Market Update February 2026

The Freight Economist

February 2026

Executive summary

Monthly economic and market update

Dry van and reefer spot rates rose more than 20% year-over-year due to Winter Storm Fern.

U.S. economy

Labor market

Winter storm Fern

Tariffs

Freight demand

Imports

Manufacturing

Retail sales

Container imports rose in January.

Imports

What does it mean for truck tonnage?

Retail sales

Key data points and commentary

Trucking volume

Intermodal rates

Geographic trends

Routing guide trends

Geographic trends

Trucking volume

The Cass Freight Shipments Index declined by 2% on a seasonally adjusted basis in January, representing a 7.1% year-over-year drop. This decrease was partially attributed to the recent winter storm, weak Less-Than-Truckload (LTL) volumes, tariff-related disruptions, and the trend of private fleet insourcing. However, this result stands in contrast to other volume indicators, such as our Truckload Demand Index (see the Shipper Recommendations section above) and the ATA Truck Tonnage Index, which showed a 0.4% increase in December and was up 0.9% year-over-year.

Intermodal rates

In January, average weekly intermodal loads decreased by 3.7%, and weekly carloads dropped by 4.7%. However, compared to the same time last year, intermodal volumes were significantly higher, up 11%, and carloads increased by 2.1%. It's worth noting that this January's declines were less severe than those of the previous year, which saw 7.7% and 9.3% reductions in intermodal and carload loadings, respectively.

Mazen’s work focuses on analyzing the freight transportation landscape, and producing short- and long-term forecasts based on supply and demand dynamics. He is also a research affiliate with the Intelligent Transportation Systems (ITS) Lab at MIT, where he completed his PhD in 2019. His work falls at the intersection of ITS, economic modeling, and analytics.

mdanaf@uberfreight.com

By Mazen Danaf, Senior Economist and Applied Scientist, Uber Freight

Featuring insights and contributions from Uber Freight leadership, technologists and market specialists.

The tightening market drove a significant increase in shipper costs. The First Tender Acceptance Rate continued its downward trend, dropping to 85% in January from 86% in December and a much higher 92% in November. This decline was mirrored by a decrease in the Route Guide Compliance rate, which fell to 89% from 94% in November. Consequently, the surge in tender rejections resulted in a substantial financial impact on shippers, with the average cost over the primary carrier rising sharply from 1.7% in November to 7% in January—the highest level recorded since 2022.

Following a loss of 51,000 employees in the fourth quarter, the U.S. economy demonstrated increased stability in January by adding 130,000 jobs. Furthermore, the unemployment rate improved, dropping from 4.4% to 4.3%. However, the most recent Job Openings and Labor Turnover Survey (JOLTS) indicates a softening U.S. labor market: job openings decreased by 5.6% in December, reaching the lowest level since 2017 (excluding the COVID-related decline), and were down 12.9% year-over-year. While the hiring rate saw a modest improvement in December, it remains near cycle lows and, outside of the pandemic, is at its lowest point since the 2014-2015 period.

Executive summary

U.S. economy

Freight demand

Freight supply

Labor market

Average m/m and y/y van spot rate index by destination regions – August Source: DAT

Winter storms had a clear impact on geographic variations in spot rates. The West, the region least affected by the storms, experienced a typical post-peak season decrease, with spot rates falling by 4.5% in January. This, combined with tough year-over-year comparisons due to last year's import surge in the West region, resulted in weak year-over-year growth, with rates up only 2.5%. In contrast, the Midwest and Northeast, which were most exposed to the storms, saw counterseasonal increases in spot rates, rising by 4.5% and 4.8% respectively. As a result of this storm-driven activity, spot rates in these regions were significantly higher year-over-year in January, up 12%.

Key data points

Freight Supply Carrier Population

Retail activity is slowing down.

Inflation

Truckload demand slowed in June after a pre-stocking surge. In August, truckload demand remained largely flat. A slight increase in retail and manufacturing demand was counteracted by a significant drop in imports. Consumer-driven demand rose 3.2% year-over-year, while manufacturing demand decreased by 0.2%. Full visibility into all demand indicators, such as wholesalers' sales and inventories, was not possible due to the government shutdown.

