RXO faces a rate squeeze: what it means for the 3PL

Core Insights - RXO is experiencing a "squeeze" due to locked-in lower contractual rates and rising rates needed to fulfill those obligations, a situation likely affecting the broader 3PL sector [1][4] Financial Performance - RXO reported a net loss in its third quarter earnings, leading to a negative reaction from Wall Street and a decline in stock price [2] - The SONAR National Truckload Index indicated a rise in linehaul rates from $1.68 per mile to $1.80 per mile during the third quarter, ending at $1.72 per mile [5] Market Conditions - CEO Drew Wilkerson highlighted that the freight market is facing a tightening dynamic, with capacity exiting certain regions due to regulatory changes [4][6] - Approximately two-thirds of RXO's freight came from regions experiencing rate increases, despite a backdrop of weaker volume [6] Structural Changes - Wilkerson suggested that the current market changes, driven by regulatory enforcement, could represent one of the largest structural shifts in truckload supply since deregulation in the 1980s [7] - The freight market may enter a "higher for longer" phase if regulatory changes persist, potentially leading to a significant and permanent exit of truckload capacity from the market [8]