Freight Demand Is Still Uneven. So Why Are Transportation Costs Rising?

Canadian shippers are receiving seemingly contradictory signals.

Freight demand remains uneven. Economic and trade uncertainty continues. Many businesses are managing inventories carefully and delaying major commitments.

Yet transportation costs are rising—and available capacity is becoming more difficult to secure in parts of the market.

It may seem counterintuitive, but freight demand is only one factor affecting transportation prices. Carrier capacity, fuel, labour, equipment costs and regulatory requirements all influence what it costs to move goods reliably.

Understanding these forces is becoming increasingly important for shippers preparing transportation budgets, negotiating contracts and planning for 2027.

Canadian trucking prices are already moving higher

According to Statistics Canada, Canadian truck transportation prices increased 9.5% year over year and 5.3% from the first quarter to the second quarter of 2026.

That was the largest quarterly increase in four years.

The increase was not limited to one segment. Prices rose across local and long-distance transportation, as well as general and specialized freight services.

Statistics Canada also found that 22.4% of transportation and warehousing businesses expected to raise their prices during the third quarter. Nearly one-third identified input costs as a near-term obstacle, with energy costs cited most frequently.

These figures point to an important market shift: transportation prices are rising even without a broad surge in freight demand.

Demand is only one side of the capacity equation

Transportation pricing reflects the balance between the amount of freight that needs to move and the capacity available to move it.

A market can tighten because demand increases—but it can also tighten because capacity decreases.

Following several years of depressed rates and rising operating expenses, some carriers have exited the market, reduced their fleets or postponed equipment investments. Others are being cautious about adding trucks after an extended period of weak returns.

At the same time, qualified professional drivers remain difficult to recruit and retain. In the first quarter of 2026, Canada had 13,310 vacancies for transport truck drivers, up from 11,780 a year earlier. Almost 30% had been advertised for at least 90 days.

When fewer trucks and qualified drivers are available, even modest growth or short-term disruptions can create pressure on capacity.

That is why shippers should not assume that soft demand automatically guarantees abundant transportation capacity or lower rates.

Fuel remains a significant source of cost pressure

Fuel is one of the largest operating expenses for a transportation provider.

Statistics Canada reported that prices paid to diesel producers increased between 40.3% and 58.8% from July 2025 to July 2026, depending on the region.

The federal government has extended the temporary suspension of its four-cent-per-litre diesel excise tax through January 31, 2027. While that measure provides some relief, it does not offset the broader increase in fuel costs.

Fuel-price volatility also affects more than the price of an individual shipment. It influences carrier cash flow, fuel surcharges, route economics and the cost of repositioning empty equipment.

For shippers, this makes transparency especially important. A clearly defined fuel-surcharge program and efficient transportation plan provide more value than an attractive base rate that does not reflect the shipment’s full cost.

Equipment and compliance costs are also shaping capacity

Trucks, trailers, replacement parts, insurance, financing and maintenance have all become more expensive.

After a prolonged freight downturn, many carriers are operating older equipment while remaining cautious about major capital investments. Adding capacity requires more than purchasing another truck; it requires access to financing, suitable equipment, qualified drivers and enough sustainable revenue to support the investment.

Compliance requirements are also affecting how many carriers and drivers can operate in the market, particularly on cross-border lanes.

In the United States, authorities have increased scrutiny of commercial driver qualifications, training providers and licensing practices. These actions are intended to remove unsafe or unqualified operators, but they may also reduce available North American capacity.

For Canadian shippers, the effect may be most visible in cross-border transportation, where driver qualifications, documentation and regulatory compliance are critical to maintaining reliable service.

Trade uncertainty is making freight patterns less predictable

Canada’s merchandise exports declined 2.3% in July 2026, while exports to the United States fell 6.6%. At the same time, exports to countries outside the United States rose 7.4% to a record $25.6 billion.

These changing trade patterns can reshape transportation demand.

A decline in one lane does not necessarily free up capacity where it is needed elsewhere. Different customers, commodities and destinations may require different equipment, drivers, terminals and operating expertise.

Tariffs and changing sourcing strategies can also cause shippers to adjust order quantities, suppliers, ports, inventory levels and distribution networks.

This creates a market in which overall demand may appear subdued while particular lanes, equipment types or regions experience significant pressure.

What should Canadian shippers do now?

Shippers do not need to predict exactly where the freight market is headed. They do, however, need a transportation strategy that can adapt as conditions change.

1. Identify the lanes where capacity matters most

Not every shipment carries the same operational risk.

Identify the lanes, customers and facilities where a missed pickup or service disruption would have the greatest financial or customer impact. These are the areas where dependable capacity may be more valuable than securing the lowest possible transactional rate.

2. Share forecasts earlier

Transportation providers can plan equipment and driver resources more effectively when they have accurate visibility into anticipated volumes.

Forecasts do not need to be perfect. Regular communication about expected changes, promotions, seasonal peaks and new business can help both parties respond before capacity becomes constrained.

3. Evaluate total transportation cost

The lowest quoted rate does not always produce the lowest overall cost.

Service failures can lead to production delays, detention, expedited shipments, missed appointments, dissatisfied customers and additional administrative work. Evaluating transportation providers on reliability, communication, visibility and problem resolution provides a more complete picture of value.

4. Review contingency plans

Shippers should understand what happens when their preferred route, carrier or facility is disrupted.

Alternative lanes, backup capacity, temporary warehousing and flexible distribution options can help protect service during market changes, weather events, labour disruptions or unexpected volume increases.

5. Reassess the transportation model

Changing market conditions may be a good time to reconsider the balance between private fleet, dedicated transportation, contracted carrier capacity, and the spot market.

The right model depends on shipment volumes, service requirements, geographic coverage, equipment needs and the level of operational control required. In many cases, a blended approach provides the best balance of consistency and flexibility.

The conversation is shifting from price to certainty

Transportation rates will always matter. But as capacity tightens and operating costs rise, the more important question may be whether the required capacity will be available when and where it is needed.

Canadian shippers that plan early, share better information and evaluate transportation as part of their broader supply-chain strategy will be better positioned to manage volatility.

The objective is not simply to secure a competitive rate. It is to build a transportation model that protects service, supports growth and remains resilient when market conditions change.

Is your transportation strategy prepared for a tighter market?

Before renewing a transportation contract or investing additional capital in a private fleet, assess where your operation is most exposed to capacity, cost and service volatility.

Canada Cartage can help you evaluate your current transportation model and identify opportunities to improve reliability, flexibility and cost predictability. Contact us to learn more and to evaluate your options.