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Winter Storm Fern caused 171 fatalities and an estimated $4 billion to $7 billion in damages, with Bank of America projecting a 0.5-1.5 percentage point cut to Q1’26 GDP. Data from Uber Freight points to a slowdown in economic activity in January, evidenced by a storm-related drop in shipment volumes across all sectors. Despite this, U.S. manufacturing saw a surprise expansion in January, with the Supply Management Purchasing Managers Index (ISM PMI) climbing to 52.6, suggesting a return of demand tailwinds for the freight market.

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Despite increases in both truckload spot and contract rates in January, Uber Freight’s Intermodal Rate Per Load index saw only a modest 0.2% increase. The intermodal market has been generally stable, as this index has remained mostly flat since July 2024, with the exception of a minor rise last January, which still resulted in a 1.7% year-over-year decrease. Intermodal prices typically lag truckload contract rates by about three to six months. Therefore, we should expect future price increases in the intermodal market.

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Shipper and carrier insights

The first quarter of 2026 was significantly affected by Winter Storm Fern (January 23-30), a severe weather event that severely impacted the broader U.S. economy and the freight market. The storm was the deadliest since 2021's Storm Uri, resulting in 171 fatalities and an estimated $4 billion to $7 billion in direct damages. Bank of America forecasts that Winter Storm Fern will reduce 1Q 2026 GDP by 0.5-1.5 percentage points on a quarter-over-quarter basis. However, they anticipate that this economic activity is mostly delayed, not destroyed, suggesting a potential rebound in the second quarter. Uber Freight's data provides insight into the storm's effect across different sectors (using a fixed sample of shippers to exclude the impact of shipper growth or churn on the platform). A decrease in shipment volumes was observed across all sectors. Most notably, retail shipments experienced a sharp 19% year-over-year decrease in January, a significant drop from the 7% year-over-year growth seen in December.

Winter storm Fern

On February 20, 2026, the Supreme Court of the United States (SCOTUS) ruled that the President had overstepped his authority under the International Emergency Economic Powers Act (IEEPA) by imposing reciprocal tariffs on other nations. Consequently, the court ordered that these IEEPA tariffs, which constituted the majority of the tariff regime established throughout 2025, must be voided. According to the most recent estimates from U.S. Customs and Border Protection, approximately $142 billion had been collected from tariffs enacted under IEEPA authority during 2025. Importers are likely to receive refunds following the SCOTUS decision, which did not specify the refund process. These payments are not expected to be passed directly to consumers. According to the Yale Budget Lab, the current average effective tariff rate for consumers is 9.1%—the highest since 1946 (excluding 2025). This is after the removal of IEEPA tariffs; had those tariffs remained, the rate would have been 16%. When importers substitute away from high tariff sources, the average effective tariff rate drops to approximately 8%. As of the beginning of February 2026, the remaining active tariff policies primarily impact metals, vehicles, electrical equipment, and electronics. President Trump responded with an announced plan to impose a 15% global tariff. This could potentially increase the pre-substitution rate to 13.7% and the post-substitution rate to 12.2%. Freight Implications: • The potential rescinding of IEEPA tariffs is likely to create a temporary spike in import and freight demand as shippers rush to place orders during this window. • Should a 15% global tariff be put in place, we anticipate an increase in imports from countries with a net decrease in tariff rates, and a decrease in imports from countries facing a net increase. • The likelihood of "tariff dividends" causing a significant demand shock later in 2026 is now significantly lower. This is because tariff revenues are expected to be paid as refunds to importers, not consumers. As a result, the impact on spending patterns will not be the same as that of consumer-focused tariff dividends or stimulus checks.

Tariffs

In the long run, tariffs might boost domestic freight by giving local manufacturers an edge. However, the magnitude and sudden implementation of tariffs means we probably won't see benefits for a while, and the immediate damage will be greater. Unlike Canada and Mexico, the 10% percent tariffs on Chinese products went into effect on February 4, and are likely to stay. Tariffs on China were already anticipated by shippers, some of which pulled imports forward in 2024. A survey of Uber Freight shippers found that the majority do not foresee immediate changes to their networks. However, a significant minority (42%) are actively assessing various options. Some shippers reported that they anticipate absorbing cost increases and subsequently passing those increases on to their customers. Seventeen percent of shippers indicated they are pre-stocking cross-border inventories. In contrast, very few are exploring domestic alternatives or alternative vendors in countries not impacted by tariffs. Some expressed concerns that it will take several months to adapt their networks.

