Trucking Sector Inflationary Trends Signal Prime Time for Logistics Plays

The U.S. trucking sector is at an inflection point. With tender rejection rates surpassing 10% in key regions like the Southeast—a level not seen since 2022—and the national Outbound Tender Rejection Index (OTRI) hovering near 6.7%, the industry is sending a clear signal: capacity is tightening, costs are rising, and inflationary pressures are mounting. For investors, this presents a rare opportunity to capitalize on structural rebalancing in logistics costs while navigating tariff-driven volatility.

The Inflationary Pipeline: PPI and Trucking Costs

The Producer Price Index (PPI) has long been a leading indicator of inflationary shifts in transportation costs. As tender rejections rise, carriers gain pricing power, directly boosting logistics expenses for shippers. This dynamic is already reflected in the PPI for truck transportation, which rose 0.8% in May 2025—its steepest monthly increase since late 2022. The Southeast's 10%-plus rejection rates underscore a supply-demand imbalance so severe that carriers can afford to reject unprofitable contracts, forcing shippers to accept higher spot rates or secure capacity through premium pricing.

This trend is not confined to one region. Atlanta's tender rejections hit 8.89% in June, while Chicago and Dallas exceeded 7%, signaling a broader rebalancing. The will likely accelerate further as carriers exit the market, reducing available capacity by an estimated 10% since mid-2024.

Regional Exposure: The Southeast as an Inflation Hotspot

The Southeast's surge in tender rejections is no accident. Factors like seasonal produce demand, Road Check Week disruptions, and a surge in maritime freight through ports like Savannah have strained capacity. Meanwhile, intermodal shifts on the West Coast—where long-haul tender volumes dropped 26% annually—are diverting freight to rail, reducing truckload demand there but leaving the Southeast's trucking market to absorb excess pressure.

For investors, this regional disparity creates an edge. Companies with strong Southeast exposure, such as C.H. Robinson (CHRW) and J.B. Hunt (JBHT), are positioned to capture rate hikes in one of the tightest markets. Both firms have demonstrated flexibility in deploying capacity through digital platforms and asset-light models, allowing them to pivot to high-demand routes like Atlanta-to-Chicago, where carriers now demand $1.78/mile—up 15% from early 2024.

Tariff-Resistant Freight: Navigating Policy Risks

Trade policy remains a wildcard. If tariffs ease, the West Coast's rebound in container imports could reverse intermodal trends, boosting truckload demand there. Conversely, a prolonged trade stalemate might deepen regional imbalances. To mitigate this risk, focus on firms handling tariff-resistant freight types, such as domestic intermodal (CHRW's rail partnerships) or last-mile e-commerce (JBHT's Dedicated Contract Services). These segments are less tied to volatile import/export cycles.

Investment Thesis: Buy Now, Hedge Later

The data is unequivocal: trucking equities are undervalued relative to emerging rate trends. CHRW and JBHT trade at 14x and 16x forward earnings, respectively—below their five-year averages—despite the sector's improving fundamentals. Near-term catalysts include:
1. Spot rate inflation: Spot rates rose 9.1% year-over-year in early 2025, with further gains likely as tender rejections climb.
2. Contractual rate resets: The first contractual rate increases since 2022, now occurring in regions like the Southeast, will boost margins.
3. Capacity attrition: A 10% reduction in carriers since 2024 has solidified carriers' pricing power, a trend likely to persist.

Recommendation: Allocate 5%–7% of a growth portfolio to CHRW and JBHT. Pair these positions with a small short position in West Coast-focused firms (e.g., Knight-Swift (KNX)) to hedge against tariff-driven volatility.

Conclusion: The Logistics Tightrope

The trucking sector's rebalancing is no flash in the pan. With tender rejections signaling a sustained inflationary upcycle in logistics costs—and PPI data confirming the trend—investors ignoring this shift risk missing a multi-quarter opportunity. The Southeast's capacity pinch, flexible operators like CHRW and JBHT, and tariff-resistant freight types form the pillars of a resilient logistics portfolio. Act now: the road to returns is paved with rising rates.