November 2025 marks a sobering milestone in the trucking industry’s prolonged downturn: carrier bankruptcies and failures are occurring at the highest rate on record, surpassing even the darkest days of previous freight recessions. After more than three years of depressed spot rates, elevated operating costs, and margin compression, thousands of trucking companies have reached the breaking point. Small fleets are closing their doors weekly. Mid-sized carriers that survived 2023 and 2024 are now throwing in the towel. Even some larger, well-established operations are downsizing or exiting unprofitable segments. This wave of capacity exits—painful as it is for the carriers and drivers affected—represents a necessary and inevitable market correction after the unsustainable boom of 2020-21. For freight brokers and shippers, the implications are profound: the abundant, cheap capacity that defined much of 2024 and early 2025 is rapidly disappearing, setting the stage for a tighter, more expensive freight market in 2026 and beyond. Understanding why carriers are failing, what this means for available capacity, and how to navigate the resulting market dynamics has never been more critical.
The scale of the crisis: unprecedented carrier exits
The numbers tell a stark story. Carrier failures are rising faster in 2025 than in any prior year of the downturn. Industry data from the Federal Motor Carrier Safety Administration (FMCSA) shows that thousands of motor carriers have had their operating authority revoked or voluntarily suspended their operations this year. While exact figures vary depending on how “failure” is defined—some carriers simply park trucks and go dormant rather than formally filing bankruptcy—analysts estimate that 5,000 to 8,000 trucking companies have effectively exited the market in 2025 alone. This represents the most significant capacity shakeout since deregulation in 1980, and possibly the largest in absolute terms given the size of the modern trucking industry.
The carnage is concentrated among small and mid-sized carriers. Fleets operating fewer than 20 trucks have been hit especially hard. These operations, often family-owned or independent owner-operators, lack the financial cushion to survive extended periods of below-cost freight rates. They don’t have the negotiating leverage to secure premium contracts, can’t spread fixed costs across a large asset base, and typically don’t have access to low-cost capital or sophisticated financial management. When spot rates dipped below $2.00 per mile for dry van and stayed there for months—well below the $2.20 to $2.50 per mile needed to cover all-in costs for most small carriers—the result was predictable: cash reserves drained, credit lines maxed out, and doors closed.
But the failures aren’t limited to the smallest operators. Mid-sized carriers with 50 to 500 trucks—traditionally considered the sweet spot for profitability in trucking—are also struggling. Several regional carriers that were household names in their markets have filed Chapter 11 bankruptcy or liquidated assets in 2025. Even some publicly traded truckload carriers have reported losses, shut down terminals, and cut significant portions of their fleets. The common thread is simple: when revenue per truck falls below operating costs for an extended period, no amount of operational efficiency can save you. And that’s precisely what’s happened across the industry for the better part of three years.
Why are carriers failing? The perfect storm of low rates and high costs
The carrier failure wave is the result of a vicious squeeze between falling revenue and stubbornly high costs. On the revenue side, spot rates collapsed from their 2021-22 peaks and never recovered. Dry van spot rates, which topped $3.00 per mile (all-in, including fuel surcharge) during the pandemic boom, plummeted to around $1.95 to $2.05 per mile in early 2025—a decline of 70 cents or more. Even with recent modest upticks in late 2025, spot rates remain near multi-year lows. Contract rates, which lag spot trends, have also softened, hovering around $2.40 to $2.45 per mile, down from highs above $3.50 in 2022.
For most carriers, these rate levels are simply unsustainable. Let’s break down the cost structure: diesel fuel, even after retreating from its 2022 peaks, still costs around $3.70 per gallon nationally. For an average tractor-trailer getting 6-7 miles per gallon, that’s roughly $0.50 to $0.60 per mile in fuel costs. Add in driver wages (the largest expense), which have remained elevated as carriers competed to attract and retain scarce labor—often $0.60 to $0.80 per mile or more. Then there’s insurance, which has skyrocketed: many carriers report premium increases of 40-50% over the past five years, driven by nuclear verdicts in accident litigation and a hardening insurance market. Maintenance and repairs, particularly for aging equipment, add another $0.15 to $0.25 per mile. Truck payments or leases, regulatory compliance costs, administrative overhead, and taxes round out the picture.