Labor market

The U.S. manufacturing sector saw a surprise expansion in January.

Manufacturing

The ISM report also highlighted widespread concerns among manufacturers about declining demand and order levels. Respondents across various sectors expressed pessimism about the near-term outlook.

Manufacturing

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Freight supply

Spot and contract rates

Trucking employment

Tractor orders

A surge in tractor orders signals returning carrier optimism.

Tractor orders

Market tightness persists, driving spot and contract rate increases.

Spot and contract rates

Market conditions

A more significant development this month was the major revisions to BLS employment data showing long-distance truckload employment at its lowest point since 2014. Concurrently, tractor sales continued their decline, hitting 2018 lows (based on a 12-month moving average). This simultaneous decline in supply, coupled with stable demand, is causing the demand/supply gap to widen. This widening gap explains the significant tightening of the freight market observed during the recent storm and signals considerable inflationary risks for 2026, which shippers should plan ahead for.

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Long-distance truckload employment reached its lowest level since 2014.

Trucking employment

Spot rates in January and February surged to levels not seen since 2022, marking year-over-year increases of 10% in January and over 20% in the first two weeks of February. While the immediate cause is often attributed to the recent winter storms, the critical question is whether this market tightness is transient or signals a permanent shift toward a tighter environment. We believe the winter storms merely acted as a catalyst. The fundamental cause of this tight market—the 'fuel'—has been accumulating for the past two years. Contrary to expectations of a demand-led recovery, the current market tightness is primarily supply-driven, a result of capacity consistently leaving the market since 2023. 1. The supply-demand imbalance The gap between Uber Freight’s national truckload demand and supply indices is widening to levels not seen since the tight market of the 2021-2022 COVID era. In the last 12 months, the Truckload Demand index grew by 2.3%, recovering from a sharp 2022 decline and two soft years in 2023 and 2024. Despite this growth, demand remains 1.3% below its 2021 pandemic peak. Conversely, the supply index has contracted 1% year-over-year. This places supply at its lowest level since 2021, a significant 5.4% below its all-time high reached in 2022.

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Due to the storm, the spot market experienced significant tightening in January, resulting in rate increases across all modes: dry van (+2.1%), reefer (+5.7%), and flatbed (+3.9%). This pressure on the spot market subsequently pushed contract rates higher. Contrary to typical seasonal patterns, this market tightness persisted through mid-February, resisting the expected seasonal rate drops.

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Winter storm Fern froze the freight market and the U.S. economy.

Industrial production of machinery, primary metals, and fabricated metals has remained relatively flat or slightly declined over the past year. A recovery in these sectors seems unlikely in the near future, as orders and shipments of core capital goods—a key indicator of manufacturing activity—have also stagnated. Orders for core capital goods, which are nondefense capital goods excluding aircraft, are considered an early indicator of manufacturing activity. Weak orders and shipments in this sector suggest that a broader economic recovery may be delayed.

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Industrial equipment and supplies

Automotive

Auto manufacturing has been one of the bright spots in the economy over the past year, driven by pent-up demand and a shortage of vehicles at dealerships. While production rose to meet demand, the market is starting to show signs of saturation, with inventories gradually normalizing and potential glut looming on the wholesale side.

Paper and plastics

Paper and plastics are highly used in the packaging industry, which has been affected by the recent slowdown in food spending after the economy re-opened. In addition, the demand for paper products was already on a downward trajectory due to factors such as digitalization, adoption of alternatives (plastics), and growth of e-commerce. The pandemic further accelerated this decline. Moreover, a surge in downstream inventories led to a slowdown in manufacturers’ demand.

Nondurable consumer goods

Demand for food consumed at home fell from its pandemic highs as the economy re-opened, normalizing back to its pre-pandemic levels. Demand for other consumer goods (such as apparel) continues to be pressured by external competition, slowing consumer demand, and high downstream inventories.

