News / Sea-change in US trucking en route as drivers are forced out

Washington’s onslaught on non-domiciled drivers, flanked by a clampdown on driving schools and the English language proficiency mandate, appears to transforming the US trucking market.

The move is prompting diagnoses of tectonic changes in the industry that will spark a sharp surge in pricing – despite a weak market. Not everybody is convinced, though.

For well over two years US truckers have struggled in a market characterised by tepid demand, overcapacity, downward rate pressure and escalating costs. While industrial activity was mired in stagnation, inflation cast doubts over the ability of consumers to continue to carry the market, causing observers to conclude that only a large exodus of capacity could turn the tide.

Now it senses that the administration’s campaign, to push non-domiciled drivers and those with insufficient command of English, could do the trick. The latest update of the RXO Curve (Q1 26 Truckload Market Forecast: Rate & Capacity Trends) argues that accelerated exits of drivers from the market are showing results that augur a dramatic change on the scene.

By some estimates, there are between 640,000 and 720,000 foreign-born drivers in the US, making up 18% to 19% of the driver workforce. Between them, the non-domiciled CDL expurgation drive and the language proficiency tests could push as many as 600,000 drivers out of the market.

As the final rule on non-domiciled commercial driver licences (CDLs) went into effect on 11 February, the Curve’s authors described the loss of large numbers of drivers as “potentially the biggest structural change to the supply side of the truckload market since trucking deregulation in 1980”.

The decimation of capacity has not come out of the blue. Over the past two years industry publications have chronicled a steady trickle of exits as firms succumbed to headwinds. Last year, 2,648 operating authorities fell out of the market. However, 46% of those exits occurred in the final quarter showing the rising impact of the intensifying drive to weed out non-domiciled drivers.

The Curve concluded that today “the capacity situation is much more fragile than at any point since 2022.”

“We’re in a changing environment, and the carrier market is in a much more precarious place than it has been over the last few years,” its authors wrote.

Pressures are multiplying. Insurance companies will be less likely to extend coverage to carriers that employ non-domiciled CDLs, the Curve pointed out.

The Curve’s authors and other observers point to the rise of spot rates as a signal of a changing market. Since the Christmas holiday season, spot rates have been higher than contract rates, after having languished below contract pricing for three years.

In the fourth quarter, truckload spot rates were up 5.2% year on year, whereas contact rates were 2.4% higher than a year earlier. Tender rejections have also been on the rise, an indication that truckers have become more picky, despite a slow market.

On 25 February, the ‘Delilah Law’ was introduced in the Senate that would bar non-US citizens and illegal residents from obtaining a CDL, mandate English knowledge and skills testing.

Moreover, this bill would become statutory federal law, which means its passage and signature by the president would mean immediate compliance, an aspect that triggered fears of an abrupt capacity slump rather than a drawn-out exit of drivers.

Inevitably, this would accelerate a surge in pricing that is widely predicted to gather momentum as more drivers exit the market. According to one observer, rates in some sectors could double.

Shippers are advised to engage in contract negotiations before rates increase significantly.

However, not everybody is convinced that the market is turning. Satish Jindel, founder and president of ShipMatrix, has doubts on how far the recent rate increases and tender rejections are a reflection of winter weather affecting operations. The authors of the Curve noted that January usually saw re-ordering activity as firms replenish inventory.

Mr Jindel doubts rates will continue to climb, pointing to sluggish industrial demand and a consumer outlook clouded by inflation and employment prospects. Recent results from Home Depot and Lowe’s do not give cause for optimism, he added.

Nor is he convinced that the legislative measures will keep non-domiciled drivers out of the industry. Many will be back before long, he reckons.

Instead of relying on political help to create profitability through a legislated capacity reduction, the trucking industry ought to address its inefficiencies, such as low utilisation rates, he said.