When you tally it all up, the average carrier needs at least $2.20 per mile just to break even on a fully loaded basis. Some estimates put the true all-in cost closer to $2.50 per mile for smaller operators with less purchasing power and higher financing costs. Industry observers note that most carriers currently need around $1.80 per mile just to cover variable costs, but current spot rates in many lanes hover around $1.69 per mile. Running at those rates means losing money on every load—a situation that can’t be sustained for long. Carriers initially hoped the downturn would be brief and drew down cash reserves or tapped credit lines to stay afloat. But as the recession stretched into its second, then third year, those financial buffers ran dry.
The problem is compounded by the fact that many carriers over-extended during the boom. Lured by high rates and easy profits in 2021-22, fleets added trucks aggressively. Some bought equipment at inflated prices—used trucks in 2022 sold for 50-100% above their pre-pandemic values. Carriers who financed those purchases are now underwater, owing more on their trucks than the equipment is worth in today’s depressed resale market. When the freight market turned and revenue plummeted, these carriers found themselves saddled with high debt payments on overpriced assets, unable to sell or trade equipment without taking massive losses. This dynamic has trapped many operators: they can’t afford to keep running at current rates, but they also can’t afford to exit cleanly by selling their trucks. The result is bankruptcy.
The anatomy of a carrier failure: what happens when a fleet shuts down
When a trucking company fails, the process is often sudden and chaotic. Unlike large corporations with complex bankruptcy proceedings that can take years, small trucking companies tend to collapse quickly once the decision is made. The typical sequence: the carrier exhausts its line of credit, misses a payroll or can’t make a truck payment, and realizes there’s no path forward. Within days or weeks, the fleet notifies customers that it can no longer accept freight, parks its trucks, and lays off drivers. Creditors—fuel card companies, lenders, maintenance providers—scramble to recover what they’re owed. Trucks and trailers are repossessed or sold at auction. Drivers, often owed back pay or reimbursements for fuel advances, file claims and look for new jobs.
For shippers and brokers, a carrier failure can mean immediate disruption. Freight in transit may be stranded or delayed as trucks are repossessed mid-route. Loads scheduled for pickup never arrive, forcing scrambles to find replacement capacity at the last minute (usually at premium spot rates). Contracts become worthless paper as the counterparty ceases to exist. In some cases, freight bills go unpaid if the carrier collapses between hauling a load and settling the invoice, leaving the broker or shipper holding the bag. The larger and more abrupt the failure, the bigger the ripple effects. When a mid-sized carrier with hundreds of trucks shuts down overnight, it can remove significant capacity from specific lanes or regions, tightening the market and driving up rates for remaining competitors.
The human toll is also significant. Trucking employs millions of Americans, and each carrier failure means dozens or hundreds of drivers, dispatchers, mechanics, and administrative staff lose their jobs. Many of these workers face uncertainty about their next paycheck, loss of health insurance, and the need to quickly find new employment in an industry that’s itself in turmoil. For independent owner-operators who leased onto a failed carrier, the consequences can be devastating: they may lose their trucks to repossession, have difficulty collecting final pay, and struggle to find a new carrier willing to take them on in a down market.
The silver lining: capacity discipline and market rebalancing
As painful as the carrier failure wave is, it serves a critical economic function: clearing excess capacity from the market. The freight industry is notoriously cyclical, and overcapacity is the root cause of depressed rates. During the 2020-21 boom, the industry added far too many trucks relative to sustainable demand. When freight volumes normalized post-pandemic, that excess capacity hung over the market, suppressing rates as carriers chased a shrinking pool of loads. The only way to restore balance is for that excess capacity to exit—either through carriers voluntarily downsizing or, more often, through bankruptcy and fleet closures.
