US Freight Market Defies Gloom: Rates Rise as Capacity Exits
Load-to-truck ratios ease to 1.3-1.5 but still support double-digit rate hikes, says Covenant Logistics CEO
The market correction, which saw ratios ease from roughly 2-to-1 in the first half of 2025, has created what Parker describes as a “healthier environment” heading into peak season. Speaking in a recent interview, he noted that the moderation is tight enough to support rate hikes without triggering an influx of new competitors. “This is not a bad environment and probably a healthy environment, more so than it was in the first 6 months,” Parker said. “And so yeah, our customers are really excited about what they’re expecting for peak season.”
The freight market’s resilience is evident in the second quarter of 2025, when most truckload carriers posted double-digit rate increases. However, operating ratios improved by only about 1 point, as rising costs offset revenue gains. Parker warned that the industry needs another round of double-digit rate hikes to maintain financial health. “We need another double-digit rate if this industry’s gonna stay healthy,” he emphasised.
Shippers, meanwhile, are prioritising capacity over price resistance. Parker noted that as long as pricing remains fair, customers are more focused on securing reliable transport than haggling over rates. The shift comes as the market sheds excess capacity, with 2% to 3% of industry trucks already exiting. Parker credited the FMCSA Administration (FMCSA) for removing underperforming operators, a trend he expects to continue.
Rates Rise as Capacity Exits
Looking ahead, Parker forecast a 3-to-4-year “supercycle” driven by domestic manufacturing investment and data centre construction. Data centres, in particular, are projected to remain under development through at least 2032, with servers requiring replacement every 3 to 5 years. This long-term demand could provide a structural tailwind for freight volumes, even as some sectors face headwinds.
Covenant Logistics is repositioning its fleet to capitalise on high-service niches, moving away from commoditised over-the-road (OTR) freight. One standout success is its live chicken hauling division, acquired in 2023 through the purchase of Lou Thompson. The unit has grown from 230 trucks at acquisition to 800 today, serving poultry farms in Arkansas, Delaware, South Carolina, and Georgia.
Specialised Freight Gains Ground
Live chicken transport is a demanding niche, where on-time delivery and weight preservation are critical. Covenant’s fleet is now roughly 60% Freightliner and 40% Peterbilt, reflecting its focus on reliability and efficiency.
Parker also highlighted the potential in AI data centre logistics, announcing a partnership with a large international freight forwarder. The forwarder operates 400 solo trucks but lacks experience in team operations, an area where Covenant excels. Team operations, which require trucks to be traded every 18 months due to high mileage, must maintain operating ratios in the mid-80s to be profitable.
However, not all segments are thriving. The shift underscores the need for carriers to adapt to evolving market dynamics.
Covenant Transport continuará expandiendo su flota en el segmento de transporte especializado, con el objetivo de alcanzar 900 unidades para finales de 2025. La alianza con el operador internacional de carga se implementará en fases, iniciando pruebas piloto en el tercer trimestre de este año. La próxima revisión de resultados trimestrales, prevista para el 15 de octubre, ofrecerá detalles sobre la evolución de los márgenes operativos en ambos segmentos.
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