Why has the freight recession ended and what's driving the recovery?

According to RSM's industrial analyst Ryan Farlow, the freight recession bottomed in November-December of last year, primarily triggered by regulatory and compliance enforcement. The recovery is now being driven by multiple factors: AI data center construction, tax incentives under the One Big Beautiful Act (OBA) for reshoring, tariff policies pushing manufacturing domestically, and resilient consumer spending at 3.9% real private demand. The ISM Manufacturing index reaching 55.6 with 15 of 18 sub-sectors expanding signals broad-based industrial growth rather than a single-sector phenomenon.

What is causing the driver shortage and capacity constraints in trucking?

The driver pool has shrunk significantly due to capacity exits accelerated by rising bankruptcies (2023-2024), crackdowns on non-domiciled CDLs, and the ELP (Electronic Logging Device) mandate. Since 2019, registered motor carriers increased 30% while shipment volumes declined 10%, creating oversupply that is now correcting as weaker operators exit. Finding qualified drivers has become the top operational concern for mid-market carrier executives. Compounding pressures include elevated insurance costs and litigation risks from cases like Montgomery and C.H. Robinson.

How are trucking costs and carrier economics changing?

Trucking costs are at record levels according to the American Transportation Research Institute's most recent Cost in Trucking report. Middle-market carriers are running aging equipment longer while navigating elevated insurance expenses. Contract rates and spot prices have risen substantially, with RSM clients reporting stronger July results and ongoing rate increases. Interestingly, freight expenditures are up 12% since 2019 even as shipments declined 10%, reflecting operational efficiency gains as carriers move larger volumes in fewer loads across both truckload and LTL services.

What is the primary risk to the industrial and freight outlook?

Data center construction slowdowns present the primary risk to the industrial outlook. Birmingham recently imposed a six-month moratorium on new data centers, and approximately 500 municipalities nationwide have enacted bans or pauses. The underlying issue is grid underinvestment rather than data center demand itself, with meaningful progress on transmission capacity estimated to require 3-5 years. However, RSM maintains that the data center buildout remains a multi-year tailwind despite near-term friction, and private equity funds are already positioning for increased transportation infrastructure investment by 2027.

How does the shipment volume decline contrast with freight expenditure increases?

Freight expenditures have increased 12% since 2019 despite shipment volumes declining 10%, a gap that reflects growing operational efficiency in the transportation industry. Carriers are moving larger volumes in fewer loads across both truckload and LTL services, meaning raw shipment counts understate the actual volume of freight moving through the network. This dynamic is helping correct supply-demand imbalances while highlighting how the industry has optimized capacity utilization even during constrained periods.

Manufacturing

High Impact

Industrial Boom Drives Freight Recovery, But Driver Shortage Looms

Aug 10, 2026

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S. 6 and marking seven consecutive months of growth. This expansion extends well beyond AI data center construction into aerospace, defense, semiconductors, and chemicals—signaling durable freight demand rather than a temporary cyclical spike. 9% in real private demand.

For supply chain professionals, this represents a structural shift from the freight recession that bottomed in November-December of last year. Capacity has tightened significantly as weaker carriers exited the market due to bankruptcies, CDL enforcement, and the ELP mandate. The driver pool has contracted to the point where qualified driver availability is now the top operational concern for mid-market carriers. Contract rates and spot prices are rising substantially, with freight expenditures up 12% since 2019 despite shipment volumes declining 10%—reflecting efficiency gains as carriers consolidate loads.

Risks remain material, particularly data center construction slowdowns driven by grid underinvestment. With 500+ municipalities implementing bans or moratoriums on new data centers, and transmission capacity improvements requiring 3-5 years, carriers face near-term friction. However, RSM projects 2027 as increasingly favorable, with private equity firms already positioning for transportation infrastructure M&A. For carriers and logistics providers, the current environment requires careful navigation of elevated costs, constrained capacity, and regulatory compliance while capitalizing on strengthening demand tailwinds.

#ism-manufacturing-index

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#capacity-exit

#grid-infrastructure

#carrier-economics

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Simulation Suggestion

this month

What if driver shortage reduces available truckload capacity by 25% in H2 2025?

Simulate a scenario where accelerating capacity exits due to CDL enforcement and the ELP mandate result in a 25% reduction in available truckload capacity over the next 6 months. This would force carriers to increase contract rates significantly, compress service levels, and potentially create supply chain disruptions for time-sensitive aerospace, defense, and semiconductor shipments reliant on consistent trucking availability.

Run this scenario

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this month

What if contract trucking rates increase 18-22% by Q4 2025?

Simulate the impact of sustained contract rate increases of 18-22% for truckload and LTL services through Q4 2025, driven by constrained driver supply, elevated insurance costs, and normalized spot pricing. This scenario would increase total freight costs for industrial manufacturers, potentially squeezing margins for shippers and forcing logistics optimization or near-shoring strategies to mitigate transportation cost inflation.

Run this scenario

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strategic

What if data center construction moratoriums expand to 1,000 municipalities by end of 2025?

Simulate a scenario where grid capacity constraints and local zoning restrictions cause data center construction moratoriums to expand from the current 500 municipalities to 1,000 nationwide. This would reduce the primary demand driver for industrial manufacturing and freight capacity, potentially reducing industrial sector shipment volume growth by 15-25% and dampening the multi-year tailwind currently projected through 2027.

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