In economic terms, this is a classic example of “creative destruction”: inefficient or financially weak operators leave the market, allowing the remaining players to operate at healthier utilization rates and pricing levels. Industry analysts describe carrier exits as a “necessary evil” to rebalance supply and demand. Every truck that’s parked or scrapped is one less truck competing for freight, which improves the fundamentals for surviving carriers. We’re already seeing the effects in late 2025: spot volumes are down 16-18% year-over-year, but spot rates have actually increased slightly (dry van up 3%, reefer up 5%) because the supply of available trucks has contracted even faster than demand has declined.
Tender rejection rates—the percentage of loads that carriers decline when offered by shippers or brokers—have climbed to their highest levels since early 2022. This is a key indicator that the market is tightening. When rejection rates rise, it means carriers are getting more selective about the freight they accept, and shippers are finding it harder to secure capacity at posted rates. Some of this is due to geographic imbalances (trucks in the wrong places), but much of it reflects genuine capacity discipline. Carriers that survived the downturn have learned the hard way that chasing volume at unprofitable rates is a recipe for failure. They’re now demanding prices that cover their costs, and they’re willing to reject freight rather than haul at a loss.
This discipline, forced by economic pain, is setting the stage for a healthier market. When freight demand eventually recovers—whether that’s in Q2 or Q4 of 2026—there won’t be an ocean of idle trucks waiting to handle it. The active fleet is smaller, older, and more cautiously managed. New capacity won’t flood the market because the barriers to entry have never been higher: equipment is expensive (especially with new tariffs on imported trucks), insurance costs are prohibitive, driver wages remain elevated, and access to capital is tight. Tractor builds have fallen 32% from the first half of 2025 to the second half, dropping below replacement levels. The industry is shrinking its fleet, not growing it. When demand rebounds, that tightness will translate into higher rates and better margins for surviving carriers—and higher costs for shippers.
Who’s failing and who’s surviving: a tale of two trucking industries
Not all carriers are equally vulnerable. The failures are disproportionately concentrated among certain types of fleets, while others have weathered the storm relatively well. Understanding these dynamics is crucial for brokers and shippers trying to assess which carriers are likely to remain viable partners.
Small carriers and owner-operators: As mentioned, fleets with fewer than 20 trucks—especially those operating in the spot market with minimal contract coverage—have been hit hardest. These carriers have the least financial resilience, the highest per-unit operating costs, and the least pricing power. Many entered the industry during the boom, attracted by high rates and easy money, without fully understanding the cyclical nature of trucking. When rates collapsed, they lacked the reserves or business acumen to adapt. The failure rate among startups and small fleets in 2025 is estimated to be in the double digits, meaning 10-15% or more of these operators have exited.
Mid-sized regional carriers: Traditionally, regional carriers with a strong customer base and geographic focus were considered relatively safe. But 2025 has shown that even these operators aren’t immune. Several long-established regional fleets have failed or been acquired under distress. The culprits: over-expansion during the boom, high debt loads, and contracts that repriced downward in 2023-24 and never recovered. Some regional carriers also suffered from concentration risk—relying too heavily on a single customer or industry (e.g., automotive, retail) that itself hit hard times.
Asset-light brokers and 3PLs: Ironically, freight brokers—who don’t own trucks—have generally fared better than asset-based carriers during the downturn. Brokers can flexibly adjust their capacity sourcing, don’t bear the fixed costs of equipment and drivers, and can quickly pivot to different lanes or customers. Some brokers have struggled with margin compression (shippers demanding lower prices while carriers push for higher rates), but the model’s inherent flexibility has been an advantage. However, some smaller brokers without strong customer relationships or credit lines have also failed, particularly those that extended credit to risky carriers and got burned when those carriers collapsed without paying their freight bills.
