.2% year-over-year, indicating modest industry contraction despite tightening capacity. Warehousing and storage employment totaled 1,791,500, down 0.4% month over month and 2.8% year over year, reflecting ongoing efficiency improvements and automation adoption.
Air transportation employment grew 2.0% year-over-year to 580,900, while transit and ground passenger transportation increased 3.1% to 499,900. The divergence between contracting warehouse employment and growing passenger transportation suggests labor is shifting toward higher-margin, services-oriented transportation segments rather than traditional freight handling.
The tight labor market constrains carriers' ability to add capacity even as freight demand strengthens. Driver recruitment and retention remain challenging despite unemployment below 4%, as qualified CDL holders have options beyond long-haul trucking. This structural constraint supports projections of sustained capacity tightness regardless of demand fluctuations.
Services Sector Strength Versus Manufacturing Weakness
Economic indicators present a mixed picture of freight demand, complicating rate forecasting. The ISM Services PMI reached 54.4% in December—the highest reading of 2025 and marking 10 consecutive months of expansion. Services new orders jumped 5.0 points to 57.9%, the highest since September 2024, while employment returned to expansion at 52.0% for the first time since May 2025.
Manufacturing, conversely, remained contracted at 47.9% in December, continuing below the 50% expansion threshold. This manufacturing weakness contributes to subdued freight demand in traditional industrial lanes despite strong consumer spending. The divergence between services expansion and manufacturing contraction creates uneven freight demand across transportation modes and lanes.
The services sector's strength particularly benefits final-mile delivery, parcel carriers, and less-than-truckload providers serving e-commerce fulfillment. Manufacturing weakness impacts truckload carriers serving industrial corridors and flatbed operators dependent on construction and heavy equipment movements. Enterprises with diversified freight profiles across these segments experience mixed rate pressure depending on their specific transportation mix.
Price pressures in the services sector provide insight into broader inflation dynamics affecting transportation. The Services Prices Index remained elevated at 64.3% in December—the 13th consecutive month above 60%—with respondents frequently citing tariff impacts as the primary cost driver. These persistent input cost pressures give carriers justification for rate increases even in segments with adequate capacity.
Five Strategic Imperatives for Shippers
The return of carrier pricing power demands immediate strategic adjustments from enterprises managing transportation spend. Companies that adapt proactively to shifting market dynamics will secure adequate capacity at more favorable rates than those that react after market conditions fully tighten.
Building three to four week lead times represents the most fundamental operational adjustment. Where shippers grew accustomed to booking capacity with one to two weeks' notice during the freight recession, the tightening market requires extended planning horizons. This additional lead time allows procurement teams to secure capacity before spot-market pressures drive rates higher, and gives carriers adequate notice to position equipment appropriately.
Strengthening carrier relationships before spring bid season provides a competitive advantage in capacity-constrained markets. Enterprises that maintained fair partnerships with core carriers throughout the downcycle—avoiding aggressive price reductions that threatened carrier viability—will find themselves prioritized when capacity tightens. Companies that pursued lowest-cost strategies without regard for carrier economics may struggle to secure adequate capacity regardless of rates offered.
Rebalancing contract versus spot mix requires reassessment given projected rate increases. The traditional approach of maintaining 70-80% contracted volume with 20-30% spot-market exposure may need to be adjusted based on an enterprise's tolerance for rate volatility and capacity risk. Increasing contracted percentages provides cost certainty and capacity assurance, but reduces flexibility to capitalize on occasional spot-market softness.
Locking favorable contracts early in Q1 2026 enables enterprises to secure capacity before the spring bid season, when competition intensifies. Carriers enter bid season with clear visibility into available capacity and can price accordingly. Enterprises that defer contracting decisions until March or April face more aggressive pricing as carriers fill capacity commitments with early movers.
Planning for tariff uncertainty with flexible sourcing strategies acknowledges that trade policy remains a wildcard affecting freight demand and routing patterns. The January 1st furniture tariff rollback and China tariff adjustments (reducing the effective rate to 45% from 55%) demonstrate policy fluidity. Enterprises need contingency plans for multiple tariff scenarios, including resumed escalation, continued stability, or broad-based reductions.
Negotiation Strategies for Tightening Markets
Carrier contract negotiations in 2026 require approaches different from the shipper-favorable environment of 2023-2025. Rather than leveraging abundant capacity to extract aggressive rate concessions, enterprises should focus on securing adequate capacity commitments at reasonable rates while building relationships that provide priority during peak demand periods.
Volume commitments carry more weight in tight markets than during oversupply periods. Carriers prioritize shippers with predictable, consistent volumes, as these enable efficient equipment utilization and driver scheduling. Enterprises willing to commit to minimum volume levels or accept financial penalties for underperformance can negotiate more favorable rates than those seeking maximum flexibility.
Multi-year agreements with annual escalators provide mutual benefit in uncertain rate environments. Carriers gain revenue visibility to support investment decisions, while shippers secure capacity at predetermined rates. Escalator clauses tied to objective indices, such as diesel prices or published rate benchmarks, protect both parties from extreme market movements while maintaining relationship stability.
Performance-based incentives align the interests of shippers and carriers around service-quality metrics. Rather than purely price-focused negotiations, enterprises can structure agreements rewarding on-time performance, tender acceptance rates, or claims-free delivery. These incentive structures give carriers reason to prioritize committed volumes even during spot market surges.
Data-Driven Rate Validation
In rising rate environments, comprehensive freight audit capabilities become essential for validating contracted rates against market benchmarks and ensuring carriers honor negotiated terms. Normalized freight data enables enterprises to compare actual charges with contracted rates, identify inflation in accessorial charges, and confirm that negotiated discounts are properly applied.
Rate benchmarking using industry indices and peer comparisons provides objective validation of carrier proposals during negotiations. When carriers cite market conditions to justify rate increases, enterprises with access to comprehensive rate data can assess whether proposed increases align with broader market movements or represent opportunistic pricing unsupported by actual capacity constraints.
Advanced analytics can quantify the total transportation cost, including base rates, fuel surcharges, accessorial charges, and claims expenses. This comprehensive view prevents false economies in which enterprises negotiate favorable line-haul rates but experience cost inflation through accessorials or reduced service quality, which increases downstream expenses.
Preparing for Sustained Market Shift
December 2025's freight market inversion and subsequent forecast revisions signal that the extended freight recession characterizing 2023-2025 is ending. The combination of structural capacity constraints—including labor market tightness, carrier attrition, and regulatory pressures—supports projections of sustained carrier pricing power through 2026.
For enterprises managing complex global supply chains, success requires recognizing this market inflection point and adjusting strategies accordingly. Companies that strengthen carrier partnerships, secure capacity commitments early, and invest in comprehensive freight data management will navigate 2026's tighter market more effectively than those attempting to maintain freight recession-era strategies in a fundamentally changed environment.
Ready to navigate 2026's tightening freight market with confidence? Contact Trax today to learn how our comprehensive freight audit and rate management solutions provide the visibility and insights you need to validate carrier proposals, benchmark rates, and optimize transportation spending in a carrier-favorable environment.