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MODE INSIGHT Transportation Market Overview

TRUCKLOAD

INTERMODAL

LTL

PARCEL

A U G U S T 2 02 6

INTERNATIONAL

TRUCKLOAD Truckload Market Update With the produce season winding down, market rates have tapered in recent weeks. Tender rejections have dropped from 15% to 13%, and load-to-truck postings have improved from 10.05 to 9.98. Despite the improvement, all indices remain significantly elevated year over year, with spot rates up 30-40% versus last year. There are no clear demand signals, as has been the primary concern for the last several months, and economic indicators point to more of the same trend as we head toward the final months of 2026. The question is how to stay nimble and secure opportunities at hand given the likely extended period of lower volumes across most industries.

Source: Sonar.Surf

DAT’s National Van Spot Linehaul RPM tapered and decreased from June to July for the first time in several months. Diesel pressure and uncertainty remain the wildcards to watch out for.

August 2026 MODE Insight

INTERMODAL Intermodal Market Update Peak season is underway, and the industry continues to experience large volumes of truckload shippers converting to intermodal out of California. Due to these increased volumes, the railroads have been considering increasing surcharges in Southern California and implementing new surcharges in Northern California over the upcoming weeks. Drayage capacity remains constrained in many markets across the country, with increased intermodal volumes and a multitude of regulatory changes resulting in more drivers leaving the industry. Overall, there have been challenges in finding drivers to pick up and deliver to locations that are greater than 50 miles from an intermodal ramp. Due to market conditions, drayage companies are attempting to increase the number of loads that are pulled by their trucks by serving shorter distances. 2026 domestic intermodal line haul rate renewals without fuel surcharge are forecast to rise 8.8%. 2027 rate projections for domestic intermodal have increased from 4% to 5% in correlation with continued expectations of high truckload rate increases. The 2026 volume projection for intermodal has increased to 5.3%, and the forecast for 2027 has grown to 2.3%. Intermodal conversions from truckload driven by fewer drivers and high truckload rates are the primary reason for expected intermodal volume increases.

August 2026 MODE Insight

LTL LTL Industry News Here are links to some top stories in the industry for you to check out: FreightSnap, Shiplify Strategic Partnership Targets LTL Invoice Accuracy and Trust Between Carriers and Shippers

How Can LTL Carriers Modernize Cost Intelligence Without Replacing Proven Processes?

FedEx Freight CEO Smith Outlines Company’s Growth Strategy Post Spin-Off

XPO’s Q2 Earnings Beat Expectations Behind Strong LTL Performance

LTL Market Update As we move into August, there are finally a few more positive data points behind the LTL market than we had earlier in the year. Freight demand is still far from booming, but recent carrier results are beginning to show improvement in parts of the market. Manufacturing is also giving LTL a little more support. June marked the sixth straight month of expansion, and while growth has not been even across every industry, stronger production and new orders are beginning to translate into more freight in certain parts of the market. This is important for LTL, where industrial freight plays such a large role, and gives us something more tangible to watch as we move through the second half of the year. Competition is changing too. Amazon’s expansion of its LTL offering to businesses outside of its own fulfillment network adds another option for shippers and another competitor for traditional carriers. The immediate impact appears limited, but it reinforces how quickly technology, visibility and ease of doing business are becoming part of the LTL conversation alongside price and service. The bigger question now is whether the recent improvement can carry through the remainder of Q3. Carriers have spent the last several years preparing their networks for more freight, and there is plenty of capacity available today. If industrial and seasonal demand continue to build, the industry is in a much better position to absorb that growth without the service disruption we have seen during past market swings. What This Means to MODE: We’re starting to see some of the positive signals we’ve been waiting for. Our advantage remains the strength of our carrier relationships and the ability to match freight with the right provider as conditions change. If volumes continue to build, having that network in place becomes even more important.

