Q&A: Why Freight Costs Are Rising Even When Volumes Aren't

Jeff Berman | Logistics Management
June 2, 2026

Logistics Management Group News Editor Jeff Berman recently connected with Raddy Velkov, Senior Vice President of Carrier Sales & Strategy at BlueGrace Logistics, a Tampa, Fla.-based, non-asset-based 3PL, about the key financial takeaways of current freight market dynamics in the Q&A below.

LM: Why are freight costs rising when shipping volumes aren’t, and what does that mean for the remainder of 2026?

Velkov: I think the biggest misconception right now is that freight costs only rise when volumes surge. That’s not really what’s happening. Demand has improved, but unevenly. The bigger story is that the supply side of the market has become structurally tighter. Over the last few years, carriers have dealt with margin compression, higher insurance costs, elevated fuel, labor pressure, equipment inflation, and now a much stricter regulatory environment. You’re seeing increased scrutiny around non-domiciled carriers, English-language enforcement, ELD compliance, and safety oversight. The recent Supreme Court ruling effectively raises the standard around carrier vetting and operational oversight across the brokerage industry as well. All of that changes carrier behavior and reduces excess capacity in the system. So even though we’re not in a broad freight boom, the market is reacting much faster when disruption or seasonal pressure appears. The market today is much more fragile than it looks from the top-line shipment numbers. I think, for the rest of 2026, shippers should expect a more disciplined market where costs rise unevenly, routing guides become more volatile, and execution matters more than ever. The easy soft-market environment we had over the last couple of years is gone.

LM: What does the FedEx Freight spinoff mean in practice for companies that haven’t reviewed their carrier relationships?

Velkov: From my perspective, the biggest implication is not the transaction itself, it’s what it says about where the LTL market is heading strategically. I think the industry is moving toward a much greater focus on network profitability, density, yield management, and capital discipline. I also think the broader takeaway is that the industry is rewarding operational quality and network efficiency over pure scale. Independent LTL carriers are going to be evaluated very heavily on margin performance and network efficiency, which naturally creates more disciplined behavior around pricing and freight selection. For shippers, that means carrier relationships become more strategic. It’s no longer just about rate. It’s about how your freight fits operationally into a carrier’s network, how consistent your volumes are, how efficient your facilities are, and how much friction your freight creates. I also think it reinforces a broader trend we’re seeing across transportation: carriers are becoming more selective. That doesn’t mean capacity disappears overnight, but it does mean the market becomes less forgiving toward inefficient freight and reactive procurement strategies.

LM: Why are freight-focused CFOs relying on total freight spend numbers missing where costs are actually accumulating?

Velkov: It is because total freight spend is too blunt of an instrument. It tells you what happened, but not why it happened. The real cost pressure today is usually hiding underneath the averages; detention, accessorials, routing guide failures, short lead-time shipments, service failures, and unplanned spot utilization. Those issues can quietly erode transportation efficiency even when overall freight spend looks relatively stable. What’s changed is that the market is no longer moving uniformly. Costs are accumulating lane-by-lane and shipment-by-shipment. One facility may be highly efficient while another is driving constant exceptions and premium freight. The companies doing this well are looking much deeper than top-line spend. They’re monitoring shipment-level profitability, tender acceptance, dwell time, carrier alignment, and execution consistency. That’s where the real operational story sits today.

LM: How are companies like BlueGrace managing shifts in tariffs, in terms of the volatility and uncertainty tariff shifts cause, as it relates to things like freight spend and procurement, sourcing, and capex?

Velkov: The biggest thing tariffs create is uncertainty around network design. And when companies become uncertain, they tend to make shorter-term operational decisions that can unintentionally increase cost across the supply chain. What we’re seeing now is companies reevaluating sourcing regions, inventory positioning, cross-border strategy, safety stock levels, warehousing footprints, and even manufacturing timing. Those are not just procurement decisions, they’re network decisions. From a managed logistics perspective, our role is to help customers understand the downstream transportation impact before they make those changes. If you shift sourcing from one region to another, that affects carrier density, lead times, drayage, cross-border exposure, warehousing strategy, and ultimately freight cost structure. One of the biggest risks for shippers right now is that if enough companies make sourcing or inventory changes simultaneously, capacity tightens much faster than historical models would suggest. So, the conversation becomes much more strategic than simply reacting to tariff headlines. We’re helping customers scenario-plan around flexibility, optionality, and network resiliency rather than trying to predict every policy move. The companies navigating this best are not overreacting to short-term changes, but they are building supply chains that can adapt faster as conditions evolve.

LM: Given the ongoing increases in diesel fuel, how are you working with shippers to help them on that front, i.e. for managing freight spend and expenses?

Velkov: Fuel exposes inefficiency faster than almost anything else in transportation. When diesel rises, the impact goes far beyond the fuel surcharge. Carriers become more selective around network efficiency, reload opportunities, dwell time, and asset utilization. Freight that creates friction inside the network becomes more expensive very quickly. So, our approach is not simply negotiating surcharge programs. It’s helping customers build more efficient transportation networks overall. That means improving routing guide alignment, reducing unnecessary mode conversions, optimizing facility flow, tightening appointment scheduling, reducing empty miles, and aligning freight with the right carrier networks. This is where managed logistics becomes especially valuable because the biggest savings opportunities usually sit between functions, not inside a single shipment. When supply chain, procurement, transportation, and finance operate from the same data and strategy, companies can reduce volatility and improve cost performance much more consistently, even in inflationary freight environments.

Read the original article here.