Shipper spending continues to rise in the first quarter of 2026 as low freight volumes, high diesel prices and tightening capacity brought costs higher, even as demand remained weak.
According to the U.S. Bank Freight Payment Index report, national shipment volume inched down 0.3% from the fourth quarter of 2025, but shipper spending surged 12.9% higher—the largest quarter-over-quarter increase since late 2020.
On a year-over-year basis, shipments inched up 0.6% and spending rose 21.8%.
Spending increased faster than shipments, representing a contraction after a prolonged freight recession from mid-2022, the report noted. This stretched long because spot market carriers had surplus funds from the pandemic era and were able to endure the downturn longer than expected.
The report pointed out several trends that kept the market under pressure during the quarter. First, is the adoption to power-only freight arrangements, with carriers providing only a tractor and driver to pull trailers owned, leased or managed by others. In addition, the report pointed out that a weak used truck market limited fleet foreclosures and a larger pool of truck drivers.
As a result of these dynamics, a supply-side recovery may be underway, according to the report.
Diesel prices were a major stress point in March, including a nearly $1-per-gallon one-week jump, according to the Energy Information Administration. For small fleets and owner-operators, the spike likely pushed many to their breaking point, the report pointed out, forcing some to idle equipment or exit the market.
For the quarter overall, tighter capacity lifted shipper costs through fuel surcharges and rate increases. Total freight volumes were roughly flat compared to the previous quarter, pointing to continued soft demand. The rise in gasoline prices also added another pressure on consumer spending, which can impact freight demand.
“This is a market being reshaped by supply, not demand,” said Bob Costello, senior vice president and chief economist at the American Trucking Association.
“The increase in rates and shipper spending reflects a rare supply-side recovery, with little change in freight volumes and simply fewer trucks competing for freight. Fuel price spikes late in the quarter contributed to higher costs, but the dominant force is tighter capacity after a prolonged industry downturn,” said Costello.
DAT spot rates jumped 11.9% from the previous quarter, another increase not seen since the pandemic-era boom.
“What makes this quarter stand out is how abruptly costs moved higher even though freight activity itself didn’t,” said Bobby Holland, director of freight business analytics at U.S. Bank.
“For shippers, that creates a much harder environment to plan and budget, because the usual volume signals weren’t there. March’s fuel spike added volatility at the margin, but the broader takeaway from the data is that pricing dynamics shifted faster than demand conditions,” said Holland.
[RELATED: Transportation costs soar despite soft demand in Q4 2025]
Same capacity crunch, different outcomes
Regional performance was uneven on the volume side, though freight spending rose across every region.
The West saw shipment growth in Q1, with volume up 1.9% from Q4 2025 and 6.4% higher than a year ago. Spending climbed more sharply, gaining 8.5% quarter over quarter and 20.5% year over year. It attributed shipment volume increase to steadier manufacturing and port activity, while limited capacity and surging diesel prices pushed shipper costs higher. In the West region, EIA noted that diesel hit $6.60 per gallon in March 30, the highest among all EIA regions.
In the Southwest region, shipments fell 9.6% from Q4 2025 and were down 14.3% from a year earlier—its 10th consecutive quarter of double-digit annual shipment declines. Yet spending moved in the opposite direction, rising 11.5% sequentially and 21.4% year over year, reflecting capacity constraints even as demand pulled back significantly. Slower population growth may be a factor to the region’s subdued freight demand, the report noted. The region also likely felt the impact of stricter federal immigration enforcement in the past year, which had reduced population levels and household spending.
The Midwest was the quarter’s standout performer, with shipments rising 5.4% from Q4 2025 and 9.5% year over year despite mixed manufacturing signals and some softening in cross-border traffic from Canada. The region also saw the steepest increase in shippers’ costs as spending surged 19.6% sequentially and led all regions on an annual basis with a 26.7% year-over-year gain.
The Northeast felt the impact of severe winter storms early in the quarter as it disrupted freight activity and economic activity, posting its first sequential shipment decline since Q4 2024. Manufacturing also saw supply chain issues due to tariffs and geopolitical events that disrupted operations. Despite softer volumes, shipments slipped 2.7% from the prior quarter but was still up 5.3% year over year. Spending continued to climb at 8.9% quarter over quarter and 22.1% from a year earlier, attributed to fuel surcharges amid higher diesel prices and rising rates as capacity tightened.
The Southeast saw freight activity weaken on both a sequential and annual basis, with shipments down 3.0% from Q4 2025 and 7.2% from a year ago. Consumer caution, mixed-to-weaker manufacturing activity, slower seaport volumes, softer tourism demand, and severe winter weather likely weighed on regional demand. Despite falling volumes, spending still rose 9.9% quarter over quarter and 16.7% year over year, reflecting national pattern of capacity constraints pushing costs higher despite demand conditions.
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