Forecasting the 2026 Transportation Turn-Around

The transportation industry exited 2025 fundamentally reshaped. What began as a prolonged freight recession evolved into a structural reset driven by sustained margin pressure, tightening capital, regulatory complexity, and heightened scrutiny of compliance and operating discipline. Bankruptcies rose sharply, voluntary closures accelerated, and consolidation activity reached levels not seen since prior downcycles. For Transportation Tax Consulting (TTC) and its clients, 2025 reinforced a central truth: financial survival and transaction success increasingly depend on tax strategy, compliance execution, and operational visibility—not just freight volumes. Bankruptcies Accelerated as Structural Costs Outpaced Revenue Carrier bankruptcies climbed again in 2025 after already elevated filings in 2023 and 2024. Industry estimates and court filings indicate that U.S. trucking bankruptcies in 2025 increased by more than 35% year over year , driven primarily by small and mid-sized fleets. Key drivers included: Spot market exposure: Spot rates remained 20–30% below 2021 peaks for much of the year Insurance inflation: Premiums rose another 10–15% for many carriers Equipment replacement pressure: Emissions-compliant equipment increased capital requirements Tax and compliance exposure: Multistate fuel tax, sales/use tax, and employment classification issues surfaced during audits and distressed transactions The bankruptcy trend chart above illustrates the steady rise in carrier failures since 2021, culminating in 2025 as financially weakened operators ran out of options. From TTC’s perspective, many bankruptcies revealed unaddressed tax liabilities —including unpaid fuel taxes, misapplied sales tax exemptions, and unremitted payroll taxes—that significantly reduced recovery value and complicated restructurings. Closures Reflected Strategic Exits, Not Just Failure Beyond formal bankruptcies, thousands of carriers voluntarily exited the market in 2025. Owner-operators and family-owned fleets increasingly chose to shut down operations rather than refinance debt, absorb compliance costs, or invest in new technology. Common closure drivers included: Aging ownership with no succession plan Rising administrative burden tied to tax filings, registrations, and audits Difficulty maintaining compliance across multiple jurisdictions Limited access to affordable insurance and credit Brokerages and small logistics providers also closed quietly as digital platforms and large intermediaries consolidated shipper relationships. For TTC clients, these closures often triggered unexpected exposure , including: Orphaned fuel tax accounts Unresolved audit notices Asset disposition sales tax issues Nexus questions following market exits Closures reinforced the importance of exit planning , even for companies not pursuing bankruptcy or sale. Mergers Increased as Scale Became a Risk-Management Tool Mergers gained momentum in 2025 as carriers sought density, efficiency, and purchasing power. Unlike prior cycles focused on rapid geographic expansion, most mergers emphasized: Terminal consolidation Lane density optimization Overhead reduction Back-office centralization Private equity-backed platforms led much of this activity, targeting compliance-ready operators with clean tax profiles and documented processes. The M&A activity chart above illustrates the steady increase in transportation transactions through 2025, reflecting both defensive and opportunistic consolidation. TTC observed a clear trend: buyers increasingly demanded tax diligence early in the process . Transactions stalled—or valuations adjusted—when targets lacked clean fuel tax filings, sales tax documentation, or employment tax compliance. Acquisitions Became More Disciplined and Asset-Focused Acquisitions in 2025 shifted toward selective, strategic deals rather than full-platform rollups. Buyers focused on: Asset purchases out of bankruptcy Specialized fleets (temperature-controlled, bulk, dedicated) Contract-heavy operators with predictable revenue Asset-only acquisitions allowed buyers to avoid assuming historical tax and compliance liabilities, a strategy TTC frequently supported through transaction structuring and liability isolation . Technology-driven acquisitions also expanded, particularly in logistics software and compliance automation. These deals aimed to reduce long-term administrative risk while improving reporting accuracy. Shipper Behavior Accelerated Consolidation Pressure Shippers played a direct role in reshaping the market. In 2025: Large shippers reduced carrier counts by an estimated 15–25% Contract rebids emphasized compliance, reporting, and audit readiness Dedicated and hybrid fleet models gained share Carriers unable to demonstrate fuel tax accuracy, emissions compliance, and regulatory consistency increasingly lost freight—even when rates were competitive. For TTC, this trend underscored the growing link between tax compliance and revenue retention . Regulatory and Tax Complexity Influenced Winners and Losers Regulatory pressure intensified throughout 2025. State revenue agencies increased audit activity, particularly around: Fuel tax reporting Sales and use tax on equipment, parts, and leases Worker classification and payroll tax compliance Carriers entering mergers, acquisitions, or restructurings faced heightened scrutiny of historical filings. TTC frequently supported clients by: Quantifying historical exposure Resolving legacy liabilities pre-transaction Structuring deals to mitigate successor liability Supporting post-merger integration of tax processes Companies that invested in compliance infrastructure earlier in the cycle emerged as preferred acquisition targets . Workforce Disruption and Realignment Industry restructuring displaced thousands of drivers and staff. While consolidation absorbed some talent, uncertainty persisted in regions heavily affected by closures. However, acquiring firms that executed clean integrations —including payroll tax alignment and benefit compliance—retained talent more effectively and avoided post-close disruptions. TTC Perspective: 2025 Was a Compliance Wake-Up Call From Transportation Tax Consulting’s vantage point, 2025 clearly demonstrated that: Tax exposure materially impacts valuation Compliance failures accelerate distress Clean filings enable faster, more favorable transactions Proactive advisory reduces downside risk Bankruptcies, mergers, acquisitions, and closures were not isolated financial events—they were compliance stress tests . Looking Ahead: Discipline Defines the Next Cycle The transportation industry enters 2026 leaner, more consolidated, and more disciplined. Capacity rationalization improved long-term fundamentals, but success will favor companies that: Maintain strong compliance frameworks Integrate tax strategy into growth planning Prepare early for transactions and exits Treat tax and regulatory management as strategic assets  The turbulence of 2025 cleared excess capacity—but it also elevated the role of advisors who understand transportation’s unique tax and compliance landscape.

