Limited Trucking Capacity Drives Costs Up: US Bank Research

Trucking Capacity Tightens as Freight Costs Rise in Q4 2025

The U.S. freight market ended 2025 with rising costs and limited availability of trucks. Shipment volumes increased slightly during the fourth quarter, but trucking capacity continued to contract nationwide. This imbalance pushed freight rates higher, even though overall demand remained soft, according to the U.S. Bank Freight Payment Index™ Q4 2025.

Shippers paid more to move freight as fewer trucks and drivers were available. The report shows that tighter capacity, not fuel prices, was the main driver behind higher shipping costs.

Trucking Capacity Shrinks While Shipments Show Modest Growth

National shipment volumes posted a small increase during the fourth quarter. The U.S. Bank National Shipments Index rose 1.5% from the previous quarter. Even with that gain, shipments were still down 4.9% compared to the same period in 2024.

Manufacturing activity remained weak throughout the quarter. Industrial production showed no month-over-month growth for four consecutive months. In December, the ISM Manufacturing Index fell to its lowest level since October 2024. Retail sales also remained flat and barely exceeded inflation.

These conditions limited freight demand, but trucking capacity continued to decline, creating upward pressure on rates.

Higher Freight Spending Reflects Tight Capacity

Shipper spending rose much faster than shipment volumes. The U.S. Bank National Spend Index increased 4.6% quarter over quarter. Compared to one year earlier, spending climbed 5.2%, marking the first year-over-year increase in three years.

Fuel prices were not the cause of higher costs. Diesel prices fell during the quarter, and fuel expenses per mile dropped nearly 3%. Instead, reduced trucking capacity forced shippers to pay higher rates to secure transportation.

The growing gap between shipment growth and spending highlights how limited capacity is shaping freight pricing.

Carrier Exits and Regulations Reduce Capacity

Several factors contributed to the continued decline in trucking capacity during Q4. Extended periods of low rates earlier in the market cycle led many carriers to downsize fleets or exit the industry entirely. The total number of active carriers declined, reducing available truck supply.

Regulatory enforcement also affected driver availability. Stricter English Language Proficiency standards removed thousands of drivers from service. In addition, the Department of Transportation temporarily paused the issuance of certain non-domiciled commercial driver’s licenses. That rule could impact nearly 194,000 CDL holders once fully implemented, although a court ruling has delayed enforcement for now.

Trucking Capacity Pressures Push Spot and Contract Rates Higher

Freight rates increased across both spot and contract markets during the fourth quarter. Spot rates rose by an average of 10 cents per mile, a 4.8% increase from the third quarter. For the second half of 2025, spot rates were up more than 6%.

Contract rates also increased, rising 1.4% during the quarter. That marked the second consecutive quarterly gain. On a year-over-year basis, spot rates climbed 5.1%, while contract rates increased 2.9%.

Regional Conditions Vary Across the U.S.

Freight activity and trucking capacity conditions differed by region. Shipment volumes increased in the Northeast, Midwest, and Southwest, while the West and Southeast reported declines.

The Northeast stood out as the strongest region. Shipments rose 4.2% from the third quarter and increased more than 12% year over year. Higher volumes combined with limited trucking capacity pushed regional spending sharply higher.

The Midwest saw shipments rise 3.5% quarter over quarter, although volumes were still slightly lower than a year earlier. Spending rose modestly, signaling mild rate increases tied to capacity constraints.

The Southwest experienced volatile conditions. Shipments rebounded 5.4% from the third quarter but remained more than 25% lower than a year earlier. Despite weak volumes, spending surged as capacity tightened due to regulatory and labor pressures.

The West posted a slight decline in shipments linked to lower port activity and cautious consumer spending. Even so, annual shipment averages improved compared to recent years. Spending increased as trucking capacity remained constrained.

The Southeast recorded its second straight quarterly decline in shipments. Spending rose only slightly, reflecting muted demand and less severe trucking capacity pressure compared to other regions.

Trucking Capacity Shapes the Freight Market Outlook

By the end of 2025, freight volumes appeared to stabilize at low levels. However, trucking capacity continued to tighten, creating a more expensive environment for shippers. The U.S. Bank Freight Payment Index shows that capacity constraints, not fuel costs, were the primary force behind rising rates.

For truck drivers and carriers, tighter trucking capacity improved pricing conditions but came with ongoing regulatory and labor challenges. For shippers, higher transportation costs remained the dominant trend as the industry moved into 2026.