Why Demand — Not Truck Attrition — May Decide the Fate of Small Carriers in 2026

For the past year, there’s been a steady belief floating around the industry that once enough capacity leaves the market, rates will finally rise. It sounds reassuring. It sounds straightforward. But it’s also dangerously incomplete. Because the reality small carriers deal with every single day tells a different story: capacity exits are temporary, but demand is structural. And only one of those truly has the power to fix the market in any lasting way.

Capacity Exits Give You Sugar Highs — Not Sustained Market Strength

When small carriers shut down, the spot market sometimes tightens. Maybe rates bump. Maybe they don’t. But even when they do, it doesn’t necessarily hold long term.

Why?

Because capacity exits are emotional events.

• Carriers quit when rates are low.

• Carriers return when rates rise — even slightly.

• Fleets park trucks… then redeploy them when they smell opportunity.

• New MCs open the second they see a lane improve by 20 cents.

• Mega carriers shift trucks across regions instantly.

And spot-market carriers, especially, react to short-lived windows. That’s why every “capacity-driven rate strengthening” since deregulation has burned out.

Capacity moves fast. Demand moves slow.

When fast meets slow, fast loses.

Demand Is the Only Force That Creates Long-Term Market Health

Demand isn’t emotional — it doesn’t solely react to fear, frustration, or short-term rate swings. Demand is structural. It’s rooted in the deeper forces that actually move freight across the country. Those forces include retail inventory investment, which determines how aggressively stores and distribution centers reorder product. Manufacturing output and industrial production create a steady stream of raw materials and finished goods that must move across regional networks. Consumer goods spending influences how busy warehouses and parcel hubs become. Housing starts drive lumber, shingles, appliances, and fixtures. Import and export volume shifts freight flow across ports, rail networks, and long-haul lanes. Government infrastructure cycles produce multi-year boosts in construction freight. E-commerce seasonality shapes regional surges. And wholesale replenishment behavior determines whether DCs are drawing down inventory or restocking aggressively.

These are the true engines of freight. When they pick up, freight volume rises in ways that endure. And when freight grows, that growth spills into the spot market in a way that’s sustainable — not fleeting. Capacity exits might amplify that strength by tightening the truck-to-load ratio, but they can never create demand on their own. Removing trucks doesn’t make shippers order more, doesn’t make retailers restock sooner, and doesn’t make factories increase output.

Why the COVID Freight Boom Proved Capacity Exits Aren’t the Savior

Let’s revisit COVID — but from a look back this time, with the nuance the industry tends to skip.

Phase 1 — Demand Shock

People stayed home, stimulus money hit, E-commerce skyrocketed and retailers panic-shipped everything they could get. Demand didn’t just rise it exploded.

Phase 2 — Inventory Overbuild

Retailers ordered too much, warehouses stuffed to the rafters, DCs couldn’t breathe, and this created huge sustained freight volumes.

Phase 3 — Temporary Capacity Tightening

Some carriers parked early in the pandemic and this amplified the initial rate surge. But it wasn’t the cause.

Phase 4 — Capacity Flooded Back In

Rates were too attractive, many saw an opportunity, and tens of thousands of new authorities hit the market each month at times.

Non-domiciled CDL holders entered at scale, adding even more available drivers into an already frothy capacity pool.

Phase 5 — Demand Normalized

People stopped buying pallets of goods, retailers corrected inventory and supply chains finally stabilized.

Phase 6 — Oversupply Crushed Rates

It wasn’t the capacity exits that drove the COVID boom —It was demand.

And when demand faded, the capacity flood erased the lift entirely.

If COVID taught us anything, it’s this:

Rate spikes created by demand sustain themselves while rate spikes created by capacity vanished.

The Non-Domiciled CDL Factor — And Why It Matters to This Conversation

From 2018–2024, the U.S. saw a massive influx of non-domiciled CDL holders.

This is not an opinion — this is a statistical reality. These drivers entered the workforce primarily through:

• State-level licensing in high-volume issuance states

• Employment Authorization Document (EAD) pathways

• Large fleet recruiting pipelines

• School-to-carrier direct entry systems

This influx effectively added thousands of additional drivers into the capacity pool — often at a time when domestic trucking was already oversupplied.

Now, with the FMCSA’s non-domiciled CDL rule under legal challenge, and the potential future removal of many existing non-domiciled CDL holders from eligibility, we are staring at what could be a major forced capacity exit overnight.

Here’s how it ties to the core argument:

If these drivers suddenly exit the market while demand is still flat or lagging, we’ll get a temporary tightening —but NOT a sustainable recovery. Why?

