Why are freight costs reaching multi-year highs according to ITS Logistics?

Multiple structural factors are driving freight cost inflation: persistent driver shortages limiting carrier capacity, carrier consolidation reducing competition, elevated fuel costs, and sustained freight demand from e-commerce and inventory restocking. These factors combined create an environment where carriers can maintain premium pricing without significant demand destruction.

How does this freight cost warning affect supply chain budgeting for 2024-2025?

Shippers should expect transportation line items to consume a larger percentage of overall supply chain budgets. The multi-year high designation suggests this is not a temporary spike; companies need to build elevated freight costs into medium-term financial forecasts and adjust pricing strategies accordingly to protect margins.

What alternatives can shippers explore to mitigate rising freight costs?

Viable mitigation strategies include: shifting volume to intermodal (rail + truck) for lane optimization, consolidating shipments to improve utilization, renegotiating contracts with multiple carriers to maintain competitive pressure, optimizing routes and facility locations, and evaluating nearshoring or supply base restructuring to reduce transportation distance.

Which industries are most vulnerable to these freight cost increases?

Industries with thin margins and high transportation intensity face the greatest exposure: retail, e-commerce, consumer goods, and fast-moving grocery. Capital-intensive sectors like automotive and electronics manufacturing also face pressure, though they typically have more sophisticated transportation management capabilities and volume negotiating leverage.

Is this freight cost trend expected to reverse in the near term?

The ITS Logistics report's emphasis on 'multi-year highs' suggests persistence rather than near-term relief. Driver shortage, carrier consolidation, and regulatory pressures show no signs of acute reversal, indicating elevated freight costs will likely remain structural for 12+ months. Shippers should plan accordingly rather than anticipate normalization.

Shipping & Freight

High Impact

Freight Costs Hit Multi-Year Highs: What Supply Chain Leaders Need to Know

May 23, 2026

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The signal

ITS Logistics has issued a warning that freight costs are climbing to multi-year highs, signaling intensifying pressure across the transportation and logistics sector. This escalation reflects a confluence of factors including carrier consolidation, driver shortages, fuel volatility, and sustained demand for freight capacity. The warning carries significant weight given ITS Logistics' market visibility and positions freight cost management as a critical strategic priority for supply chain professionals.

The multi-year high signals a structural shift rather than temporary volatility. Shippers face narrowing margins and reduced negotiating leverage as capacity constraints persist and carrier profitability requirements remain elevated. Companies relying on just-in-time inventory models or those with limited transportation budget flexibility face the highest operational risk.

For supply chain teams, this development underscores the urgency of rate negotiation cycles, modal diversification strategies, and cost-control initiatives. Organizations should reassess transportation budgets, explore intermodal alternatives, optimize routing efficiency, and strengthen relationships with multiple carriers to mitigate exposure to continued rate escalation.

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Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

this month

What if freight rates increase an additional 8-12% in the next 90 days?

Model the impact of transportation costs rising 8-12% above current multi-year high levels across all freight modes (LTL, TL, intermodal). Assess the effect on product landed costs, gross margins by customer segment, and pricing power. Evaluate which customers can absorb increases versus those requiring service level adjustments or sourcing changes.

Run this scenario

Simulation Suggestion

this week

What if you shift 15-20% of volume to intermodal rail for long-haul lanes?

Evaluate the cost and service level implications of shifting 15-20% of long-haul truck volume to intermodal rail alternatives. Model total transportation cost savings, changes in transit time predictability, increased inventory carrying costs from longer transit times, and impact on customer service levels. Identify which lanes and customer segments are best suited for intermodal conversion.

Run this scenario

Simulation Suggestion

strategic

What if you consolidate distribution centers to reduce freight miles?

Simulate the impact of reducing the distribution center network by consolidating facilities to decrease per-unit transportation distance and freight volume. Model changes in facility costs, transportation cost reduction, changes in service radius and customer delivery times, and the breakeven timeline for facility optimization investments versus ongoing freight cost savings.

Run this scenario

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