Mega-carriers and private fleets: The largest for-hire carriers—fleets with thousands of trucks like Schneider, J.B. Hunt, and Knight-Swift—have generally survived, though not without pain. These giants have diversified customer bases, long-term contracts with sticky shipper relationships, access to capital markets, and economies of scale that reduce per-unit costs. They’ve posted losses or razor-thin margins, but their balance sheets can absorb the downturn better than small operators. Private fleets—trucks owned and operated by shippers for their own freight—have actually grown during the downturn, capturing market share from for-hire carriers. Companies like Walmart, Amazon, and PepsiCo have expanded their captive fleets, reasoning that controlling their own transportation reduces reliance on a volatile for-hire market.
Specialized and niche carriers: Carriers operating in specialized segments—tankers, flatbeds, heavy haul, refrigerated—have had mixed experiences. Some niche markets held up better than dry van (which saw the worst oversupply). For example, tanker carriers serving energy markets benefited from increased oil production, while heavy haul benefited from infrastructure spending. Refrigerated fleets saw seasonal strength but still faced margin pressure. Generally, carriers with differentiated services, higher barriers to entry, and less direct competition fared better than generic dry van operators.
The quality question: not all capacity is created equal
As carriers exit the market, an important dynamic emerges: the capacity that’s leaving isn’t necessarily the capacity shippers and brokers want to lose. In an ideal world, only the worst carriers—those with poor safety records, bad customer service, unreliable operations—would fail, leaving the best carriers to thrive. But the market doesn’t work that way. Failure is driven primarily by financial factors, not operational quality. Some carriers that provided excellent service and had strong safety records have failed simply because they were undercapitalized, over-leveraged, or unlucky with their contract timing.
Conversely, some carriers that have survived are not necessarily high-quality operators. They may have managed to scrape by through aggressive cost-cutting (including deferred maintenance or lower driver pay), by operating in protected niches, or by sheer luck. For brokers, this creates a challenge: the pool of available carriers is shrinking, but it’s not necessarily becoming higher quality. In fact, some worry that the financial stress of the downturn is creating perverse incentives. Carriers desperate to stay afloat may cut corners on maintenance, hire less-experienced drivers, or take on risky freight they’re not equipped to handle. The recent increases in out-of-service violations and safety incidents reported at some struggling carriers bear this out.
For shippers and brokers, this underscores the importance of carrier vetting and relationship management. In a tightening market, it’s tempting to simply award freight to whoever has capacity at the lowest price. But as capacity becomes scarcer and rates rise, quality and reliability become even more critical. A carrier that consistently delivers on time, maintains clean equipment, and communicates proactively is worth paying a premium for, especially when the alternative is a fly-by-night operator that might go bankrupt mid-shipment. Luna Logistics has always emphasized building a curated carrier network based on performance metrics, safety scores, and financial stability. In the current environment, that approach is more valuable than ever.
Geographic and modal impacts: where capacity tightness is hitting hardest
The capacity shakeout isn’t uniform across all regions and freight modes. Some markets are feeling the pinch more acutely than others. In general, lanes with higher concentrations of small carriers and spot-market freight are seeing the most pronounced capacity tightening. The Southwest border region, for example, has seen significant carrier exits, compounded by the non-domiciled CDL ban and enforcement actions that have sidelined drivers. Spot rates from Texas to major consumption markets have spiked periodically as available capacity dwindled.
Port markets are another focal point. Drayage operations—moving containers from ports to nearby warehouses—traditionally rely on a fragmented base of small carriers and owner-operators. Many of these operators have exited as import volumes softened and rates fell. When import volumes surge (as they did earlier in 2025 ahead of tariff deadlines), port capacity becomes tight very quickly, leading to congestion, appointment delays, and rate spikes. West Coast ports (Los Angeles, Long Beach, Oakland) and East Coast gateways (New York/New Jersey, Savannah, Charleston) all experienced periodic capacity crunches despite overall soft freight volumes, simply because the carrier base had shrunk so much.
