The freight market has weathered unprecedented challenges over the past several years — from a prolonged "freight recession" to tightening capacity and soaring liability costs. At the Univar annual carrier kickoff event, Ben Kavlinar, EVP of Operations at LRT Solutions, shared his perspective on navigating these headwinds, explaining how logistics companies can differentiate themselves through top-tier service and strategic partnerships. FreightWaves' Mary O'Connell also weighed in on why trucking capacity has exited the market — and why it is unlikely to return anytime soon.

Barriers to Entry Locking Out New Capacity

Trucking capacity that drained out of the market over the past four years is showing little sign of returning, according to Kavlinar. Speaking at the Univar event, he cited a compounding set of barriers — equipment costs, nuclear jury verdicts against carriers, and rising insurance premiums — that are effectively locking out new market entrants and tightening supply even before a meaningful volume rebound takes hold. The trend has significant implications across the broader supply chain: when fewer trucks are available to move freight, shippers face higher rates and reduced service reliability, which can ripple through delivery times and consumer pricing for goods dependent on truck transport.

"You've got a couple of things that are being tough for new entries into this business," Kavlinar said. "One of the costs of equipment — we always talk about cost of equipment, it's continued to skyrocket. But on the other hand, we've got all these negative things coming at us with these verdicts. So insurance is going to be a big thing in the near future. It already is and it's going to continue to be worse."

When asked about the broader outlook, Kavlinar offered an assessment of current market dynamics:

"With a lot of capacity coming out of the space over the last 4 years, it's given us an opportunity now that volumes are starting to increase a little bit. But I don't know if it's necessarily a volume increase as much as it is a capacity decrease." — Ben Kavlinar, EVP of Operations, LRT Solutions

A Four-Year Freight Recession and Shifting Conditions

The backdrop is a freight market that endured what FreightWaves host Mary O'Connell described as a roughly four-year "freight recession." The downturn followed a pandemic-era freight boom in which surging consumer demand and strained supply chains pushed rates to historic highs, drawing a wave of new carriers into the market. As that demand normalized, excess capacity and softening rates created a prolonged contraction that thinned the carrier ranks. Conditions have since shifted. O'Connell noted that tender rejections — a widely tracked metric measuring the percentage of contracted loads carriers turn down, which rises when capacity tightens — are running in the 15% range, elevated compared to the same period in prior years, even after a softer stretch in recent weeks. She attributed the near-term softness partly to seasonal factors, expecting July and August to remain quieter before activity picks back up.

"It's absolutely turned. Capacity has left the market. I don't see capacity entering anytime soon because there's new barriers to entry," O'Connell said. "All of this regulation, the liability and the verdicts that are coming in are terrifying. And yes, it's been a little bit softer the last couple of weeks. But it's July. I think it'll stay that way in August. But we're still seeing tender rejections in that 15% range."

She clarified that while current levels may seem soft compared to the rapid tightening seen earlier in the year, they remain elevated relative to the last few years for this time of year.

LRT Solutions: Service Quality as the Differentiator

Kavlinar said LRT Solutions, a Fort Payne, Alabama-based logistics provider offering LTL and full truckload services, is using the tightening environment to pursue new shipper relationships and fill network gaps. He described the current moment as well-suited for carriers to get in front of prospective customers before the next round of bid cycles.

"I think it's very important to put a name with a face," Kavlinar said, emphasizing the value of in-person conversations at industry events. "We have certain gaps, just like any carrier or logistics company has certain gaps we're looking to fill. So having some of those conversations prior to the bid is important and knowing where we can fit in the puzzle there."

Asked how a company stands out in a crowded logistics marketplace, Kavlinar pointed to service as the key differentiator. "It is difficult to stick out. But there's some great partners here, some great logistics companies here. So you've got to stick out with service. You got to stick out with customer service," he said. "Safety is super important in our world right now. It always has been. So that's table stakes for everybody right now. But service is something that we can sort of stand on and stick out with."

Safety Headwinds: Verdicts, Fraud, and Cargo Theft

The conversation turned to the safety landscape, which the hosts characterized as fundamentally different from when they first entered the industry. Daily headlines about cargo theft, fraud, and drivers being forced out of the market have made the operating environment significantly more challenging. The "nuclear verdicts" Kavlinar referenced — a term the industry uses for jury awards in liability cases against trucking companies that reach into the millions or tens of millions of dollars — have been a growing concern documented by industry research groups such as the American Transportation Research Institute, which has tracked a steady rise in the frequency and size of such awards over the past decade.

"It's pretty scary. We've faced a lot of headwinds. All trucking companies have these last 5 or 6 years," Kavlinar acknowledged. "It's been pretty difficult and it's just one thing after another after another. And then just recently we're seeing all these verdicts coming across negatively towards our business, so it's scary. We're going to have to do some things different and pay more attention on certain things where we probably shouldn't have in the past anyway. We'll adapt and continue to get better. But there's a lot of stuff coming at us right now, so we just have to stay on top of it."

Technology: Practical Over Flashy

On the technology front, Kavlinar acknowledged that LRT's scale limits its ability to make large AI or technology investments. Rather than chasing high-dollar platforms, the company is extracting value from tools already embedded in its existing transportation management system (TMS).

"Being a smaller company, it's difficult to have that tech spend that we can kind of devote to a high AI spend or technology spend," he explained. "So we focus on leveraging some pieces within our TMS that can be a little lower cost, but give us a lot of benefit as far as freeing up some bandwidth on our team. And we're going to continue to do that and find out where it's necessary to continue to spend those resources."

"For us, it's just really being in front of our customers and being available to them and being very responsive," he added.

Market Outlook: Bullish Despite Uncertainty

Kavlinar said he attended a freight market update delivered earlier in the day by FreightWaves SONAR's head of Freight Market Intelligence, Zach, and found himself largely in agreement — though he described his own outlook as more bullish.

"I would agree with most of what he said. I think that we're in that band right now where we're just popping out of it every once in a while," Kavlinar said. "We're seeing some days where it's strong and very active in the market, and some in the last couple of weeks has been a little softer. So I think we still haven't found where we're at right now. But I think it's working its way to be a pretty active marketplace over the next few years, so I'm excited about that."

O'Connell noted that she and co-host Craig are considerably more bullish than Zach, whose analytical approach is more cautious. "I think we're all seeing the same thing, just to varying degrees," she said.

Kavlinar reiterated his optimism, pointing again to the structural barriers preventing new capacity from entering the space. "I'm very bullish on it too. You've got a couple of things that are being tough for new entries into this business. One is the cost of equipment — it's continued to skyrocket. But on the other hand, we've got all these negative things coming at us with these verdicts. So insurance is going to be a big thing in the near future. It already is and it's going to continue to be worse."

He expects the marketplace to become increasingly active over the next few years as structural supply constraints persist and the cost of entering the trucking business continues to climb.

The event, held as part of the Univar annual carrier kickoff, brought together carriers and logistics providers for networking and market discussions. Kavlinar said he planned to continue meeting attendees and introducing LRT Solutions to potential partners. "I'm excited to get back out there and meet a few more people and introduce our company," he said.

Source: FreightWaves