Truckload’s value in critical lane is on the rise despite weak demand-awdailynews

webadmin

2025-11-16

Truckload’s value in critical lane is on the rise despite weak demand

Chart of the Week: Truckload spot and contract rates, Intermodal contract rates – Los Angeles to Chicago SONAR: Spot Contract Rates, IMCRPM.LAXCHI

Long-term contract rates (purple) from Los Angeles to Chicago have increased nearly 32% over the past two years, according to SONAR’s invoice data. In contrast, the same dataset shows a 10% decline in intermodal rates (orange) over that period. Truckload spot rates (green) on this lane have become increasingly volatile but have also risen overall. The widening gap between truckload and intermodal pricing suggests that shippers continue to place a high value on truckload service, even as the cheaper intermodal option gains share.

The Los Angeles–Chicago lane is a vital artery in domestic supply chain networks. It is one of the most heavily trafficked transcontinental lanes in the country, fed by goods arriving from Asia through the Southern California ports of Los Angeles and Long Beach.

Over the past 30 years, many companies have built warehouses in this region to stage freight before moving it deeper into the country for fulfillment. Both BNSF and Union Pacific operate major railheads here, giving importers relatively easy access to move goods inland by rail.

Loaded container volumes on this lane have grown significantly—up roughly 20% over the past two years—as importers pulled goods into the country earlier than usual due to geopolitical tensions and tariff concerns. This “pull forward” has given them ample time to move freight more cheaply across the country. During the same period, demand for long-haul truckload service out of this region has fallen nearly 30%.

Yet truckload prices in this lane have not fallen, which is somewhat counterintuitive. Typically, lower demand leads to lower rates.

Two main forces explain this anomaly. First, capacity is leaving the market. Weak demand and an oversupply of trucks have made conditions too competitive for many carriers to remain profitable. As capacity exits, gaps in coverage appear, helping explain the rising volatility in spot rates. Too much capacity doesn’t guarantee it’s in the right place at the right time.

Second, the freight that does move by truck has limited substitutability with intermodal service. This may be freight from smaller shippers who lack rail relationships, or freight with elevated urgency, since intermodal transit times tend to be slightly longer and less predictable.

So, even though fewer truckload shipments are moving out of Los Angeles, the value of that service continues to increase. If demand—or urgency—returns to the market, this lane will be among the first to react.