Truckload Is Tightening. The Shippers Best Positioned Won’t Wait for the Market to Turn.
Why early warning signals, shipper-of-choice practices and a more dynamic truckload/intermodal strategy matter now
By Vince Paperiello, EVP & Group President, Transportation, STG Logistics
For several years, shippers operated in a truckload market characterized by abundant capacity and significant buying leverage. That environment made it relatively easy to find a truck when needed, recover failed tenders and push aggressively on transportation rates.
The market is beginning to look different.
But what makes the current environment especially interesting is why it is changing.
Historically, I look for several demand-side indicators to confirm a sustained turn in the freight cycle. One is shipment demand as measured by the CASS Shipment Index: three consecutive months of year-over-year improvement is typically a meaningful indication that a longer-term trend may be developing. Housing starts and the Institute for Supply Management’s (ISM) Index are also good indicators of a changing demand environment.
We aren’t seeing a broad demand-driven freight boom today.
Instead, much of the tightening we’re experiencing is being driven from the supply side. Truck pricing economics have pushed capacity out of the market, particularly among smaller operators, while changes in regulatory enforcement are also constraining portions of the driver pool.
That distinction matters for shippers.
You don’t have to wait for freight demand to surge before capacity becomes more difficult or expensive to secure. In fact, several of the indicators shippers should be watching are already much closer to home.
Your Own Routing Guide May Tell You the Market Is Turning First
One of the earliest signs is first-tender rejection.
If a shipper historically sees a first-tender rejection rate around 4%, for example, and it begins moving toward 10%, that should get the transportation team’s attention.
Why?
Because carriers are beginning to have options.
The next signal is the relationship between spot and contract rates. As spot rates rise toward—and eventually above—contract rates, carriers have an economic incentive to allocate more available capacity toward higher-paying spot opportunities.
They may continue meeting some core contractual commitments, but discretionary capacity begins moving elsewhere.
Shippers should also pay attention to carriers capping capacity at awarded volumes, increased acceptance management and short-notice drop-offs.
Individually, these indicators may not look dramatic. Together, they can tell you that the market is changing before a major increase shows up in the transportation budget.
And once that happens, waiting becomes expensive.
If you haven’t secured capacity on an important lane and suddenly need it after the market tightens, your options become narrower. You may be pushed into the spot market or forced to go back to carriers with whom you have relationships but no committed capacity on that particular lane.
At that point, you’re likely buying capacity at a higher price than you could have secured earlier.
More importantly, you’ve lost leverage.
“Shipper of Choice” Needs to Become an Operating Strategy
The industry talks frequently about becoming a “shipper of choice.” In a loose market, the phrase can sound abstract.
In a tighter market, it becomes very tangible.
Carriers and drivers will increasingly gravitate toward freight that allows them to use their time and equipment efficiently. There are measurable things a shipper can do to become more attractive as they compete with others for the limited capacity available in their area of need.
For a drop-and-pull operation, a driver should ideally be able to arrive, drop equipment, grab an empty and be on the road again in roughly 30 minutes.
For live loading or unloading, think in terms of hours—not half a day. If a facility can turn a driver in an hour or two, it has a meaningful advantage over a facility where the driver routinely waits much longer.
The same principle applies to dropped equipment. A trailer or container sitting at a facility for a week or two isn’t generating the same value it could generate moving another load. Shippers that unload dropped equipment quickly and return it to service become better users of their carriers’ assets.
Appointment flexibility matters too.
A narrow receiving window that forces a driver to arrive hours early or wait until an inconvenient time creates friction that carriers remember. Wherever operations allow it, open pickup and delivery windows give carriers more flexibility to sequence their drivers efficiently.
And there is a human element that shouldn’t be overlooked: treat drivers well. Give them a safe place to use a restroom, get out of the truck or grab a cup of coffee.
Finally, shipper-of-choice status isn’t just operational.
It means paying a fair rate.
Transportation procurement shouldn’t become an exercise in driving every carrier to the lowest possible number regardless of the economics required to operate the service. Strong shipper-carrier relationships need to work for both sides.
When capacity becomes scarce, being easy to work with and paying a sustainable rate become competitive advantages.
Look for Intermodal Opportunity Beyond the Traditional Long-Haul Playbook
As truckload economics evolve, shippers should also revisit where intermodal fits within their networks.
The traditional intermodal profile still holds: repetitive freight, predictable service windows, major-market-to-major-market moves, reasonable proximity to rail ramps and enough transit flexibility to accommodate rail.
A general rule of thumb has historically been to start the conversation around 650 miles and above.
But that shouldn’t be treated as an absolute threshold.
Some of the most interesting untapped opportunities may actually be in shorter-haul markets, particularly for fulfillment and DC-to-DC freight that is still moving over the road.
The eastern U.S. is one area worth analyzing. Chicago to Eastern PA, for example, sits around the traditional mileage threshold and can be a strong intermodal lane. Evolving rail networks can also create opportunities in markets that historically weren’t viewed as natural intermodal candidates.
There is opportunity at the other end of the spectrum as well. Long-haul customer-direct shipments that automatically default to truckload should be reviewed to determine whether the service requirement genuinely always requires highway transit.
And sustainability shouldn’t be separated from the economics.
For companies with emissions-reduction goals, converting appropriate freight from highway to rail can help reduce transportation-related emissions—even when the intermodal length of haul is shorter than what the organization might traditionally have considered.
Don’t Wait Until the Annual Bid to Stress-Test Your Routing Guide
Routing-guide stress testing shouldn’t be a once-a-year exercise.
It should be ongoing.
Start with service performance. Are there carriers already failing to provide awarded capacity? Are certain lanes experiencing repeated service problems?