August 2026 MODE Insight

LTL UPDATE LTL Pricing Power Continues as Rates Reach New Highs SOURCE: FreightWaves, “TL, LTL Rates to Hit New Highs in Q3,” Todd Maiden, July 14, 2026. The LTL pricing environment continues to strengthen as the industry moves through the second half of 2026. According to the latest TD Cowen-AFS Freight Index, LTL rates reached a new high during the second quarter, supported by continued carrier pricing discipline, elevated fuel costs and improving fundamentals across the industrial economy. The LTL rate per pound index finished Q2 76.5% above its January 2018 baseline, increasing significantly from both the prior quarter and the same period last year. The index is expected to move slightly higher again in Q3, which would put rates nearly 10 percentage points above a year ago levels. Carriers are also showing increased confidence in their pricing position. General rate increases are occurring earlier in the year, with ArcBest implementing a 5.9% increase in June and Saia following with a 7.1% increase in July. Higher fuel surcharges remain part of the equation as well, contributing to rising shipment costs even as average shipment weight declined during the quarter. There are also encouraging signs on the demand side. Industrial activity improved for a sixth consecutive month in June, while longer term LTL tonnage comparisons recently turned positive after an extended downturn. Because industrial production represents a significant portion of LTL freight, continued improvement in manufacturing could provide additional support for volumes in the months ahead. The overall picture is a market beginning to look different than the prolonged freight downturn of the past several years. Carriers have maintained pricing discipline through the softer cycle, and as demand begins to show signs of improvement, that discipline is translating into greater pricing power rather than a return to aggressive discounting. What This Means for MODE Global For shippers, rising rates make carrier strategy and freight quality increasingly important. At MODE Global, our scale and carrier relationships allow us to look beyond the rate itself, aligning freight with the right carriers, identifying opportunities within their networks and helping customers manage both cost and service as market conditions change. In a strengthening LTL market, having the right carrier strategy becomes even more valuable, and when you partner with MODE Global, that is exactly what you gain.

August 2026 MODE Insight

LTL UPDATE United States ISM Manufacturing PMI The ISM Manufacturing PMI rose to 55.6 in July 2026 from 53.3 in June, marking the strongest expansion since May 2022. Production jumped sharply, new orders remained strong and employment returned to growth for the first time since early 2025, signaling broader improvement across the manufacturing sector. Cost pressures continued to ease, although supplier deliveries slowed for the eighth straight month. Manufacturing activity also benefited from forward ordering ahead of potential supply and cost disruptions, AI-related investment and lean business inventories, which could provide additional support for production and freight demand in the months ahead.

Source: Trading Economics & Federal Reserve

Fuel The U.S. national average cost per gallon for on-highway diesel in July 2026 came in at approximately $4.96, which is $0.06 (1.2%) lower than June 2026's average of approximately $5.02. July 2025's average was approximately $3.78, putting July 2026 about $1.18 (31.2%) higher year over year. As of the first week of August 2026 (week ending August 3, 2026), the national average stands at $5.35 per gallon, reflecting an increase of approximately $0.39 (7.9%) from the July monthly average.

August 2026 MODE Insight

PARCEL Tariff Refunds Land, USPS Buys Time and FedEx’s Network Overhaul Enters Its Final Stretch Three key topics are worth knowing as we head into fall: $800M in tariff refund money starts moving this month, the USPS's financial runway just got longer without getting healthier and FedEx is entering the hardest stretch of its multi-year network overhaul.

1. FedEx and UPS Tariff Refunds Start Landing This Month After the Supreme Court invalidated the bulk of the Trump administration's IEEPA tariffs earlier this year, FedEx and UPS (both filed as importer of record on the affected shipments) began collecting refunds from Customs and Border Protection (CBP). FedEx had roughly $800 million earmarked for returns to customers who originally paid those duties, per its fiscal Q4 earnings report, and opened a verification portal in mid-July where shippers can confirm whether a refund was received for a given shipment and its dollar value. The catch: FedEx is prioritizing disbursement for shippers who opt into sharing limited shipment and refund data with “trusted vendor partners” inside that portal. Those customers who opt in are first in line when initial refunds start going out around August 10; everyone else gets paid on a slower timeline. UPS is handling things differently by auto-refunding IEEPA duties for shipments where it served as importer of record; no portal opt-in required. CEO Carol Tomé has said UPS collected roughly $5 billion in tariffs from customers historically. DHL has committed to passing through CBP refunds as they're processed, though on a less specific timeline than either U.S.-based carrier.

