Newsletter · · Ashutosh Agarwal

Diesel Hits a Record as Spot Rates Keep Sliding - Freight Cycle - Week of August 25, 2026

Freight and trucking newsletter for the week of August 25, 2026. Spot rates fell for a fifth straight week even as the structural-capacity bulls made their boldest call yet and diesel printed a record crack spread, leaving the cycle-turn versus seasonal-head-fake debate unresolved.

Freight Cycle

Week of August 25, 2026: Diesel Hits a Record as Spot Rates Keep Sliding

Here's the puzzle sitting on every carrier's desk this week. Spot rates, the price you pay to book a truck on short notice, just fell for the fifth week running, and dry van (the plain box trailer that moves most consumer goods) had one of its worst weekly drops in nearly two decades. On paper, that looks like a market rolling over.

And yet the loudest voices in freight spent the week arguing the exact opposite: that a chunk of the nation's trucking capacity has permanently walked out the door, that this is "the largest structural change since deregulation in 1980," and that rates have nowhere to go but up. Meanwhile, the price of diesel, the fuel that moves literally everything, printed an all-time record on one key measure.

So which is it? Cycle turning, or cycle rolling over? This week the two stories didn't just coexist, they collided. Let me walk you through it.

TL;DR

  • Spot rates slid again. Week-32 broker-posted spot fell more than 7 cents a mile to its lowest since April, the fifth straight weekly drop. Flatbed fell for a ninth straight week; dry van had a near-record weekly decline. Total load activity was the second-lowest of the year.
  • But the structural-capacity bulls got their boldest number yet. RXO's strategy chief says as much as 20–25% of for-hire truckload capacity is coming out, calling it the biggest change since 1980. Truck-authority revocations spiked to ~4,000 in July (normal is ~1,400).
  • Diesel is the fresh shock. The national average jumped 19.7 cents in a single week to $5.45/gallon, and the diesel "crack spread" (refiner margin) hit a record $102, literally larger than the price of the crude it's made from.
  • The spot-to-contract gap keeps widening, up to 26 cents a mile on flatbed, which is the tension that usually resolves with contract rates stepping up.
  • Intermodal conversion is real: truck rates on Chicago→New Jersey are up 31% and Atlanta→New Jersey up 61%, pushing shippers onto the rails.
  • Cargo theft is exploding, especially data-center loads (~$110M stolen since June), and the Supreme Court's Montgomery ruling is quietly repricing what a "safe" carrier is worth.

What's New

The boldest capacity call of the year. The single most striking thing anyone said this week came from Jared Weisfield, chief strategy officer at broker RXO, on FreightWaves Today (Aug 18). His firm's view isn't just that the freight recession is over, it's that the ground has permanently shifted:

"We think as much as 20 to 25% of the for-hire truckload market is likely to come out from a supply perspective… this is the largest structural change to occur in the market since deregulation in 1980."

His logic: roughly 12 months of government enforcement (the crackdown on non-domiciled commercial licenses, the English-language-proficiency rule, the shutdown of "CDL mill" driving schools, ELD (electronic logging) enforcement, and cabotage rules) has pulled drivers out of the pool for good. The proof, he argues, is that spot rates are running 30–50% above last year despite genuinely soft demand. If demand were doing this, you'd expect strong shipment volumes; instead, industry shipments are still down year over year. So this recovery is being driven by trucks leaving, not freight arriving. And on top of that, the cost to operate a truck is up about 26% versus the last peak (insurance, tires, maintenance), which he calls structural. Higher costs, fewer trucks: rates have to rise.

RXO put its money where its mouth is in Q2. Its spot volume jumped 900 basis points sequentially and 1,500 basis points year over year, to about 42% of its mix, and roughly 50% in July. When routing guides break (i.e., when a shipper's contracted carrier says "no" and the load spills into the spot market), RXO says it's "the first call."

A record diesel crack, the cost side of the vice. While rates softened, the cost of moving freight did the opposite, and did it violently. On FTR's State of Freight (Aug 19), FTR's Avery Weiss reported the national average diesel price jumped 19.7 cents in a single week to $5.454 a gallon, the highest since early July, with the Midwest up a punishing 25 cents. That's not a rounding error; that's a straight line into carrier margins.

