The freight market experienced a dramatic turning point in December 2025, as transportation capacity contracted for the first time in nearly three years. This shift signals the end of an extended freight recession and marks the beginning of what many industry experts predict will be a carrier-favorable market through 2026.
Transportation Capacity Hits Historic Low
December 2025 delivered a stark wake-up call to shippers across North America. The Logistics Manager's Index (LMI) reported that transportation capacity plummeted 13.1 points to reach 36.9, marking the first contraction since March 2022 and the lowest reading since October 2021. This sudden tightening caught many market participants off guard, as the industry had grown accustomed to abundant capacity during the extended downcycle.
The transportation capacity shortage manifested most visibly in truckload markets, where the DAT load-to-truck ratio spiked to 9.9-to-1 during the week ending December 6, 2025. This represented the highest ratio of the current truckload downcycle and exceeded even the January 2025 peak of 9.1-to-1. For context, a higher load-to-truck ratio indicates tighter capacity, as more loads compete for fewer available trucks.
According to the December 2025 LMI Report, this capacity crunch drove transportation utilization up 6.7 points to 58.2, while transportation prices expanded 1.8 points to 66.7—the highest pricing level since January 2025.
Understanding the Freight Market Inversion
The December capacity crisis created what freight analysts call a "freight market inversion"—a condition where transportation prices significantly exceed available capacity. 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 inversion has profound implications for supply chain economics. When capacity contracts while demand remains steady or increases, carriers gain pricing power they haven't enjoyed since the immediate post-pandemic boom period. The result is a fundamental shift in the negotiating dynamic between shippers and carriers.
FreightWaves data corroborates this shift, reporting that truckload spot rates increased 8% between November 19 and December 4—a remarkable surge concentrated in just two weeks. Tender rejection rates climbed to nearly 9.5% in mid-December, up from the same period in 2024, reflecting genuine capacity constraints rather than seasonal noise.
What Drove the Truckload Capacity Crisis
Several converging factors contributed to December's transportation capacity shortage, creating a perfect storm of supply-side constraints.
CDL enforcement played a notable role, with Transportation Secretary Sean Duffy reporting that approximately 9,500 truck drivers were removed from service due to failing English-language proficiency tests. While this represents less than 0.5% of the estimated 2 million U.S. heavy and tractor-trailer drivers, the timing amplified seasonal pressures.
Holiday season dynamics intensified the capacity withdrawal, as drivers traditionally take time off during the year-end period. This annual pattern was more pronounced in 2025, with carriers reporting larger-than-usual reductions in available equipment between Christmas and New Year's.
Perhaps most significantly, unprecedented inventory movement created exceptional demand for transportation services. December's inventory levels hit an all-time low of 35.1 according to LMI data—the lowest reading in the index's history. This historic drawdown, driven by aggressive downstream selling strategies, required massive transportation capacity to move goods from warehouses to retail locations and ultimately to consumers.
Weather disruptions around Thanksgiving further strained an already-tight capacity environment, while year-end carrier exits removed additional trucks from the active fleet as smaller operators struggled with persistently low profitability from the previous two years.
Rate Forecasts Signal Sustained Pressure
The December capacity shock has already prompted freight analysts to revise their 2026 rate forecasts upward. C.H. Robinson, one of North America's largest third-party logistics providers, upgraded its dry van truckload rate forecast from +4% to +6% year-over-year growth. The refrigerated forecast was similarly upgraded to +5% year-over-year.
These revisions reflect expectations that capacity tightness will persist well into 2026. LMI 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 76.8—all pointing to a sustained carrier-favorable environment.
Unemployment in the transportation sector fell to 3.6% in December 2025, down from 4.3% in December 2024. This tightening labor market provides another data point supporting expectations of constrained capacity, as carriers face challenges recruiting and retaining qualified drivers even as freight volumes increase.
Strategic Imperatives for Enterprises
The return of the freight market inversion demands immediate strategic adjustments from enterprises managing complex supply chains. Companies that recognize this shift early and adapt their transportation strategies accordingly will maintain a competitive advantage through 2026's tighter market.
Extending lead times represents the most immediate adjustment. Where shippers have grown accustomed to booking capacity with one to two weeks' notice during the freight recession, the new environment requires a three to four-week planning horizon. This extended timeframe allows procurement teams to secure capacity before spot market pressures drive rates even higher.
Carrier relationship management takes on renewed importance in capacity-constrained markets. Enterprises that maintained strong partnerships with core carriers throughout the downcycle will find themselves prioritized when capacity tightens. Companies that aggressively pursued lowest-cost options without regard for carrier partnerships may struggle to secure adequate capacity at any price.
Contract versus spot balance requires reassessment given projected rate increases. The traditional approach of maintaining 70-80% contracted volume with 20-30% spot market exposure may need adjustment. Locking in favorable contract rates early in Q1 2026—before the spring bid season when capacity will tighten further—provides cost certainty and capacity assurance.
Data-Driven Capacity Management
In volatile freight markets, normalized freight audit data becomes essential for strategic decision-making. Comprehensive visibility into transportation spending patterns, carrier performance metrics, and rate benchmarks allows enterprises to respond proactively rather than reactively to market shifts.
Real-time freight data enables supply chain teams to identify early warning signals of capacity constraints, such as increasing tender rejections from specific carriers or sustained rate pressure across lanes. This visibility supports more effective negotiations and helps prioritize which loads receive premium capacity commitments.
Advanced analytics can model the financial impact of various capacity scenarios, helping enterprises quantify the cost difference between securing contracted capacity now and waiting for potentially higher spot-market rates later. These insights inform strategic decisions on contract timing, volume commitments, and carrier diversification.
Looking Ahead
December 2025's capacity crisis marks an inflection point after nearly three years of carrier oversupply. The combination of structural factors—including CDL enforcement, inventory-driven demand, and carrier attrition—suggests this tightening represents more than seasonal variation.
For enterprises navigating global supply chains, the message is clear: the extended freight recession that characterized 2023-2025 is ending. Companies that strengthen carrier relationships, build operational flexibility, and invest in comprehensive freight data management now will be best positioned to thrive in 2026's tighter transportation market.
Ready to navigate 2026's capacity-constrained freight market with confidence? Contact Trax today to learn how our comprehensive freight audit and data management solutions provide the real-time visibility you need to anticipate market shifts and optimize transportation spending.