2. USPS's Cash Crisis Moved from 2027 to 2031–2034 Through Stopgap Measures In March, Postmaster General David Steiner told Congress USPS could run out of cash within about 12 months without new borrowing authority; that timeline has since moved. At a late-June Senate hearing, Steiner said the agency's projections now push a cash crunch out to sometime between 2031 and 2034. The reprieve didn't come from a fix; however, it came from USPS suspending its employer contributions to workers' retirement funds, conserving roughly $2.5 billion this fiscal year. “We're basically borrowing money from our retirement plans to fund current operations,” Steiner told lawmakers. “I'm not particularly comfortable with that... None of us should be comfortable with that.” The underlying numbers haven't improved. USPS posted a $1.95–$2.0 billion net loss in fiscal Q2 2026 alone, its fifth consecutive quarterly loss and part of 19 consecutive years of operating losses. At a June 4 hearing, Postal Regulatory Commission members rejected that request outright, calling it “more money with less oversight,” and said Congress needs to define what it wants from USPS and fund it accordingly before any further borrowing makes sense. USPS isn't at risk of stopping deliveries next quarter. However, the underlying pressure that's driven this year's dimensional-weight changes, fuel surcharge and rate hikes hasn't gone away — it's just been financed differently. Expect USPS to keep looking for revenue wherever regulatory authority allows.

August 2026 MODE Insight

PARCEL UPDATE 3. FedEx Network 2.0 Enters Its Hardest Stretch Before Peak Season FedEx's multi-year consolidation of its historically separate Express and Ground networks keeps advancing. About 24% of FedEx's global average daily volume now flows through Network 2.0-optimized stations, up from 18% at the start of fiscal 2026, and the carrier has reiterated its target of reaching 65% by this year's peak season. More than 150 facilities have closed so far on the way to a previously stated goal of 475+ closures (roughly 30% of FedEx's U.S. footprint) by the end of 2027. FedEx Network 2.0: share of volume through optimized stations

Canada's network finished converting earlier this year and is being used as the operational blueprint for the U.S. rollout. In optimized markets, FedEx has reported a 10% reduction in pickup and delivery costs and consolidated Express and Ground pickups into a single appointment, the most visible change for shippers. Getting from 24% to 65% by peak season is the largest single-year jump in the program's history, which means more markets should see pickup and facility changes between now and Q4 than in any prior year of the rollout. Clients in markets that haven't yet converted should expect a pickup consolidation notice from FedEx sometime this fall. Framing it now as a planned, company-wide rollout, not a service disruption, heads off a wave of concerned calls once the notices start landing.

August 2026 MODE Insight

INTERNATIONAL Key Trends Volume: With a solid July volume increase and forecasts for a lower August volume, signals are pointing more toward a much earlier end to the typical peak season Rates: Rate volatility being driven by multiple factors; volumes slowing but congestion, elevated fuel costs and other surcharges offsetting overall rate erosion Capacity: Global capacity, although plentiful, is currently being constrained by several factors and carriers managing that balance Operational: Panama Canal reducing operating water level due to drought conditions, which could impact U.S. East Coast-bound capacity

Rates Ocean carrier rate volatility continues to be the norm moving into August. This volatility is being driven by multiple factors – resilient peak season volume levels, severe congestion in Asian ports and escalating geopolitical tensions in the Middle East. Since early July, and despite planned carrier GRIs and peak season surcharges for August 1 – rates on most Asia to U.S. lanes have at least leveled off from the sharp increases in late June/early July. This may be a sign that the frontloading-driven peak season rush could be cooling off earlier than usual. On the transpacific Asia to U.S. East Coast, rates have been stable at their peak level of about $9,000/FEU since early July. Asia to U.S. West Coast rates reached a peak of more than $7,500/FEU in early July; however, now moving into August, those rates have eased about 20% to around $6,000/FEU. On the transpacific trade route, spot rates from Shanghai to New York rose 4% to $7,893 per 40ft container, while rates from Shanghai to Los Angeles increased 3% to $5,894 per 40ft. Carriers successfully implemented GRIs as volumes held firm into the first week of August. Following a late-July resumption of hostilities between Iran and the U.S. near the Strait of Hormuz, major carriers introduced sweeping Emergency Fuel Surcharges (EFS) effective August 1 as bunker fuel prices spiked up quickly.

