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As lingering volatility tied to severe winter weather was fading into more typical seasonal patterns, rapidly rising fuel costs disrupted rates and distorted the overall market picture this month.
Diesel price increases drove up all-in rates as surcharges adjusted to the higher national average, with contract-heavy shippers feeling the most immediate impact. At the same time, linehaul rates appeared to decline, but this was a byproduct of spot rates lagging behind fuel spikes rather than a true reflection of underlying market conditions. Recent upward trends in linehaul rates support this assumption.
The result is an environment where shippers are paying elevated contract rates while spot-reliant carriers are absorbing higher upfront costs and often waiting weeks for reimbursement as rates adjust more slowly.
The reason for recent fuel price increases is growing uncertainty in global energy markets amid escalating geopolitical tension. As that story unfolds, it remains unclear how long prices will hold at current levels. However, if they remain elevated, spot rates will continue to rise to offset carrier costs or financial strain will accelerate capacity attrition, both of which will contribute to tighter supply conditions.
This pressure is building at a critical time for the freight market. While demand indicators remain mixed, spot activity continues to show year-over-year strength. Growing produce season demand is tightening reefer capacity across South Texas, Florida and California. Flatbed markets are also tightening as the construction and lawn and garden seasons ramp up alongside post-storm recovery volume.
With these variables adding to existing supply risks such as high operating costs and regulatory pressure, the market remains highly vulnerable to disruption as we approach some of the busiest shipping months of the year.
Read on for more on the latest supply, demand, rates and economic conditions trends shaping the market this month.
Demand improved in February as seasonal activity ramped up, with an additional boost from post-winter storm recovery freight. Contract volumes have shown growth in March. However, they remain below prior year levels. Imports declined from the January peak but remained historically elevated, while manufacturing expanded for a second consecutive month as new orders, production and backlogs increased.
Near-term demand is expected to build as produce season continues on a regional basis, supported by strong consumer spending and recent manufacturing improvements. However, whether those improvements indicate a true turnaround remains uncertain. Notably, some shippers are shifting volume toward rail and intermodal to reduce exposure to elevated fuel prices, which could temporarily drag on truckload demand.
Carriers relying heavily on spot market freight, especially smaller businesses, are facing increased financial strain as all-in rates lag rising fuel prices. Meanwhile, high operating costs, tightening driver supply and ongoing regulatory enforcement continue to constrain capacity.
Supply is likely to tighten further as seasonal demand builds through April and May. Fuel prices will continue to play an important role — lagging spot rate increases could accelerate attrition, whereas higher FSC-protected contract rates could improve shipper routing guide compliance. Further, equipment orders have improved but not beyond replacement levels, meaning supply is unlikely to expand enough to meet any near-term demand growth or market volatility that may materialize in the coming months.
Rising fuel costs pushed all-in contract rates higher in March, while spot linehaul pricing remained low as rates failed to catch up with fuel increases. Flatbed markets remained historically elevated amid seasonal tightness and post-winter storm recovery volumes, and reefer rates softened outside of key produce regions.
Outside of seasonal volatility, fuel will have the most significant influence on the near-term rate environment. If prices remain elevated, spot rates will likely rise as carriers seek to cover higher costs, particularly as demand increases through in the summer months.
Manufacturing expanded for a second consecutive month, with increases across new orders, production and backlogs. Consumer spending also reached its highest year-over-year growth rate since early 2023, though those gains were primarily driven by higher-income households.
Geopolitical tension remains a key economic wildcard, as rising inflation tied to increased energy costs may limit the potential for interest rate cuts in the near term. However, if strong consumer spending and recent manufacturing growth continue, it would help support stable freight demand.
While most drivers have returned from seasonal holiday time off, the Canadian labor market is facing a structural shift as new federal regulations on foreign drivers prompt a notable increase in industry exits. This contraction in the driver pool has kept outbound Canada rates elevated, even as inbound capacity has begun to normalize toward late last year’s levels. Fuel costs remain a primary justification for sustained rate floors, providing little relief to shippers despite stabilization in some lanes. The capacity crunch is most notable in the temperature-controlled sector, where reefer rates have surged to record highs across the board for Canadian shipments.
Capacity is expected to remain under pressure as the full impact of driver attrition and regulatory compliance continues to filter through the market. While dry van rates may level off on inbound lanes, the reefer segment will likely face persistent volatility and tightening supply as seasonal demand ramps up. Shippers should anticipate that high fuel surcharges will remain a fixed narrative in rate negotiations for the foreseeable future. The shrinking availability of specialized equipment and a smaller overall driver pool suggest that any significant surge in volume will quickly trigger further rate increases across both domestic and cross-border corridors.
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