Ryan: Welcome to the May edition of the C.H. Robinson Edge video. I'm Ryan Hammett, joined as always by Mat Leo to talk through the developments in the freight market that are impactful to you.

Over the last few months, we have been focused on the ever-shifting U.S. truckload market and this month, well, that's going to continue. I do want to note early that there are still plenty of developments in the international delivery market, but compared to the domestic U.S. transportation market, that side of the market has been recently stable.

So even though this video will continue on the theme of domestic markets, If you're looking for an update on ocean, air or cross-border, make sure you check out our May edge report on our website. But in the U.S., the majority of freight moves through the truckload mode.

So with its importance in a time of transition, it's going to continue to get the most attention. But we're actually going to start with those truckload adjacent modes of LTL and Intermodal as they have both been active lately.

Mat, for a long stretch, essentially since the yellow closure in 2023, LTL pricing felt relatively quiet and consistent. But in 2026, we're starting to see some movement and that's being driven by two familiar forces, which are fuel and a shifting truckload market.

Mat: Yeah and let's start off with fuel. And remember that in LTL, fuel isn't baked into the base rate. It's A surcharge, typically as a per cent of line haul. And that can amplify swings because it scales with the freight bill. So in the Department of Energy's diesel benchmark moves quickly in the weekly update, LTL invoices can also move quickly.

Now, one way that you can quickly see this type of pricing movement is with the LTL producer price index, which is published each month by the government on the Federal Reserve. And the most recent print of the LTL producer price index shows fuel included in here, reflecting a rapid escalation of cost. And with much of that recent move being driven by that fuel surcharge.

So that's what's happening now. But forward-looking, the LTL story is what's happening in truckload. As the truckload market tightens and rates move higher, freight starts to shift into LTL, particularly in those tweener delivery sizes where it's either a large LTL or a small truckload on that bubble. And right now, we're seeing the early stages of that shift.

Now it's not pronounced yet as tonnage is not showing significant growth, but experience says that this is brewing. And we've heard of this in recent LTL public earnings calls where the summary is that many of them are seeing early signs and mixed improvement in tonnage.

So while fuel prices are pushing all in LTL prices up higher today, forward-looking LTL price relief may be challenged as tonnage moves away from that more challenged environment in truckload and into the LTL space.

Ryan: The other mode with a downstream affect to the truckload market is intermodal. And what we're seeing here is actually a similar theme but playing out a little bit differently than LTL. Coming out of Q1, overall intermodal volumes were weak, but they were better than expected. And more importantly, they've started to turn positive in recent weeks.

The intermodal market is gaining momentum as tightening truckload capacity, rising fuel cost and improved rail service create the most favourable conversion environment that we've seen in years.

Mat: And like you mentioned, Ryan, the big driver behind that improvement is once again the truckload market. And as truckload rates begin to move higher, we're seeing that freight again shift back into the domestic intermodal market. And it's particularly in that mid length of haul range between 500 and 1500 miles.

And we've heard from our teams on the ground that in tighter lanes or even in anticipation of disruption events like road check week, free is actively being flipped from truckload into rail. And that's to control both the cost and also just to secure capacity.

And while rail pricing is still moving upwards, it's happening at a much more moderate pace than truckload. And that's widening that gap and reinforcing the domestic intermodal value proposition. And I think it's important to note that even with diesel fuel prices moving higher, fuel isn't the critical factor that's driving the long-term modal shifts.

What really matters and ultimately drives the intermodal adoption over time is the balance between truckload capacity and demand. And if rail service trends continue, it'll only make that transition from truckload to intermodal a lot more intriguing.

Ryan: So with both LTL and intermodal, as truckload tightens, both will likely see increased attention with potential for stronger acceleration in the second-half of 2026. So for shippers, that means acting early.

LTL and intermodal providers are constantly evaluating their freight networks and looking for consistent freight they can anchor around. And early movers have the opportunity to get access to capacity while it's available. The latecomers, well, they end up taking what is available at the market price.

