Regional disparity grows as truckload capacity tightens

The increasing dispersion in regional rejection rates points to a less balanced freight environment. Carrier networks constantly struggle to keep trucks moving toward areas where equipment is needed. When demand shifts—as it has over the past year—networks are slow to recalibrate.

Not so oversupplied

Following the pandemic, truckload capacity was so abundant that regional imbalances were largely absorbed. Trucks were readily available, often waiting on the sidelines. That’s no longer the case.

Since late 2022, the market has been shedding capacity. According to FMCSA data, more than 48,000 registered operators have exited the market. Net revocations have accelerated since last October, now averaging nearly 200 more per week year-over-year.

Still, the increase in total rejection rates has remained modest—hovering around 6% in recent months—insufficient to spark a significant capacity crunch or a market “flip.”

Rates are also driving regional inequity

One contributor to the growing disparity in rejection rates is the diverging trend in contract rates, particularly out of eastern markets.

According to SONAR’s invoice data, the average contract rate per mile from Los Angeles to Chicago has risen about 3% over the past two years. In contrast, the rate from Atlanta to Chicago has declined nearly 7%. While these are just two lanes among many, they illustrate a broader trend: outbound Southern California rates have shown more upward pressure than those in the East.

Length of haul also plays a role. Freight originating in Atlanta averages about 500 miles, while Los Angeles loads average more than 800 miles. This difference incentivizes carriers to prioritize longer West Coast hauls.

Rejection rates out of Atlanta — the Southeast’s largest market — have spiked in recent months. Although this hasn’t yet driven up contract rates, it has had a strong effect on the spot market. Spot rates in the Atlanta-to-Chicago lane are up 41% since mid-April. If sustained, this could eventually lead to higher contract rates. In the meantime, it highlights how fragile the spot market environment is. 

The Bottom Line

The freight market remains relatively soft, with little upward movement in long-term contract rates. But under the surface, conditions are shifting. The fact that spot rates have surged more than 40% in a well-traveled lane — even in a down market — demonstrates just how vulnerable the truckload environment has become.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

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