Durable consumer goods

Durable consumer goods such as appliances, furniture, and wood products are affected by the ongoing housing recession. New home sales remain below the 2019 levels, and about 30% below the pandemic peak. Similarly, housing starts are at their lowest level since the beginning of the housing recession, 32% below the 2022 peak.

Inflation

Dry van and reefer spot rates rose more than 20% year-over-year due to Winter Storm Fern.

The relationship between the supply-demand gap (as measured by these indices) and spot rates is strong. Indicators such as DAT’s load-to-truck ratio and the aforementioned supply-demand gap had signaled a significant tightening of the market, which typically predicts a rate increase. However, spot rates remained flat despite this underlying tightness. The recent surge in spot rates, which now aligns with the other market indicators, appears to have been catalyzed by the recent storms.

Shipper and carrier insights Could the freight market tighten further?

2. Carrier operating costs Though recent spot and contract rate increases have narrowed the difference between rates and operating costs, they still fall short of carriers' average operating cost per revenue mile. This cost metric is comparable to current rates, as it accounts for unpaid empty miles. The resulting negative margins persist even at current rate levels, meaning carriers are still, on average, losing money per mile driven (both contract and spot). Consequently, market capacity is likely to continue decreasing until this gap is eliminated. Due to persistent inflationary pressures, largely stemming from tariffs, operating costs are not expected to decrease. Therefore, it is likely that rates will increase in the coming months to keep pace with these rising costs.

Stability and Slight Rate Decrease Expected

Price inflation continues to normalize, with the Consumer Price Index (CPI) showing a 2.4% year-over-year increase, following a 0.2% rise in January. Core inflation, which excludes volatile food and energy prices, is slightly higher at 2.5% year-over-year, with a 0.3% increase for the month. This stabilization is evident across sectors: Services inflation has fallen to 3%, its lowest level since October 2021, and goods inflation has stabilized around 1.1%. The increase in goods inflation seen in 2025, partially attributed to tariffs, is expected to be a one-time shock unless new tariffs are introduced.

The Supply Management Purchasing Managers Index (ISM PMI) climbed to 52.6, suggesting a return of demand tailwinds for the freight market. This positive outlook is reinforced by forward-looking indices for new orders (57.1) and backlogs (51.6), indicating potential demand recovery. Although a favorable sign for U.S. manufacturing, this increase might partially be due to post-holiday reordering that is not fully captured by seasonal adjustments.

Retail sales remained flat month-over-month in December and only rose 2.4% year-over-year. This modest annual increase was primarily driven by price inflation rather than a genuine rise in the volume of goods sold. Most retail sectors experienced decreases in December, with notable exceptions being nonstore retailers (e-commerce), food and beverage stores, and building materials and garden supplies. The overall year-over-year growth was significantly dampened by the motor vehicles and parts dealers sector. When excluding this sector, the year-over-year increase in retail sales was a healthier 3.5%.

Retail activity is slowing down.

January saw a rebound in containerized imports, reaching 2.32 million TEUs. The 4.1% increase observed in January exceeded seasonal expectations, which typically project an increase of less than 1% between December and January. While this figure is 6.8% lower than January 2025, it still surpasses the historical average for the month, indicating a possible normalization of trade patterns. Specifically, imports from China rose 9.3%, but were still 24.6% below the July 2024 peak.

Revised data from the Bureau of Labor Statistics (BLS) confirms a significant, lower-than-estimated figure for long-distance truckload employment. This revision, based on annual data benchmarking using the Quarterly Census of Employment and Wages (QCEW) survey, indicates that market capacity continues to decrease sharply. From 2022 to 2025, employment in this sector dropped by 56.6K employees, a 10.2% reduction. This decline is notably steeper than the 3.9% (20.2K reduction) observed at the start of COVID, indicating a much more severe capacity reduction this time compared to 2020. For-hire trucking employment continues to decline, falling by 0.3% in January and resulting in a 2% year-over-year decrease. Earlier data for December showed a similar trend for long-distance truckload employment, which dropped 0.3% month-over-month to its lowest level since February 2024, and was 3.5% lower compared to the previous year.