The more alarming number came from the energy desk. On Big Digital Energy (Aug 19), the hosts flagged that the diesel crack spread, the profit a refiner makes turning crude into diesel, hit $102, a figure so extreme that, as they put it, "the crack spread is larger than the actual price of the crude." Normal is around $20. This isn't about crude being expensive; it's about refining being broken: Russia's export ban and refinery strikes, the Hormuz disruption, and outages across three of the world's four major refining regions. Their memorable line: "Crude and refined products have gotten a divorce."

Two read-throughs matter here. First, the refiners are printing money: Marathon and Valero have both roughly doubled year to date, and Phillips 66 is up about 66%. Second, and more insidiously, the fuel surcharge is becoming a permanent price hike. The hosts described how FedEx and UPS surcharge tables now "lock in" a higher effective rate even if diesel falls, so the net surcharge per package is up roughly 40% year over year regardless of where the pump goes. They call it "inflation laundering," and it feeds the "October surprise" worry that a fuel-driven cost wave is about to hit consumers just as peak season starts.

The spot-to-contract gap keeps stretching. Spot rates get the headlines, but contract rates, the negotiated prices that actually govern most freight, are the tell for where the cycle is going. On Freightvine (Aug 20), DAT's truckload update showed the gap is still wide and, on some equipment, enormous: spot sits 14 cents a mile above contract on dry van, 13 cents on refrigerated, and 26 cents on flatbed. New contract rates being signed are coming in about 8.4% above the rates they replace, and spot is up 40.6% year over year on dry van. When spot trades that far above contract for this long, one of two things happens: either spot falls back to contract (the bear case), or contract climbs up to spot (the bull case). That convergence is the whole ballgame.

Capacity refuses to rebuild. The Logistics Manager's Index, a survey that's been running ten years, offered the clearest picture of the stalemate. On the same Freightvine episode, co-creators Zac Rogers (Colorado State) and Dale Rogers (Arizona State) noted the capacity reading hit 28.4 in July, tied for the second-lowest in the survey's history, and prices have been elevated for five straight months. Normally that combination triggers a fleet-building boom. Not this time:

"We have not seen a big rush to build fleets in 2026… no one wants to take a big step to start building more capacity because of the uncertainty right now."

Carriers are scarred from the last time they over-ordered, and between tariffs, the Iran/Hormuz situation, and the labor crackdown, nobody wants to sink capital into a truck. Rogers noted the gap between the price index and the capacity index hit 66.6 points in April, "the farthest one we've ever had," versus a normal spread of about 20.

The Debate: Real Turn, or Seasonal Head-Fake?

This is where the week got interesting, because the two sides finally squared off, sometimes on the same show.

The turn is structural (the bulls). Beyond RXO, the most persuasive version came from Dean Croke of DAT on Freight 360 (Aug 21). Croke's core point is that this isn't a normal cycle because the driver losses are permanent:

"A disqualified driver is not coming back. And if they do, they've got a lot more hoops to jump through… it's a structural movement in the floor price to run a truck."

He gave a concrete data point that actually pushes back on last week's big worry (that carriers were quietly re-entering the market): July saw nearly 4,000 operating authorities revoked, versus an average of about 1,400, as the "Modus" enforcement effort bit. He also pointed to California produce lanes running 25–30% above last year because immigration enforcement thinned the local driver pool, and warned that if hair-follicle drug testing (a 90-day look-back, versus urine's 3–5 days) comes in, the door for new drivers narrows even further. Add EPA's 2027 engine rules and steel/aluminum tariffs raising the price of a new truck, and Croke sees contract rates repricing higher "even if demand stays flat."

Tom Albrecht of Reliance Partners put a clock on it on FreightWaves Today (Aug 19). He counts "five big events" hitting supply: the language rule, non-domiciled licenses, the end of self-certification for driving schools, ELD tightening, and the Montgomery Supreme Court ruling plus the C.H. Robinson verdict. His framing:

"If all of the regulatory progress stopped with those five things, then the cycle will be over by the end of next year or Q1 of '28. But if some of these other things are enacted, then [it runs longer]."