During the COVID-19 pandemic, government leaders across the United States delivered a clear message: motor carriers are essential . While offices closed and travel stopped, trucks kept moving. They delivered food, medical supplies, fuel, and consumer goods that allowed the economy—and daily life—to continue. Yet once the crisis subsided, trucking returned to its familiar regulatory position: critical to society, but treated as a competitive service rather than a public utility. This contradiction raises an important question—especially in unidirectional states where freight flows heavily in one direction: If motor carriers are essential, why are they not considered public utilities? The answer lies not in the importance of trucking, but in history, law, and economic philosophy. Motor Carriers Function as Essential Infrastructure Motor carriers for hire form the backbone of the American supply chain. In unidirectional states—those shaped by ports, agriculture, energy production, or geographic constraints—trucking does far more than move freight. It sustains local economies, supports national commerce, and ensures access to basic goods. These states often suffer from structural imbalances. Trucks haul freight in one dominant direction and return empty or underutilized. That imbalance increases costs, discourages market entry, and makes service less reliable during downturns. Despite these challenges, motor carriers must still meet public expectations for reliability. Grocery stores must stay stocked. Hospitals must receive supplies. Manufacturers must ship products. Functionally, trucking in these states resembles a public utility—even if the law does not say so. Essential Does Not Mean Public Utility During COVID, governments used the word essential deliberately. The designation allowed drivers to keep working, relaxed certain compliance rules, and ensured access to fuel and infrastructure. It solved an immediate problem: keeping freight moving during an emergency. Public utility status, however, creates permanent obligations. Utilities must: Serve all customers in a defined area Provide continuous service Operate under regulated pricing Accept limits on market exit COVID policy addressed short-term continuity. Public utility classification would have required a permanent restructuring of the trucking industry. Policymakers avoided that step. Deregulation Changed Trucking’s Legal Identity Before 1980, interstate trucking looked much closer to a public utility. Regulators controlled: Market entry Routes Rates Service obligations The Motor Carrier Act of 1980 dismantled that system. Congress chose competition over regulation, believing market forces would lower costs and improve efficiency. That decision permanently altered trucking’s legal status. COVID did not reverse deregulation. It merely confirmed that deregulated carriers still perform an essential public function—without public utility protections. Why Motor Carriers Are Not Treated Like Utilities Several structural differences keep trucking outside the public utility framework: No Obligation to Serve Motor carriers may choose their customers, lanes, and freight. Public utilities cannot. Market-Based Pricing Trucking rates fluctuate with supply, demand, fuel, and capacity. Utility rates are regulated for stability and cost recovery. No Infrastructure Ownership Utilities own and maintain their infrastructure. Motor carriers rely on publicly funded highways they do not control. Full Market Risk Carriers absorb economic volatility, fuel swings, and downturns. Utilities recover costs through regulated rates. These differences explain why policymakers resisted utility classification—even after calling trucking essential. The Policy Contradiction COVID Exposed The pandemic revealed a fundamental contradiction: Motor carriers are too important to fail Yet they receive none of the protections given to public utilities During COVID, carriers absorbed extreme risk while keeping the economy running. Utilities, by contrast, benefited from guaranteed revenue mechanisms and regulatory certainty. In unidirectional states, this imbalance becomes more pronounced. When carriers exit unprofitable lanes, communities feel the impact immediately. Supply chains falter. Costs rise. Access declines. Why the Public Utility Debate Matters Now The question is no longer whether trucking is essential—that point is settled. The real question is whether current policy appropriately reflects trucking’s role in the economy, especially where market forces alone fail to ensure reliability. Recognizing motor carriers as public utilities does not require heavy-handed rate control or elimination of competition. It could mean: Targeted protections in critical corridors Policy frameworks that recognize structural freight imbalances Regulatory consistency aligned with public benefit Long-term investment stability for carriers serving essential markets Conclusion Motor carriers for hire occupy a unique space in the American economy. They operate as private businesses, but society depends on them like public utilities. COVID made that reality undeniable. In unidirectional states and critical freight corridors, trucking already functions as essential infrastructure. The law simply has not caught up. As supply chains face growing strain, the conversation is shifting—from whether trucking is essential to whether policy should finally reflect that truth. The future of transportation policy will depend on how—and whether—regulators resolve this tension.