Why are trucking credit conditions deteriorating if freight rates are improving?

The article suggests that stronger freight rates have not yet translated into improved carrier profitability, likely due to persistent operational challenges, fuel costs, driver wages, and existing debt burdens. The rate improvement may benefit only well-capitalized carriers, while smaller operators remain undercapitalized and unable to convert higher revenues into sustainable cash flow.

What do BMO's impaired loan figures tell us about carrier default risk?

BMO's Q2 gross impaired loans of CAD $576 million represent loans where borrowers have difficulty meeting obligations. This metric is 14.5% higher than the year-ago period (CAD $503 million), indicating elevated carrier default risk. Allowances for credit losses also rose to $86 million from $57 million year-over-year, signaling banks are increasing reserves for expected losses.

How will the sale of BMO's transportation business to Stonepeak affect trucking industry financing?

The article notes the deal is expected to close in Q4 2026. Private equity ownership may result in stricter lending criteria, reduced availability of credit, or higher borrowing costs for carriers. This structural change in the financing landscape could further pressure carriers already struggling with profitability, particularly smaller operators dependent on working capital loans.

What is the difference between provisions and allowances for credit losses?

According to the article, allowances are 'contra assets' that impact balance sheets, while provisions are liabilities that impact income statements. Both signal lender expectations of borrower difficulty. BMO's increases in both metrics indicate the bank is simultaneously strengthening its financial position and reducing current earnings—a defensive posture suggesting ongoing credit stress.

Should supply chain teams be concerned about carrier capacity constraints?

Yes. Deteriorating carrier credit health often precedes fleet reductions, service cutbacks, or sudden failures. Supply chain teams should diversify carrier relationships, accelerate contract negotiations with financially stable partners, and build contingency capacity plans. The data suggests the trucking market may experience constrained capacity despite strong rates—a counterintuitive but high-risk scenario.

Risk & Disruption

High Impact

Trucking Credit Crisis: Freight Rates Rise But Carrier Finances Worsen

May 27, 2026

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Despite a measurable uptick in freight rates during the second quarter of 2026, BMO's transportation lending portfolio—which represents approximately 90% of the bank's exposure to trucking—shows a paradoxical pattern of deteriorating credit health. All four key credit metrics worsened during the period ending April 30, 2026, suggesting that rate improvements have failed to translate into meaningful financial recovery for many carriers. This disconnect between market conditions and underlying financial performance raises critical questions about the structural viability of the trucking sector and the true health of carrier balance sheets.

2 million), provisions for credit losses increased to $41 million, and net writeoffs climbed to $25 million. While these figures remain below the peak crisis levels seen in late 2024, they remain significantly elevated compared to year-ago levels, indicating the freight market recovery has not yet restored carrier financial stability. Notably, BMO continued to expand its loan originations and total portfolio value in Q2, suggesting either institutional confidence in the recovery or uncertainty about the transition to Stonepeak ownership.

For supply chain professionals, this development signals heightened carrier financial risk—a structural issue that could constrain capacity availability, increase service disruptions, or trigger sudden failures among small and mid-sized carriers. The impending sale of BMO's transportation business to private equity may also alter lending criteria and availability, fundamentally reshaping the financing landscape for trucking operations.

#trucking-credit-crisis

#freight-market-disconnect

#bmo-transportation

#carrier-financial-health

#supply-chain-financing

#impaired-loans

#freight-rates-paradox

#trucking-industry-risk

#carrier-liquidity

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Simulation Suggestion

this month

What if 15% of mid-sized carriers default or reduce capacity due to financial stress?

Simulate a scenario where carrier capacity shrinks by 15% due to financial failures or fleet reductions, occurring over the next 2-3 quarters. Assume surviving carriers increase rates by 12-18%, and service level commitments deteriorate to 85-90% on-time performance.

Run this scenario

Simulation Suggestion

strategic

What if stricter lending criteria reduce carrier working capital availability?

Model a scenario where the Stonepeak transition reduces trucking industry access to working capital financing by 20-30%, forcing carriers to reduce fleet size or limit service offerings. Assume lead times for additional capacity increases by 4-6 weeks as carriers struggle to finance new equipment.

Run this scenario

Simulation Suggestion

this month

What if carrier financial failures accelerate during Q3-Q4 2026?

Simulate elevated carrier insolvencies triggered by the BMO portfolio transition and seasonal Q4 volume increases. Model a 10-20% increase in carrier bankruptcies, creating sudden capacity gaps and forcing shippers to activate secondary carriers at premium rates.

Run this scenario

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