Covenant Logistics Group is seeing bids from customers at an all-time high as shippers become concerned over trucking capacity, CEO David Parker said during a Q3 earnings call on Oct. 23.
The logistics company’s bids are up 17% since August, which Parker said is unusual timing.
"That’s a November, December, January, February event, and it started happening in August and September,” the CEO said.
The freight industry is experiencing accelerating capacity exits, James “Tripp” Grant, Covenant’s EVP and CFO, said, due to recent enforcement of government policies relating to English language standards. The full impact of the carrier exits, however, is being masked by a consumer pause in spending and uncertainty in the market stemming from volatile global trade policy, he said.
The Trump administration has been ramping up enforcement on commercial driving. In September, the Department of Transportation issued an emergency ruling establishing stricter ID requirements and making non-U.S. citizens ineligible for CDLs. In August, the U.S. State Department paused processing of work visas for applicants seeking to operate commercial trucks in the U.S.
In April, the Federal Motor Carrier Safety Administration was directed by President Donald Trump to increase enforcement of English language proficiency standards among truck drivers. A lack of compliance will result in an out-of-service violation, per the president's order.
Capacity exits are expected to help rebalance the trucking market, bringing supply and demand more in line, but Grant noted the cost for Covenant to procure transportation could exceed rate increases from customers, “resulting in constrained margins.”
Some shippers are trying to get ahead of the swing in the market, AFS Logistics VP of Freight Services Aaron LaGanke, said in an email.
“From the perspective of a shipper, if you anticipate rate increases and reduced truckload market capacity in 2026, it doesn’t hurt to get bids out now to get a milder increase now and make sure you have capacity secured,” LaGanke said.
Overcapacity is not an issue of the past, just yet. Overcapacity and not enough freight are holding contract rates flat, said Drew Schoessel, managing director of trailer group at Wells Fargo Equipment Finance.
“I think most economists forecast that we would have seen, you know, 2 to 4% increases in contract rates in the trucking industry in 2025,” Schoessel said in an interview. But that reality is there has been about a 1% increase due to the delay in rate cuts and tariffs, so rates stayed relatively flat, he said.
Covenant hasn’t raised rates in over four years, Parker said. In recent meetings with its legacy dedicated and expedited customers, the logistics company asked for rate increases with eight to 10 accounts, he said.
“That excites me,” the CEO said. “Is that something that’s going to happen on every customer [I’ve] got? I don’t know, but I haven’t seen it in 4 years, and I’m starting to see it.”