If the answer is yes, don’t simply give an underperforming provider more time because it won freight in the last annual bid. Evaluate whether the lane should move to a more reliable carrier.
Then look at concentration risk.
Do you have important lanes where only one provider is truly capable of covering the freight?
That’s a vulnerability.
One solution is a waterfall strategy. You may have a primary carrier, but intentionally feed some volume to a secondary provider so that carrier remains active in the lane and can step up when additional capacity is needed.
That can cost slightly more than concentrating every load with the lowest-cost incumbent, but you’re effectively purchasing optionality.
The annual bid itself also deserves another look.
There are good reasons it remains common. Carriers gain enough visibility to build their networks around committed freight, while shippers gain operational consistency and avoid continuously changing providers at individual facilities.
But there are tradeoffs.
An annual cycle can also give poorly performing carriers too much time before their position is challenged.
The answer isn’t necessarily abandoning annual bids. For many organizations, it may mean supplementing them with more frequent mini-bids, lane reviews and performance-based adjustments.
Technology can increasingly help here. Transportation teams should be looking at how automation and emerging AI capabilities can reduce the significant human effort traditionally required to evaluate large transportation networks.
The objective isn’t to bid freight constantly.
It’s to avoid allowing the procurement calendar to determine how quickly you respond to deteriorating service or changing market conditions.
OTR and Intermodal Should Be Evaluated Side by Side
Another structural change transportation leaders should consider is how they procure OTR and rail.
They shouldn’t be separate decisions.
More sophisticated shippers already evaluate OTR and intermodal side by side when they bid freight. That makes sense because the actual question isn’t “What is my OTR rate?” or “What is my intermodal rate?”
The question is:
What is the best total landed cost transportation solution for this lane?
That calculation should consider transportation cost, fuel, transit, inventory carrying cost, service requirements and capacity.
It doesn’t have to result in an all-or-nothing modal decision either.
A lane could be 50% truckload and 50% intermodal. Another might be 80% truckload and 20% intermodal.
For a growing mid-market shipper, the same principle can work on a smaller scale.
If you only move one load a week in a lane, dynamically switching modes may not be practical. But if you have meaningful volume of 3-5 loads per week you now have options.
Perhaps 70% moves via truckload while 30% of less time-sensitive or safety-stock inventory moves via intermodal.
That gives the shipper an established rail solution without sacrificing the flexibility of truckload.
Dynamic Doesn’t Mean Improvised
There is an important operational caveat.
You can’t necessarily load a trailer today and the decide that you want to put that load on rail.
Intermodal freight has different equipment and securement requirements. Cargo may require different blocking and bracing, and the equipment itself must be compatible with the intermodal network.
That means a dynamic modal strategy still needs to be deliberate.
Transportation teams need to determine in advance which loads will move intermodal, which equipment will be used, how those loads will be prepared and which days they will ship. The balance can then move over the road.
The strategy is flexible.
The execution is deliberate.
Use the Calendar as Part of Your Modal Strategy
Day-of-week planning is one of the most overlooked opportunities.
Consider a shorter-haul lane where a truckload move takes approximately a day and a half while intermodal could take four days.
A truckload shipment departing Monday may arrive Wednesday. If the same freight moved by intermodal Monday, it may not arrive until Saturday.
Truckload appears to have a major service advantage.
But now change the departure day.
If the shipment isn’t ready until Wednesday afternoon and the receiving facility won’t need it until Monday, much of that truckload speed becomes irrelevant because the weekend sits in the middle.
That creates an opportunity to move the later-week freight via intermodal, use the weekend as part of the transit window and potentially capture savings without sacrificing the required delivery date.
This is what dynamic mode selection should look like.
You’re not choosing rail because rail is always cheaper or truck because truck is always faster.
You’re choosing the mode that best fits the shipment’s actual requirement.
Compare the Entire Cost—not Just the Linehaul Rate
This is also where shippers can get the economics wrong.
The most basic mistake is comparing an intermodal transportation rate directly against a truckload transportation rate without looking at fuel.
Truckload has significantly greater fuel exposure.
A shipper may look at two base rates and conclude that intermodal doesn’t provide enough savings to justify a modal change. But once fuel is incorporated into the comparison, the economics can look very different.
In certain shorter-haul scenarios, what appears to be an equivalent rate before fuel could translate into a substantially lower all-in intermodal cost.
The more sophisticated analysis goes further.
What is the inventory carrying cost of the additional transit time? How important is arrival-time certainty for this particular product? How much capacity risk exists in the truckload alternative? Is the freight replenishing safety stock or fulfilling an urgent customer order?
Those aren’t reasons to prefer one mode.
They’re reasons to segment freight rather than forcing every shipment through the same mode.
Optionality Is the Real Transportation Advantage
If I were sitting with a CFO and transportation leadership team today, two priorities would be near the top of my list.
First, identify targeted asset-based intermodal opportunities and put them into the routing guide before you need them.
Second, improve the facilities and processes that determine how effectively carriers can use their drivers and equipment.
Those actions address two sides of the same challenge.
One creates more options.
The other makes your freight more attractive to the capacity providers you depend on.
Transportation leaders shouldn’t spend the next year trying to predict the exact month when the freight market will officially “turn.”
Watch the signals. Stress-test your routing guide. Protect important carrier relationships. Revisit freight that doesn’t need truckload speed. Compare modes on a true landed-cost basis. And build alternatives while you still have negotiating leverage.
Because once capacity gets tight, the shippers in the strongest position won’t be the ones scrambling to find another truck.
They’ll be the ones who already built another way to move the freight.