Class 8 tractor orders surged in December and January, rising 13.4% and 16% y/y, respectively. Demand was fueled by a tightening market and a push by fleets to order ahead of the impending EPA’27 regulations. Although the surge in orders reflects carrier optimism in a tightening market, it is not expected to alleviate near-term capacity constraints, which are projected to persist through 2026. In fact, the ongoing decline in tractor sales, which reflects the weak order levels seen last year, is significant. The 12-month moving average of tractor sales has fallen to its lowest point since 2018. As this rolling average is a strong predictor of year-over-year changes in spot rates, the current trend underscores the effect of tightening capacity on rising freight prices.

The spot market showed significant tightening in January, evidenced by counter-seasonal rate increases across all modes compared to December. Dry van rates rose by 2.1%, reefer by 5.7%, and flatbed by 3.9%. These increases were more pronounced year-over-year, with van rates up 10.9%, reefer up 13.7%, and flatbed up 9.2%. This upward pressure on the spot market subsequently caused contract rates to climb, with van rates increasing by 1.4% and reefer rates by 0.4%. Year-over-year, contract rates were 2.9% higher for van and 3.4% higher for reefer. Market tightness defied typical seasonal trends and continued through mid-February, a period usually marked by falling spot rates. However, seasonal headwinds appear to be reasserting themselves toward the end of the month, as improved weather conditions in the third week of February led to the beginning of a decline in spot rates and a stabilization in routing guide performance.

It’s important to note that in 2021, pandemic-related lockdowns led consumers to spend most of their stimulus money on goods, as services spending was suppressed. Future stimulus impact could differ significantly, as services now account for a larger share of overall consumer spending. Finally, it is estimated that the current accumulated tariff revenues, approximately $120 billion to date, are insufficient to meet the $300 billion required to issue a $2,000 dividend to 150 million individuals. Consequently, the distribution of these tariff dividends, if it happens at all, is likely to be delayed until the first or second quarter of 2026 at least.

Tariff Dividends

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Despite rising inflation, the labor market continued to show signs of softening. The government shutdown has created a data blackout, delaying official economic reports vital for our analysis and forecasting. In the absence of federal data, the ADP National Employment Report stood out, showing that private sector employment fell by 32,000 in September, signaling continued weakness in the U.S. labor market. Adding to the concerns about labor market softness, in August, Job Hires fell 2.2% m/m and were down 2.0% y/y, to their second lowest level since April 2020.

The U.S. housing market saw volatility amidst shifting mortgage rates. The U.S. housing market continues to contract, with new permits decreasing 2.3% month-over-month in August and 9.9% year-over-year. Despite this, August saw a positive shift: a slight dip in mortgage rates led to a 20.5% month-over-month surge in new home sales, reaching their highest level since January 2022. This suggests a significant pool of potential homebuyers awaiting lower mortgage rates, indicating a substantial amount of dormant freight demand that could be unleashed next year if rates fall.

An emergency order targeting non-domiciled CDLs could drive a capacity crunch in 2026. U.S. Transportation Secretary Sean P. Duffy issued an emergency order immediately halting states from issuing or renewing non-domiciled Commercial Driver’s Licenses (CDLs). This rule closes loopholes created by states that had been granting CDLs to foreign nationals who lacked required employment-based visas or whose licenses were improperly extended long past the expiration of their lawful presence. The Federal Motor Carrier Safety Administration (FMCSA) estimates that its interim final rule on non-domiciled CDLs will remove 194,000 drivers from the market over the next two years. Additionally, the carrier population continues to shrink due to ongoing capacity reduction. FMCSA data indicates a net decrease of 385 carriers in Q3, following a modest increase of only 671 in Q2.

A 25% tariff on new tractors could also contribute to the potential capacity tightening next year. President Donald Trump announced plans to impose a 25% tariff on medium- and heavy-duty trucks starting next month. This action directly targets Mexico, which is a major manufacturing hub under the USMCA trade agreement. Mexico exported 159,466 heavy-duty trucks in 2024, with 95.5% going to the U.S. These trucks are currently permitted to cross the border tariff-free under the USMCA, provided they meet strict rules of origin requiring 64% of their value to originate regionally (a threshold set to increase to 70%). This announcement comes at a time when tractor orders are near their lowest levels in 5 years. Preliminary Class 8 orders totaled 20,800 units in September, down 44% y/y.

