FedEx Freight CEO: Rate Recovery Will Hit Bumps Through 2026
John Smith says carriers and shippers should expect volatility even as spot and contract rates climb off multi-year lows.
What did FedEx Freight's CEO say about the rate recovery?
FedEx Freight CEO John Smith told the industry to expect continued volatility in the freight market even as rates climb off their lows. Speaking June 1, Smith said the recovery "won't be in a straight line" for carriers and shippers.
The comment comes as spot rates have posted gains in recent weeks but remain below contract levels in most lanes. Small fleets watching their settlement statements have seen per-mile rates tick up modestly since April, but the gains have been uneven across regions and equipment types.
Smith's caution suggests that carriers banking on a smooth upward trajectory through the second half of 2026 may face setbacks. Rate volatility typically hits small fleets hardest because they lack the contract book to smooth out spot-market swings. A 5-truck operation running 80% spot freight feels every 3-cent drop in a way a 500-truck carrier with 60% contract coverage does not.
Why the bumpy road matters for small fleets
The "bumps" Smith referenced likely include seasonal dips, capacity re-entry as sidelined trucks return to service, and shipper resistance to rate increases after two years of falling freight costs. Each of those factors can stall or reverse rate momentum for weeks at a time.
For owner-operators and small fleets, that means continued pressure on cash flow planning. A rate environment that climbs 5 cents one month and gives back 3 cents the next makes it harder to commit to equipment purchases, driver hires, or lease renewals. The uncertainty also complicates fuel hedging and maintenance budgets.
Smith's framing aligns with what LTL carriers have reported in recent earnings calls. XPO and Saia both posted margin improvements in Q1 but noted that tonnage growth remained modest and that shippers were still pushing back on rate increases. The truckload spot market has shown similar patterns, with DAT reporting week-to-week swings of 4 to 6 cents per mile on van freight through May.
What small fleets should watch
Three indicators will tell you whether the bumps are temporary corrections or signs of a stalled recovery. First, watch contract renewal outcomes in your primary lanes. If shippers are accepting 5% to 8% increases without clawing back volume, the recovery has legs. If they're splitting awards or moving freight back to spot to avoid the increase, expect more volatility.
Second, track capacity. The number of for-hire trucking establishments has declined for eight straight quarters, but new authority grants ticked up in April for the first time since late 2022. If that trend continues, new entrants will add spot-market capacity and cap rate gains.
Third, monitor fuel. Diesel prices have held relatively steady in the $3.40 to $3.60 range since March, but any spike above $4.00 will compress margins even if linehaul rates are rising. Fuel surcharges lag the pump by one to two weeks, so a sudden jump creates a cash-flow gap that small fleets absorb before the surcharge catches up.
Smith's warning is a reminder that the freight market rarely moves in one direction for long. Small fleets that survived the 2023-2024 downturn by cutting costs and staying liquid should keep that discipline in place even as rates improve. The recovery is real, but it will not be smooth.
