FreightWaves’ March State of Freight webinar made one thing clear: the US freight market was already strengthening before the conflict with Iran added a new wartime shock. Now, with diesel prices climbing and capacity tightening further, the pressure on shippers is becoming increasingly intense.
One of the central themes of the webinar was the rise in tender rejections, as measured by the SONAR Tender Rejection Index. FreightWaves and SONAR chief executive Craig Fuller explained that tender rejections offer a real-time view into how willing carriers are to accept contracted freight. When rejections climb, it usually signals that carriers have better opportunities elsewhere and are gaining pricing power.
Fuller described freight as a “waterfall” system, where loads move down the chain if a carrier declines them. In that context, higher rejection rates show that capacity is tightening and carriers are becoming more selective.
What makes the current market especially unusual, Fuller argued, is how strong it has become at a time of year that is normally decent, but not particularly exceptional. He referenced comments from Werner chief executive Derek Leathers, who described tender rejection levels above 13% as “COVID-like,” evoking the most chaotic period of the pandemic when national rejection rates frequently climbed above 15% and at times exceeded 20%.
Fuller said the rise began to take shape in August and started to accelerate just before Labor Day. One especially unusual feature, he noted, was that spot rates began moving higher even before tender rejections surged. To him, that suggested a structural change in capacity rather than just a temporary demand spike.
He argued that immigration enforcement and compliance crackdowns may have pushed some of the market’s lowest-cost carriers out of operation. If those carriers disappear, the average market rate naturally rises — and that seems to be what has happened.
Another standout topic was flatbed strength. Fuller said the housing sector, which often supports flatbed demand, remains weak. Instead, the current momentum appears to be coming from the industrial Midwest, with demand tied to machinery, steel, aluminum and copper.
He linked that trend to a wider “energy buildout” — not traditional oil drilling, but the infrastructure supporting data centers, including power generation equipment, cooling systems, chips, fiber networks and steel racks. In his view, those industrial flows are helping explain why flatbed rates remain firm even while housing struggles.
For shippers, however, the picture is far less comfortable. During the webinar, Fuller and SONAR’s Zack Strickland described the current environment as a miserable one for cargo owners.
Demand, measured by the SONAR Tender Volume Index, has been rising after spending much of the past year flat or declining. Spot market rates are climbing, which is beginning to push contract rates upward during the current bid cycle. Fuel surcharges are also rising and, because about 80% of freight moves under fuel surcharge agreements, those higher costs are now flowing back to shippers.
At the same time, available truck capacity is shrinking. Fuller made the controversial point that some non-compliant carriers had been able to offer lower-cost and faster service because they operated outside the rules, including hours-of-service restrictions. With enforcement increasing, that capacity is disappearing, leaving shippers with fewer options and a firmer market.
The webinar also touched on the difference between SONAR’s NTIL and NTI rate measures. The NTIL strips out fuel costs to isolate linehaul rates, while the NTI includes fuel. Recently, the NTI has risen while the NTIL has slipped slightly, a sign that the increase in all-in rates is being driven in part by higher diesel costs rather than pure linehaul inflation alone.
Even so, Fuller said both indices have returned to levels last seen in early 2023, when the freight recession was taking hold. This time, however, he expects them to climb to fresh highs as March progresses and capacity continues to tighten.
The overall message from the webinar was that the freight market’s recovery was already real. The war in Iran has not created that strength — but it has added a powerful new jolt.