Modally, the dry van segment—the largest and most commoditized part of trucking—has seen the most carrier exits. Dry van is where overcapacity was most severe during the boom, and where rate compression has been most brutal. Reefer (refrigerated) and flatbed segments have also seen failures, but to a lesser extent. Specialized equipment and the need for specific expertise create somewhat higher barriers to entry and exit in these segments. LTL (less-than-truckload), which operates on a hub-and-spoke network model, has been insulated somewhat from the truckload bloodbath. The collapse of Yellow Freight in 2023 removed significant LTL capacity, and surviving carriers like XPO, Old Dominion, and Saia have been able to maintain pricing discipline and solid margins even as volumes remain soft.
Intermodal rail, which competes with trucking for long-haul freight, has also experienced its own dynamics. Intermodal volumes have been weak, but capacity (railcars and containers) has remained relatively stable since the Class I railroads control supply. Some shippers have shifted freight from truck to rail to save costs, though intermodal also has service challenges (slower transit times, less flexibility) that limit its appeal. As truck capacity tightens and rates rise, intermodal becomes more attractive, potentially absorbing some freight and taking pressure off the truck market.
What history tells us: past cycles and lessons learned
The trucking industry is no stranger to boom-bust cycles, and history offers some guidance on what to expect as capacity exits and the market rebalances. The most relevant comparison is the 2015-2016 freight recession, which followed a brief boom in 2014. During that downturn, spot rates fell sharply, carrier margins compressed, and failures ticked up. However, the 2015-16 recession was shorter and milder than the current one. Rates bottomed in mid-2016 and began recovering by early 2017, leading to a multi-year upcycle that culminated in the extreme tightness of 2018 (when the ELD mandate removed capacity and freight demand surged).
The recovery from 2016 was gradual at first, then accelerated as capacity tightened faster than anticipated. By 2018, shippers were desperate for trucks, spot rates soared above $3.00 per mile, and carriers enjoyed their best margins in years. The lesson: once excess capacity is wrung out of the system, the market can tighten very quickly when demand returns. The lag between capacity exit and demand recovery creates a window of opportunity for carriers (and a squeeze for shippers).
Earlier cycles offer similar lessons. The 1980s and early 1990s, following deregulation, saw waves of carrier failures as the industry adjusted to a more competitive environment. The 2008-2009 financial crisis triggered significant carrier exits, setting the stage for the recovery and boom of the early 2010s. In each case, the industry went through a painful but necessary cleansing, followed by a period of healthier fundamentals and improved profitability.
The key variables that determine the pace and shape of recovery are: (1) how much capacity exits, (2) how quickly demand rebounds, and (3) how fast new capacity can be added once conditions improve. Right now, we’re seeing significant capacity exits (check), but demand recovery remains uncertain (not yet check). When demand does return, the ability to add capacity quickly will be constrained by high equipment costs (tariffs), driver shortages, and tight lending standards. Analysts expect the recovery to look more like the gradual 2013-2017 upcycle than the rollercoaster boom of 2020-21. That’s actually a positive outcome: slower, more sustainable growth in rates and volumes is healthier for the industry than another boom-bust whipsaw.
Shippers and brokers: strategies for navigating tightening capacity
For shippers, the carrier failure wave and resulting capacity tightness require a shift in strategy. The days of playing carriers off against each other to secure rock-bottom rates are ending. In a tightening market, the challenge shifts from squeezing costs to securing reliable capacity. Here’s what Luna Logistics recommends:
Diversify your carrier base but deepen key relationships: Don’t rely on a single carrier or a handful of carriers for all your freight. If one fails or becomes capacity-constrained, you need alternatives. At the same time, cultivate strong relationships with your top carriers by offering consistent volumes, fair rates, and reliable communication. Carriers will prioritize their best customers when capacity gets tight.