Because fleets will simply:

• Shift existing domestic drivers

• Recruit aggressively

• Raise sign-on bonuses

• Push productivity

• Add capacity through lease-purchase

• Reopen sitting trucks

• Pull experienced drivers from gig or local work back into OTR

Just like every other capacity-driven event, the market will correct itself long before demand builds.

In other words: Removing 50,000–150,000 non-domiciled CDL drivers does not fix the trucking market long term unless demand rises at the same time.

It may feel like it helps but may only temporarily lift rates. And that it is not a long-term solution.

Why Capacity Exits + Flat Demand = Long-Term Pain for the Spot Market

Let’s discuss what really happens when capacity exits but demand is stagnant.

Scenario 1 — The “Rate Tease”

When capacity shrinks, rates usually bump just enough to give truckers a spark of hope. The problem is that the moment those rates inch upward, people return back into the market—parked trucks are put back into service, sidelined drivers return, and big fleets redeploy equipment to chase the uptick. But because demand hasn’t actually improved, the total amount of freight in the system hasn’t grown. It’s the same pie, just sliced thinner. With more trucks once again fighting for the same amount of freight, the brief rate lift collapses, and we’re right back where we started. It’s a cycle this industry has lived through dozens of times, and it always ends the same way.

Scenario 2 — Big Fleets Take the Slack Before Small Carriers Can Benefit

When small carriers exit the market, it’s easy to assume that tightening capacity will finally create breathing room for the spot market. But that’s not what happens. The moment those trucks disappear, the larger carriers move fast: they swoop in to capture mini-bids, lock down contract freight, absorb the volumes once handled by defunct carriers, and negotiate long-term deals. By the time spot carriers start to feel like “the market is tightening,” the large asset carriers have already stepped in and absorbed a big portion of oxygen in the room.

Scenario 3 — How Returning Capacity Undercuts the Market

When carriers who previously shut down re-enter the market, they often do so under financial pressure. That pressure leads many of them to accept cheaper rates, fight aggressively for every posted load, and underbid carriers who have remained stable. They’ll take freight that would normally be refused, including low-margin loads, bad backhauls, and lanes that don’t cover operating costs—simply because they need immediate cash flow. This behavior pushes lane pricing downward, undermining any temporary rate lift caused by earlier capacity exits. And in a weak-demand environment, the market cannot absorb this returning capacity, which causes rates to fall back almost as quickly as they rose.

Scenario 4 — The Freight Desert Problem

Pulling capacity out of a dead zone doesn’t magically create freight. It doesn’t spur demand. It doesn’t bring shippers back. A market without customer activity stays dry regardless of how many trucks leave.

Only rising demand — from consumers, industry, trade, or seasonal cycles — brings life back to a region. Until that happens, pulling trucks out simply means fewer carriers fighting over the same handful of bad options.

What Will Actually Trigger a Real Recovery?

Here’s the truth: the freight market only recovers for the long haul when freight actually needs to move — not simply when trucks leave the road. Capacity can tighten the market for a moment, but without real freight volume behind it, nothing meaningful sticks. The only time the spot market genuinely strengthens is when the broader economy creates enough freight to shift the balance.

So instead of watching how many MCs are shutting down, the real signal for small carriers is whether the underlying drivers of freight demand are climbing. That means keeping an eye on whether retail is beginning to restock after a long period of inventory reduction. It means watching if housing and construction are picking back up, because building materials and fixtures feed flatbed, van, and regional freight all at once. It means tracking any signs of a manufacturing rebound, since factories generate some of the most consistent and diverse freight in the country. Rising import activity is another major indicator — more containers coming through the ports eventually translate to more truckloads moving inland.

Final Thought — You Can’t Build a Future on Temporary Lifts

Capacity exits happen fast because they’re driven by emotion — fear, frustration, debt pressure, and survival instincts. Demand doesn’t work like that. Demand is structural. It builds slowly, shifts gradually, and reflects deeper economic forces. Capacity behaves like waves, rising and falling with every rate swing. But demand is the tide. And small carriers don’t need more waves beating them up. They need the tide to finally turn back in their favor.

Federal actions may soon shrink the driver pool. Economic pressure may push more carriers out. Regulatory shifts might tighten capacity around the edges. Those events can bring short-term relief, and you might feel it on the load board for a little while. But none of that creates a sustainable recovery on its own. Because sustainability only comes when there’s more freight to haul — not when there are fewer trucks available to haul it.

You don’t build a future in trucking by hoping other carriers fail. That’s not a strategy. The carriers that survive these cycles are the ones positioning themselves now — building relationships, tightening expenses, choosing the right lanes, and staying operationally sharp — so they’re ready when demand finally returns. And demand will return. It always does. But the real turning point won’t happen because trucks left the market. It’ll happen because freight came back into it.

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