Jefferies raises trucking sector outlook on capacity cuts despite summer slowdown

Jefferies sees trucking spot rates and tender rejections rising towards year-end, despite a summer slowdown. The increased rates and rejections are attributed to structural capacity reductions due to federal regulations and enforcement. Tender rejections declined to about 13.5% from a June peak of 18%, closer to pre-summer levels as contract reconfigurations have improved routing guide performance.

Spot rates, excluding fuel, remained nearly flat in July at 46% year-over-year, but dropped 6% month-over-month in August, with the year-over-year gain slowing to 39%. The analyst advises not to overinterpret the six-week decline during typically slow weeks leading up to back-to-school and peak season demand. Trucking bankruptcies reduced to 42 in June and 40 in July from the highest monthly readings on record, with 161 exits in the second quarter marking the highest quarterly level ever, surpassing the previous record of 156 first quarter.

Year-to-date exits increased by 12% compared to the previous year. The increase in reacceleration since late 2025 is partly due to the FMCSA emergency ruling restricting non-domiciled CDL issuance and renewals. Approximately 95% of the closures involved carriers with less than $1 million in annual revenue. Containerized imports were stronger than anticipated, inventories remain historically low, and the ISM Manufacturing PMI continued to expand for the seventh consecutive month in July.

However, July retail sales declined by 0.6% month-over-month, marking the first decrease in nine months, and single-family housing starts hit their lowest since November 2022 as 30-year mortgage rates are near 6.7%.