The LTL Rate Squeeze: Carriers vs. Market Reality

The U.S. less-than-truckload (LTL) sector enters the final stretch of 2025 in an unusual equilibrium: carriers continue pushing rate increases, the federal producer price index still shows elevated selling prices, and publicly traded LTL operators remain disciplined in their yield strategies — yet demand on the ground is flat, shippers are pressing for concessions, and many networks report lower volumes than a year ago. This contradiction defines today’s market conditions. The structural loss of capacity following the 2023 collapse of Yellow has supported price levels, but the long-anticipated LTL “upcycle” remains elusive. Freight volumes across manufacturing, retail replenishment, and distribution remain stubbornly muted. Shippers across the U.S.—from major industrial producers to mid-market distributors—continue challenging carrier rate ambitions, not only during annual bid cycles but in day-to-day procurement and lane-specific negotiations.

At the same time, nearly every LTL carrier acknowledges the same reality: the post-Yellow rush for terminals is over. Carriers have stopped buying real estate at the pace seen between 2023 and 2024, and the last remaining properties from Yellow’s liquidation are nearly gone. What was once described as a once-in-a-generation expansion opportunity has now slowed to a strategic pause, exposing a sector wrestling with cyclical weakness even as it prepares for tighter conditions later.

U.S. government data shows the long-distance LTL producer price index increasing 10.5% year over year in August 2025, according to the Bureau of Labor Statistics and analysis from the Journal of Commerce.

The loss of Yellow’s 308-terminal network removed approximately 6% of LTL doors from the U.S. market. Carrier leadership across the industry estimates total network capacity is down roughly 10% from early-2020 levels. While this structural shortfall supports pricing, it does not eliminate the immediate challenges created by a softer freight environment. Fixed-cost networks are harder to balance when volumes decline, and underutilized linehaul operations pressure margins even when headline yields appear strong.

Publicly traded LTL carriers continue reporting lower shipment counts. One of the industry’s largest premium carriers saw average daily shipments fall nearly 8% year over year. Another national carrier reported a decline of about 3.5%, while another posted a drop of nearly 2%. Executives consistently describe demand as steady but subdued, stable but lacking any real momentum. They also note that the much-discussed “inflection point” simply has not arrived.

Given this backdrop, network expansion has slowed noticeably. Several major carriers have opened no new service centers in 2025. Others—despite opening more than 35 new terminals since 2022—have scaled back spending and shifted their focus toward maximizing density within existing footprints. What was a race for assets during the Yellow liquidation has now become a period of regrouping.

Yet carriers continue announcing general rate increases. The two largest operators have already confirmed GRIs of 4.9% and 5.9%, while another major carrier implementing a nationwide expansion announced a 5.9% increase in October. Meanwhile, the LTL producer price index has risen nearly 17% since Yellow’s collapse, exceeding the yield increases carriers show in their public filings.

Forecasting organizations such as AFS Logistics and TD Cowen project the LTL Freight Index at 64.8% for Q4 2025—roughly 65% above January 2018 levels—suggesting that, structurally, price levels remain elevated despite soft freight conditions.

This data stands in contrast to what many shippers and third-party logistics firms report daily: while carriers promote GRIs publicly, they often privately offer concessions on selected lanes. The reality is that LTL carriers must defend network density, and defending density requires flexibility. Analysts and shippers observe strategic pricing where carriers lower rates or match competitive offers in markets where freight imbalances require adjustment. These dynamics reflect tactical decision-making rather than broad pricing weakness.

Shippers, fully aware of the freight recession in truckload markets and the muted LTL environment, are pressing harder on rates. Many combine their LTL negotiations with broader multi-modal strategies, consolidating freight into truckload when possible, especially on longer-haul lanes. Regional carriers continue gaining traction as shippers diversify away from solely national providers. The overall result is intense downward pricing pressure on lanes where volumes justify the leverage.

PNG Logistics Co. has been closely monitoring these developments, but more importantly, it is actively working on behalf of its customers to counterbalance market pressures. The company is continuously negotiating with LTL carriers not only to reduce costs, but to select partners who maintain consistently high operational performance. As PNG Logistics Co. observes across its networks, many LTL carriers have significantly improved their service levels through terminal upgrades, technology investments, improved visibility tools, and stronger transit reliability. Performance standards are now so uniform across many top carriers that the traditional operational differentiators have narrowed sharply. When most providers offer near-identical service levels, transit consistency, and claim ratios, the true differentiator for shippers becomes pricing.

This is where the disconnect between carrier expectations and market reality becomes clear. LTL carriers continue pushing for rate strength, yet they face a customer base that sees a very different landscape. PNG Logistics Co. notes that the LTL sector risks misunderstanding the long-term lesson from the truckload market, which has been in a deep recession for more than two years. Truckload carriers that resisted market corrections prolonged their downturn; those who aligned their pricing with shippers’ economic conditions strengthened their relationships and improved long-term lane commitments. LTL carriers with strong networks, high shipment density, and predictable volume lanes must remember that pricing discipline works both ways. If carriers want access to “good freight”—consistent, high-density, high-volume shipments—they must recognize that pricing is what keeps them in the favor of shippers and logistics partners.

Shippers know that today’s LTL performance metrics are increasingly uniform. Most national and strong regional carriers provide high-quality service. Without meaningful service differentiation, pricing becomes the critical competitive variable—especially in a market that hasn’t fully recovered. PNG Logistics Co. continues guiding customers through these dynamics, emphasizing carrier reliability, operational consistency, and cost-competitiveness, while negotiating lane-specific solutions aligned to real-world freight conditions rather than headline GRIs.

Across the industry, LTL carriers are adopting strategies more closely aligned with premium operators: defending yield, protecting margins, and avoiding unprofitable freight. This includes rolling out premium service tiers, investing in visibility tools, and refining their customer mix. Yet they remain cautious, recognizing that volumes are not yet supportive of the next expansion cycle.

Looking toward 2026, many carriers expect rate-friendly conditions tied to anticipated economic improvements. But the current environment demands pragmatism. GRIs may continue to anchor public expectations, but behind the scenes the market remains defined by negotiation, targeted reductions, revised FAK structures, extended terms, and lane-specific adjustments. Shippers retain more leverage today than they have at any point since the pandemic surge.

The U.S. LTL industry ends 2025 in a state of controlled tension: structurally constrained capacity, softer demand, disciplined carriers, and shippers pressing aggressively for relief. Pricing stability depends on how quickly demand returns—and whether carriers can balance long-term rate strategies with short-term realities. PNG Logistics Co., working alongside its customers, sees clearly that operational performance across carriers has become remarkably aligned, leaving pricing as the primary differentiator. As the market waits for the next cycle, relationships, responsiveness, and realistic pricing strategies will determine which carriers remain preferred partners for high-quality freight in 2026 and beyond.