Chart of the week: Van Contract Rates, National Truck Load Index (Linear Freight Cost Less Fuel Over $1.20/Gal) – US Sonar: VCRPM1.USA, NTIL12.USA
Long-term (contract) rates for dry truckload transportation (VCRPM1) have remained essentially flat over the past year and have increased by approximately 1% since July 2024. Short-term spot rates (NTIL12), which are more volatile in nature, have risen by around 4% over the same period. With all the talk of capacity exiting the market at alarming rates, what does this stability in contract rates mean for 2026?
In the short term, the answer is most likely nothing. Contracts are unlikely to move higher anytime soon, as there is currently no significant pressure on them. Bid rejection rates remain within the acceptable range for most carriers, and while cash rates are less reliable, they continue to offer deep discounts for those willing to pursue them.
Seasonal pressure will increase over the next few months as the holiday shipping season ramps up, but it’s hard to see that translating into sharp or sustained increases in contract rates. Demand remains very weak and there is little evidence of recovery beyond speculation. However, there is an important caveat.
Last week’s chart article showed that capacity appears to be coming out of the market faster than demand is falling — something that has little or no historical record over a long period. The main reason is that this transportation slump has lasted longer than at any other time in modern times.
In the chart above, both rate lines will decline sharply through most of 2022. The fastest-moving spot rate hit a floor in May 2023, while contract rates hit lower lows in 2024.
Although cash rates have been rising since 2023, they are largely unprofitable. Contract rates have been more flexible, indicating that they are currently near the lowest sustainable levels for most carriers.
The latest American Transportation Research Institute (ATRI) report on carrier costs confirms this, showing that average operating costs will increase 33 percent from 2019 to 2024. The contract rate index (VCRPM1) is almost 16% above 2019 levels – meaning the cost of operations has risen twice as fast as the rates the market is paying.
In addition, recent enforcement measures have been intensified by targeting unruly and unlicensed drivers. US Transportation Secretary Sean Duffy recently announced plans to crack down on CDL factories and the fleets that use them.
This increase in regulatory pressure, which began in the spring, has only recently begun to affect the rate environment. In early October, spot rates rose unseasonably amid reports that immigrant drivers were staying off the roads due to intensified ICE enforcement.
All of this adds up to a challenging operating environment and should keep carriers on high alert over the next 12 months. Freight demand has slowed over the past year, however rejection rates and liquidity remain flexible.
This dynamic shows that if demand returns – or even stabilizes – the market can change quickly and push long-term rates back up. Carriers should focus on the quality of their carrier partners rather than cost savings, as today’s negotiated rates are likely to become outdated before the next bid cycle in late 2026.
About the weekly chart
The FreightWaves weekly chart is a selected chart from SONAR that provides an interesting data to describe the state of the freight markets. A chart is selected from thousands of potential charts in SONAR to help participants visualize the shipping market in real time. Every week a market expert posts a chart with commentary live on the front page. The weekly chart will then be archived on FreightWaves.com for future reference.
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