Tariff Dividends

Shipper recommendations With increasing inflationary pressures, shippers should exercise caution and closely monitor the market by: • Vigilantly track market shifts and routing guide failures: Investigate lanes where routing guides are breaking. These are likely underpriced lanes that have seen recent significant rate increases. If service on these lanes remains poor even as weather conditions improve, be prepared to re-negotiate rates with carriers. • Secure competitive contract rates, but prioritize service: While now is a good time to lock in contract rates, avoid chasing only the absolute lowest rates to protect your routing guides. Carrier spot rates are not expected to revert to 2023 or 2024 levels. Extremely low rates could compromise service, especially if the freight market tightens, whether due to the onset of the Summer produce season (around May) or the approach of the next peak holiday season. • Consider flexible pricing mechanisms: Index-based pricing (where rates are tied to a market index like third-party spot rates) can be a smart option. This approach protects service levels if the market continues to tighten, eliminating the need for frequent re-negotiations. Conversely, if the market softens, it allows you to benefit from lower spot rates. This is particularly valuable if you believe the current tight market is temporary and want to mitigate the impact of recent weather disruptions on your RFP outcomes. Short-term rate outlook February typically sees a seasonal softening following the peak season—particularly in Florida, California, Texas, and the Pacific Northwest, while Midwestern and Northeastern markets maintain some residual tightness due to weather. This year is an outlier; instead of the usual dip, we are seeing nationwide tightness.

Shipper recommendations With increasing inflationary pressures, shippers should exercise caution and closely monitor the market by: • Vigilantly track market shifts and routing guide failures: Investigate lanes where routing guides are breaking. These are likely underpriced lanes that have seen recent significant rate increases. If service on these lanes remains poor even as weather conditions improve, be prepared to re-negotiate rates with carriers. • Secure competitive contract rates, but prioritize service: While now is a good time to lock in contract rates, avoid chasing only the absolute lowest rates to protect your routing guides. Carrier spot rates are not expected to revert to 2023 or 2024 levels. Extremely low rates could compromise service, especially if the freight market tightens, whether due to the onset of the Summer produce season (around May) or the approach of the next peak holiday season. • Consider flexible pricing mechanisms: Index-based pricing (where rates are tied to a market index like third-party spot rates) can be a smart option. This approach protects service levels if the market continues to tighten, eliminating the need for frequent re-negotiations. Conversely, if the market softens, it allows you to benefit from lower spot rates. This is particularly valuable if you believe the current tight market is temporary and want to mitigate the impact of recent weather disruptions on your RFP outcomes. Short-term rate outlook February typically sees a seasonal softening following the peak season—particularly in Florida, California, Texas, and the Pacific Northwest, while Midwestern and Northeastern markets maintain some residual tightness due to weather. This year is an outlier; iInstead of the usual dip, we are seeing nationwide tightness.

The market typically cools through April, with spot rates bottoming out 4%–5% below the yearly average. In some regions, rates can plummet by more than 10% during this period. This serves as a market gauge: Iif rates remain elevated or fail to hit these seasonal lows, it signals a tightening on a seasonally adjusted basis.

The market typically cools through April, with spot rates bottoming out 4%–5% below the yearly average. In some regions, rates can plummet by more than 10% during this period. This serves as a market gauge: if rates remain elevated or fail to hit these seasonal lows, it signals a tightening on a seasonally adjusted basis.

Inflation

The normalization in inflation is coming at a cost to the economy: A softening labor market.

Tariffs

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Freight Implications: • The potential rescinding of IEEPA tariffs is likely to create a temporary spike in import and freight demand as shippers rush to place orders during this window. • Should a 15% global tariff be put in place, we anticipate an increase in imports from countries with a net decrease in tariff rates, and a decrease in imports from countries facing a net increase. • The likelihood of "tariff dividends" causing a significant demand shock later in 2026 is now significantly lower. This is because tariff revenues are expected to be paid as refunds to importers, not consumers. As a result, the impact on spending patterns will not be the same as that of consumer-focused tariff dividends or stimulus checks.