Covenant Logistics Group CEO David Parker said on an Oct. 23 third-quarter earnings call that Covenant Logistics is seeing customer offers peak as shippers worry about shipping capacity.
The logistics company’s offers are up 17 percent since August, which Parker said is unusual timing.
“It’s a November, December, January, February event, and it started in August and September,” the company’s CEO said.
James “Trip” Grant, Covenant’s EVP and CFO, said the trucking industry is accelerating out of capacity due to the recent implementation of government policies regarding English language standards. However, he said, the full impact of carriers’ withdrawals will be masked by consumer restraint in spending and market uncertainty stemming from volatile global trade policy.
The Trump administration has tightened commercial driving laws. In September, the Department of Transportation issued an emergency order imposing stricter requirements for identification and disqualifying non-U.S. citizens from obtaining a CDL. In August, the US State Department stopped processing work visas for applicants seeking commercial trucking jobs in the US.
In April, the Federal Motor Vehicle Safety Administration was ordered by President Donald Trump to increase enforcement of English language proficiency standards among truck drivers. According to the President’s order, failure to comply with these items will result in dismissal from service.
The capacity exit is expected to help rebalance the transportation market and increase supply and demand, but Grant noted that the cost of charters to provide transportation may exceed rate increases from customers, “leading to tight margins.”
Some carriers are struggling to stay ahead of market volatility, Aaron LaGanke, AFS Logistics vice president of freight services, said in an email.
“From a shipper’s perspective, if you anticipate a rate increase and a decrease in capacity in the truck market in 2026, it doesn’t hurt to get bids now to get a gentler increase now and make sure your capacity is guaranteed,” Laganc said.
Excess capacity is not a thing of the past, yet. Surplus capacity and insufficient load carrying capacity Drew Schoessel, managing director of the trailer group at Wells Fargo Equipment Finance, said he has kept contract rates steady.
“I think most economists are projecting that we would see a 2 to 4 percent increase in contract rates in the transportation industry in 2025,” Schuessel said in an interview. But the fact is that due to the delay in the reduction of rates and tariffs, it has increased by about 1%, so the rates remained relatively stable.
Covenant hasn’t raised rates in more than four years, Parker said. He said that in recent meetings with its dedicated and expedited customers, the logistics company has requested a rate increase of eight to 10 accounts.
“It excites me,” the CEO said. Is this something that happens to every customer? [I’ve] did i get “I don’t know, but I haven’t seen it in 4 years and I’m starting to see it.”
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