August 2026 MODE Insight

INTERNATIONAL UPDATE Rates (continued) Following a late-July resumption of hostilities between Iran and the U.S. near the Strait of Hormuz, major carriers introduced sweeping Emergency Fuel Surcharges (EFS) effective August 1 as bunker fuel prices spiked up quickly.

Asia to U.S. West Coast

Asia to U.S. East Coast

Volume/Demand U.S. containerized imports totaled 2,508,310 TEUs in July 2026, increasing 4.5% from June. July imports were down 4.3% year over year; however, trade policy, combined with seasonal demand, led to suspected aggressive frontloading in July 2025 when volumes reached 2,621,910 TEUs. Compared to pre-pandemic 2019, July 2026 imports were up 14.1%, underscoring the continued strength of U.S. import demand connected to ongoing trade policy and tariff uncertainty. For the first seven months of 2026, import volumes were down slightly 0.9% compared to the same period in 2025. August volume is expected at 2.2 million TEU, down 4.2% from last year. While historically August is typically more of a start to peak season, this reduced forecast is likely a signal that the extreme import surge may have hit its peak. The National Retail Foundation is projecting September at 2.16 million TEU, October at 2.13 million TEU, and November at 2.03 million TEU. Industry analysts are citing unexpectedly low summer inventory levels and stronger than anticipated consumer demand for helping push this early peak volume surge.

August 2026 MODE Insight

Source: Descartes Datamyne

INTERNATIONAL UPDATE Volume/Demand (continued) Analysts also feel that another reason may be that the July 24 tariff deadline did not result in substantial tariff spikes. Many U.S. shippers were frontloading peak season volumes ahead of the Section 122, 10% global tariff changes (July 24 expiration date) out of concern that duties would shoot up sharply after the deadline. Instead, Section 122 tariffs were immediately replaced by Section 301 tariffs on more than 60 trade partners, aimed at curbing forced labor imports, of 10% to 12.5% or about even with the expiring duties. Duties could return to emergency tariff levels as the U.S. Trade team is completing their Section 301 investigation into excess manufacturing capacity by 16 of the largest U.S. trading partners.

Capacity/Supply As reported in previous market updates, on paper, the ocean shipping industry is heavily oversupplied, with significant new vessels coming online and/or soon to be delivered. However, operational inefficiencies, geopolitical issues and even weather are actively absorbing that new excess functional capacity. Port congestion across central and south China continued to constrain capacity, providing further support to freight rates. With the ongoing Red Sea diversions, the Strait of Hormuz volatility and continued blank or missed sailings (due to vessels falling out of rotation), carriers are failing to maintain their schedules. With every missed or delayed sailing, bookings must be rolled and thus substantial numbers of containers get backed up at the major loading ports. Blank sailing forecasts have inched up in August but are still not at a level to cause significant disruption. Nonetheless, space will be more constrained in early August to U.S. East Coast due to cancelled sailings of two >13,000 TEU services – COSCO’s AWE2 and the Premier Alliance’s EC3.

August 2026 MODE Insight

INTERNATIONAL UPDATE Capacity/Supply (continued) Typhoon activity in Asia suspended operations in ports such as Kaohsiung, Yantian, Ningbo and Shanghai, causing mild vessel bunching and delayed departures. As a result of the displacement, we anticipate that blank sailing numbers could resume at higher levels in August until rotations are normalized. As congestion eases moving into the latter part of August and backlogs in China and SE Asia clear, carriers will have some decisions to make. As peak season volumes appear to be dropping and vessel capacities increasing, carriers may deploy more blank sailings in September/October to avoid a collapse of the current elevated rate levels.

Source: M+R Spedag Group

New Panama Canal Water Level Restrictions The Panama Canal Authority this week announced it will reduce the maximum draft for cargo vessels from 49.5 feet to 47.5 feet in a series of reductions slated through early September. The adjustment comes amid drought conditions after a dry rainy season lowered water levels in Gatun Lake, the body of water that feeds the locks of the Panama Canal linking the Pacific and Atlantic oceans. The lower levels will force liners to carry less cargo per vessel, impacting volumes headed for East Coast ports. The new larger vessels handling 13,000–14,000 TEUs typically require water 50 feet deep for full capacity operations.

August 2026 MODE Insight

MODE Insight August 2026