And as we move on, well, we're going to stick with that theme of truckload tightness, specifically since dot Road Check Week occurred earlier in May. A quick reminder, Road Check Week is a three-day co-ordinated nationwide inspection blitz where enforcement officers inspect commercial vehicles to check for safety compliance which results in tightening capacity as trucks are temporarily taken off the road for inspections and a lot of drivers choose to park the trucks and just take holiday to avoid the inspections.

Since April, we've been telling shippers to be prepared for road check. And in our edge report posted a few weeks ago, we showed the historical average trend of capacity during this week each year. So Mat, well, you've got slides. What would you say we're seeing was the impact of road check this week?

Mat: I always have slides, but to remind everyone, this is the chart that you're referring to. And this shows how that load to truck ratio trends over time for the past 15 years. Now with the 2026 data through the event, we plotted the recent load to truck ratios on the same chart for a comparison.

And the first thing that stands out as you look at it here is how much higher of a baseline starting point you were at the days leading up to this year's road check week. But then as you look deeper, you can also see the increase or the tightening of that load to truck ratio over those three inspection days is a much sharper increase than what it does on that average time frame.

And to better illustrate this, we looked at it from a week over week percentage based change. Now the dark grey bars are the five year average. Now we also added in the light grey bars that show the average of the previous years where the market was in a tight market. And when comparing those two, you can see that there's actually a smaller per cent change for those tighter years than the average.

Now conversely and not depicted here, the softer years, the softer markets have a higher per cent change than the average.

Ryan: This doesn't mean that tighter years are less affected by the event, but rather it reflects the change compared to the starting point baseline, essentially how much of A whiplash the market experiences over that time.

Let me try to say it this way. Let's imagine a year where we're in a soft market and the load to truck ratio is like 2 to 1. And then there's another year where we're in a tighter market with a 5 to 1 ratio. So imagine that in that soft market year, the ratio only increased by one additional load per truck. But in the tight market year, we saw double that impact. So 2 more loads each per truck.

Well, despite the fact that the tighter market saw twice as much tightening, it only increased by 40% while the one additional load in that softer market made a 50% impact. So softer years have a lower starting load to truck ratio, so each additional load available per truck makes an outsized impact to the per cent change.

Mat: Exactly. And a good example to walk through that. And again, we know that the tighter markets feel the impact of Road Check Week more than the loose markets because of that incremental change in the additional loads available per each truck. And what you explain, Ryan, makes a lot of sense of why the tight markets technically show a lower per cent change when it's not necessarily the raw number change being higher.

But now let's add in 2026 for a comparison. And as you can see here, it actually has a greater increase in the per cent change week over week than the average markets feel, which is kind of odd because the logic you just walk through and considering the fact that we are at a much higher baseline point that you saw in those earlier slides makes it really interesting for 2026.

Ryan: So I think, does that mean that the raw numbers must have increased quite a bit?

Mat: Yeah, definitely so. Now looking at this slide, it compares that raw change in the load to chart ratio. So you can see that 2026 saw a much tighter change than the typical tight market, let alone the 15-year average.

Now, I should note that since then, it has been decelerating, which is seasonally expected. But as we explained in the May report, it takes a while to work through these backlogues. So everyone should expect the lingering effects are likely to be felt through the month. Now, remember as well that the market has lost elasticity due to less supply. So flexibility means longer recovery times after disruptions for the less flexibility.

Ryan: Yeah and building off what you just said, practically what this means for shippers is twofold. First, don't expect a light switch to be flipped and everything's just hunky dory again. We've still got Memorial Day. We've still got produce season. These are actively affecting the market. So build in some risk tolerance with your load planning while everything normalises.

And second, This highlights what we've been talking about for months now. The market is much more constrained than we've been used to for the last few years with a lot less slack available to absorb shocks from events like Road Check.

So moving forward, I'd expect future disruptions to be similarly more impactful than average or as we just saw with Road Check, potentially even more impactful than previous tighter markets.

Now I'm still having conversations with shippers that think this is a temporary anomaly. So hopefully this background today will help more folks understand that we are clearly operating in a tightened capacity environment.

Mat: Yeah, for sure. Well, that's all the time that we have for today. So thank you for watching and remember that C.H. Robertson brings you the edge you need to successfully manage your transportation strategy. We'll see you again next month.