Vet carriers for financial stability, not just price: Before awarding significant volumes to a carrier—especially a smaller one—check their financial health. Review their FMCSA safety scores, insurance coverage, and days-to-pay metrics. Ask brokers or credit agencies for financial assessments. The cheapest carrier may also be the riskiest. Paying a few extra cents per mile to use a financially stable carrier is a bargain if it avoids the chaos of a mid-contract failure.
Lock in contract capacity where possible: If you have predictable freight volumes, negotiate longer-term contracts with carriers while rates are still relatively low. Multi-year deals with cost escalation clauses can provide rate protection and capacity security as the market tightens. Just be sure to include termination clauses that protect you if the carrier fails.
Build flexibility into your supply chain: Don’t rely solely on just-in-time logistics. If capacity gets tight, you may need to accept longer lead times, use alternative modes (intermodal, LTL), or carry more inventory to buffer against transportation disruptions. Supply chain resilience is becoming more valuable than pure cost optimization.
Communicate early and often: If you see your own demand picking up, let your carriers and brokers know as soon as possible. The earlier they can plan for your capacity needs, the better they can serve you. Last-minute freight in a tight market is expensive and hard to cover.
For brokers, the carrier failure wave presents both challenges and opportunities. On one hand, losing carrier partners to bankruptcy disrupts operations and forces you to constantly rebuild your network. On the other hand, a tightening market creates more value for brokers who can source hard-to-find capacity and manage complex logistics. Here’s how to stay ahead:
Actively prune and refresh your carrier network: Regularly review your carrier roster for financial red flags and performance issues. Drop or de-emphasize carriers that pose high risk. Recruit new carriers to replace those that fail. Building relationships with emerging or under-the-radar carriers can give you a capacity advantage.
Position yourself as a strategic advisor to shippers: Help your shipper clients understand the market dynamics, educate them on why rates are rising, and guide them in securing capacity before it gets scarce. Shippers who see you as a trusted partner rather than just a transactional vendor are more likely to stick with you when times get tough.
Invest in technology and data: Use TMS (transportation management system) platforms, load boards, and market intelligence tools to stay on top of capacity trends, identify tight lanes, and optimize routing. Data-driven decision-making is a competitive advantage.
Manage financial risk: Carrier failures can leave brokers holding unpaid freight bills. Use factoring services, credit insurance, or other tools to mitigate this risk. Vet carriers for creditworthiness and don’t extend unsecured credit to risky operators.
Stay flexible and opportunistic: The tightening market will create pockets of opportunity. Certain lanes or regions may tighten faster than others. Brokers who can quickly identify and capitalize on these shifts will outperform.
Conclusion: the end of the beginning
The carrier failure wave of 2025 is painful, but it’s also a necessary step in the freight market’s recovery. After years of unsustainable oversupply, the industry is finally rebalancing. Thousands of trucks have been parked, capacity is exiting faster than demand is declining, and the fundamentals are slowly improving. For the carriers that survive this brutal period, the outlook is brightening: tighter capacity, improving rates, and the potential for sustained profitability once demand returns.
For shippers and brokers, the message is clear: the market is changing. The buyer’s market of 2024-25—abundant capacity, low rates, shippers in the driver’s seat—is giving way to a more balanced or even carrier-favored environment. Those who recognize this shift early and adjust their strategies accordingly will navigate the transition smoothly. Those who cling to the old playbook of squeezing carriers and playing the spot market may find themselves scrambling for trucks and paying premium rates when they least expect it.
At Luna Logistics, we’ve been through multiple freight cycles, and we know that the industry always adapts. The capacity that’s leaving the market now is making room for a healthier, more sustainable trucking sector. When the recovery comes—and it will—the carriers that remain will be leaner, more disciplined, and better positioned to serve their customers profitably. Our job is to help our clients navigate this transition, build relationships with the right carriers, and stay ahead of the market dynamics. The Great Capacity Purge of 2025 is the end of one chapter and the beginning of another. The question isn’t whether the freight market will recover, but how prepared we’ll be when it does.