In other words, even the bulls' floor is a cycle lasting into late 2027, far longer than the typical 18-month upswing.

It's a seasonal head-fake (the skeptics). The other side didn't get as much airtime this week, but it's real and it has data behind it. The plain fact is that spot rates are making lower lows. On FTR, Weiss reported that week-32 spot fell more than 7 cents a mile to its lowest since April, with flatbed down for a ninth straight week and dry van posting a drop so steep it's happened only once before in a comparable week "since at least 2008." Total load activity fell 2.8% for the week, the second-lowest reading of the year. Marc Held, CEO of the software firm Hoptek, put it bluntly on Logistics Matters (Aug 21): dry van spot "fell more in one week than in any comparable week since 2008. It's a very strange market."

And the intellectual case for a roll-over came earlier in the week on FreightWaves Today (Aug 17), where Ken Adamo (formerly of DAT) argued the government will ease the crackdown under pressure from shippers, and Michigan State's Jason Miller made the classic point that fleets always overcorrect: heavy-truck sales have already recovered to about 450,000 units annualized after cratering last winter, and new operating authorities have ticked back up. Miller added the macro landmine: if the Fed starts raising rates, trucking demand historically drops within three to six months.

My read. The honest answer is that both can be true at once, and this week showed exactly how. The soft spot data is real seasonal cooling (August after July 4 is always soft, and there's no shame in admitting the tape looks weak). But it's cooling on top of a genuinely depleted supply base that isn't rebuilding. The bulls' vulnerability isn't the spot softness; it's the "banked" authorities, the observation from prior weeks that some operators are stockpiling registration numbers, which could flood back if enforcement blinks. Croke's July revocation spike is a point for the structural case; Miller's recovering truck sales and Adamo's "government will cave" are points against it. The tiebreaker is the spot-to-contract convergence and diesel. If contract rates step up into the fall while diesel stays punishing, the bulls win the argument. If spot keeps grinding to lower lows and contract just fades, the skeptics do. We'll know a lot more by October.

The Names in Play

RXO ($RXO): The clearest single-stock read of the week, straight from its own strategy chief. The Q2 spot-volume surge (+900 bps sequentially to ~42% of mix, ~50% in July) is a genuine share-gain story, and the pitch is that structural chaos makes the biggest, best-capitalized brokers more valuable to shippers who can't afford stranded freight. Take the messenger's incentives into account (this is a broker talking its own book) but the Q2 numbers are the Q2 numbers.

Refiners (Marathon $MPC, Valero $VLO, Phillips 66 $PSX): Not freight names, but the record diesel crack is minting money for them. Marathon and Valero have roughly doubled year to date and PSX is up ~66%, per the energy discussion this week. The flip side of a refiner's windfall is a carrier's cost problem: the same crack spread that's a tailwind for $VLO is a headwind for every trucker's operating ratio.

Intermodal beneficiaries (J.B. Hunt $JBHT, Hub Group $HUBG): No dedicated episode named them this week, but the conversion story that favors them kept building (see below). When truck lanes spike 31–61%, the domestic-intermodal players are where that freight goes.

Read-Throughs

Intermodal / the rails. The conversion from truck to train is the quiet macro story of the season. On The Freight Coach (Aug 18), Anne Reinke, president and CEO of the Intermodal Association of North America (IANA), gave the numbers driving it:

"The market from Chicago to Elizabeth, New Jersey [is] up 31% in truck rates; from Atlanta to Elizabeth, 61%. And yet truckload volumes are flat to falling… people are saying, I don't want to pay that. What's a lower-cost option? And they turn to intermodal."

Her worry is retention, the "intermodal moment vs. intermodal constant" problem, where shippers flock to rail when trucks get expensive and abandon it the moment they cheapen. Notably, intermodal was the only mode with rising spot rates this week (+5.5%, per DAT), and there's a live theory, floated on FreightWaves Today (Aug 17), that the big Eastern and Western railroads are deliberately holding contract rates flat to "quietly pick up market share" without antagonizing shippers while they seek federal merger approval. Worth watching: a merger-motivated pricing pause is a temporary gift to shippers, not a permanent one.

