Broker RXO sees TL spot rate surge extend into Q3

Freight broker RXO reported that its truckload spot rate index witnessed its largest sequential increase in five years during the second quarter. This metric, which excludes fuel surcharges, has continued to rise into the third quarter, marking a significant escalation in rates. The index had not experienced such a level of inflation since the pandemic era, with the second quarter recording both the highest year-over-year reading and the largest sequential increase since 2021.

RXO's Curve Report indicated a 32.4% year-over-year increase in second-quarter spot rates, a sharp rise from the 16.5% year-over-year increase in the first quarter. By the third quarter, the index had surged 43% year-over-year. Corey Klujsza, RXO's vice president of pricing and procurement, noted that shippers are facing heightened strain as spot rates have consistently surpassed contract rates this year.

This trend is not only persistent but intensifying as the peak season approaches. Despite being in a two-year year-over-year inflationary environment, the truckload market is exhibiting a markedly different dynamic. A steady decline in capacity, driven by stringent regulatory enforcement and poor carrier economics, has further tightened the market.

Jared Weisfeld, RXO's chief strategy officer, suggested that the inflationary rate environment is expected to persist, even with reduced freight volumes. He highlighted that carrier operating costs, excluding fuel, have risen by 29% from the previous peak, implying that rates must increase substantially to enhance carrier margins.

The all-in cost-per-mile index, which incorporates fuel surcharges, hit a peak of 154.9 in the second quarter, the highest since the first quarter of 2022. Cass Information Systems data revealed that contract rates, excluding fuel and accessorial surcharges, increased by 6% year-over-year in the second quarter, up from an average of 2.4% in the first quarter.

Cass's TL linehaul rate index climbed 8.6% year-over-year in July. Public TL carriers reported substantial year-over-year contractual rate increases in the second quarter due to growing apprehensions over potential legal liabilities related to non-compliant carriers and the risk of carriers failing to meet capacity obligations during peak season.

Schneider National's one-way fleet witnessed double-digit rate hikes in contract renewals during the second quarter, and the company plans to augment its spot market fleet to capitalize on favorable market conditions following the loss of a key dedicated customer. Werner Enterprises reported a 10% year-over-year rise in revenue per total mile and projected a 10% to 13% year-over-year increase in rate per mile for the third quarter.

RXO expressed optimism for the upcoming peak season, as retailers are still experiencing same-store sales growth, and inventories are healthy. The company acknowledged several reasons to be encouraged as we enter this peak season, as demand is anticipated to follow typical seasonality patterns, potentially leading to further rate volatility in 2026.