Why are contract rates climbing if freight demand is actually soft?

According to the article, contract rates are being driven by **capacity constraints** rather than demand strength. Arrive Logistics emphasized that supply-side tightness, not volume growth, is pushing rates higher. Even though freight volumes have fallen below year-ago levels, carriers are locking in higher committed rates to protect margin as fuel costs remain elevated and available capacity tightens.

What factors are keeping diesel prices so high despite recent pullbacks?

Diesel prices peaked above $6.50 per gallon and remain historically elevated due to multiple headwinds: reported Russia supply deal uncertainty, ongoing drone strikes on Russian refineries, and discussions of a potential U.S. export ban. Craig Fuller noted that while prices have pulled back slightly, meaningful relief remains elusive given these supply-side pressures.

Is peak season freight demand actually materializing in Q4?

Not yet, according to the article. The tender rejection index sits at 1,373, which is elevated compared to recession lows and above year-ago levels, but falls short of the robust readings historically associated with confirmed peak season. The market is in a wait-and-see posture as of November, with industry participants watching for the index to heat up further before declaring peak season has truly arrived.

What is suppressing freight volumes despite higher rates?

The article cites three main factors: AI data center-related freight shifts, weakness in food and beverage (driven by higher inflation, reduced SNAP benefits, and GLP-1 medications curbing consumption), and softer year-over-year momentum compared to the first half of 2025. Volumes have fallen below both 2024 and 2023 comparable levels after the strong first-half run.

Should shippers expect further rate increases heading into year-end?

The market remains uncertain. While contract rates have closed the gap with spot rates and capacity utilization is tighter than a year ago, no single data point confirms peak-season volumes have materialized. However, sustained diesel price elevation and constrained carrier capacity suggest upward rate pressure will persist unless volumes significantly weaken or fuel prices fall substantially.

Demand Planning

High Impact

Contract Freight Rates Hit Recession Highs as Diesel Tops $6.50/gal

Oct 13, 2026

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The signal

Freight market dynamics are shifting as contract rates reach their highest seasonally adjusted levels since the freight recession ended, signaling carrier capacity constraints despite softer overall demand.

Diesel prices remain stubbornly elevated above $6.50 per gallon due to geopolitical supply uncertainty and potential U.S. export restrictions, eroding carrier margins and pushing freight costs higher.

The disconnect between tightening supply-side conditions and lackluster demand suggests the market is driven primarily by constrained carrier capacity rather than shipper volume needs, a critical distinction for procurement planning in Q4.

#capacity-utilization

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

this month

What if diesel prices remain above $6.00/gallon through December?

Simulate the impact of sustained elevated diesel costs (holding above $6.00/gallon) on carrier profitability, freight rate indices, and shipper transportation budgets through Q4 2025. Model how fuel surcharges adjust if base rates flatten.

Run this scenario

Simulation Suggestion

immediate

What if tender rejection index breaks above 1,600 in November?

Simulate rapid escalation of the tender rejection index above the 1,600 threshold, indicating confirmed peak-season capacity tightness. Model the cascading effects on spot rates, contract rate acceleration, and shipper ability to secure capacity at committed rates.

Run this scenario

Simulation Suggestion

strategic

What if food and beverage freight volumes recover as inflation moderates?

Simulate demand recovery in the food and beverage sector assuming inflation eases and SNAP benefits normalize. Model the impact on overall freight volumes, rate stabilization, and carrier capacity utilization across the trucking market.

Run this scenario

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