Class 8 trucks and industrial demand. No OEM or dealer got dedicated coverage again, but the demand signal is worth flagging: heavy-truck sales have recovered to ~450,000 units annualized (Jason Miller), and the freight that is growing is low-density data-center and electronics cargo (GPUs, switchgear, racking). Air-freight imports are up 17% year over year, and Miller's Truckload Ton-Mile Index ticked up 1.3%. The demand isn't broad; it's concentrated in the AI build-out, and it's a flatbed and expedited story more than a dry-van one.

End markets. From Albrecht on FreightWaves Today (Aug 19): grain shipments are running at levels "like 1993" on a bumper corn crop, and coke shipments (the fuel for steelmaking, much of it feeding data-center construction) are up, both rail-positive. On the negative side, Tyson is closing two plants (Illinois and Utah) on a cattle shortage, a reminder that protein freight is bifurcating (chicken volumes up on affordability, beef facilities closing).

Cargo theft, now a balance-sheet risk, not a nuisance. This was a genuinely big week for the theft story, and it ties directly to the Montgomery ruling. The scale: on Brake Check (Aug 18), Drew Wilder of Vicarious Liability Risk Management and BulkLoads.com's Jared Flynn noted $304 million stolen in a single quarter even as the number of incidents fell 26%, thieves are getting more efficient, hitting fewer, bigger targets. The most-targeted category now is data-center hardware: on WHAT THE TRUCK?!? (Aug 19), Travelers' Scott Cornell said roughly $110 million of high-tech loads have been stolen since June 3, individual loads ranging from $2 million to $38 million, and flagged a new "bump and run" tactic (bumping the security escort with a screened-in criminal already driving the truck) that he calls an escalation the US hasn't seen before. And it's not just trucks: Morning Brew (Aug 20) cited $200 million of goods stolen from trains in 2025 across 75,000 thefts (roughly 200 a day, quadrupled since 2020), hitting BNSF, CSX and Union Pacific, including $440,000 of unreleased Nike sneakers off one BNSF train.

Why it matters for stocks: the Supreme Court's Montgomery decision means, in Marc Held's words, that "federal law does not shield freight brokers from state negligent-hiring suits… safety records now carry commercial value. Quality carriers just got more valuable to every broker in the country." Pair that with a "median nuclear verdict" reportedly at $51 million against carriers often carrying just $1 million of liability (Brake Check), and you have a structural push toward safer, better-capitalized carriers and higher insurance costs, another brick in the barrier-to-entry wall the bulls keep pointing to.

What Changed From Last Week

  • The spot-rate question got answered, for now. Last week the debate was whether spot had stabilized. It hasn't: week-32 made another lower low, worse than week-31, with the dry-van drop now near-record. Seasonal underperformance is continuing, not fading.
  • Diesel reversed hard. Last week diesel had fallen 9.1 cents (its first decline in five weeks); this week it jumped 19.7 cents and the crack spread hit a record $102. The fuel plateau we were watching for didn't happen, costs are climbing again.
  • The "carriers are coming back" bear tell got complicated. Last week's new worry was operating authorities re-entering. This week Dean Croke countered with a July revocation spike (~4,000 vs. ~1,400 normal), attrition actually re-accelerated, even as "banked" registrations remain a lurking risk.
  • The bull case got quantified. "Capacity is tight" became "20–25% of capacity is leaving, the biggest change since 1980" (RXO), with a cycle-length floor of late-2027 (Albrecht). The structural thesis got louder even as the spot data softened.
  • Cargo theft moved from anecdote to number. A $304M quarterly print, a $110M data-center theft wave, and $200M in train theft, plus the Montgomery liability read-through, turned a background risk into a front-page one.

Same watch list into next week: does contract step up toward spot, or does spot keep grinding lower? Does diesel plateau or push past $5.50? And do the July revocations keep outpacing new registrations? October is when this all gets decided.