Transportation Minute: A 2025 Regulatory Recap and the Road to 2026
Written By: David Jencks, Esq., Jencks Law, P.C.
The final months of 2025 brought regulatory activity that intersects directly with the freight market’s already fragile fundamentals. New federal rules, priorities, and enforcement initiatives are poised to tighten capacity further, influence carrier exits, shape the risk and opportunity environment for both carriers and their Factors heading into 2026.
I. A Re-Cap of 2025 Regulatory Activity
Driver’s Licenses and English Proficiency
In late September, FMCSA issued an interim final rule that severely restricts the issuance and renewal of non-domiciled commercial driver’s licenses (CDL’s). The move follows President Trump’s April executive order and several high-profile accidents involving immigrant drivers. Key provisions include:
- CDL’s can no longer be issued based solely on employment authorization documents.
- Only certain visa categories (H-2A, H-2B, E-2) qualify.
- Renewals require in-person appearances, and CDL validity will track immigration status documents.
The FMCSA estimates nearly 190,000 of the 200,000 current non-domiciled CDL holders could exit the workforce within two years. This predicted exit is in addition to the effect English Learning Proficiency regulations discussed later in this article could have on driver exits from the market.
Federal Funding Withheld from California
Transportation Secretary Sean Duffy announced that $41.7 million in safety program funding is being withheld from California for failing to enforce English-language proficiency standards for drivers. While New Mexico and Washington had also faced scrutiny, California remains the lone non-compliant state.
Complaint Database Now Covers Brokers
The FMCSA has expanded its National Consumer Complaint Database to include freight brokers for the first time. This change allows carriers and shippers to report broker misconduct directly through the federal portal.
HOS Pilot Program Comments Due
The FMCSA is seeking public input on proposed hours-of-service (HOS) pilot programs to test split sleeper berth rest and 14-hour duty period pauses.
Legislative Developments
Lawmakers have introduced several bills targeting foreign commercial drivers in response to recent accidents and FMCSA’s tightened CDL rules and enforcement:
- H.R. 5670 (Rep. Beth Van Duyne, R-TX): Codifies the new CDL restrictions, ends foreign CDL reciprocity agreements, and bars Mexican and Canadian CDL holders from operating in the U.S.
- H.R. 5688 (Rep. David Rouzer, R-NC): Similar provisions, focusing specifically on non-domiciled CDLs.
- S. 2991 (Sen. Cynthia Lummis, R-WY): Codifies both English-language enforcement requirements and mandatory out-of-service orders for violations.
II. DOT and Chameleon Carriers
An internal memo from the U.S. Department of Transportation suggests one of its most aggressive actions yet to identify so-called “chameleon carriers.” These are trucking companies that repeatedly shut down, reopen under new names, and use new DOT numbers to avoid enforcement and creditors. For years, these operators have slipped through regulatory bodies.
The memo, drafted by Shaz Umer, Director of Strategic Initiatives in the Office of the Assistant Secretary for Research and Technology, was submitted to the Secretary of Transportation in November of 2025. Though marked pre-decisional, it offers insight as to how DOT intends to structure chameleon carrier identification by deploying a data-driven risk scoring system rooted in registration patterns, operational behavior, and fraud indicators.
What Makes a Carrier a “Chameleon”?
A chameleon carrier typically:
shuts down after serious violations or enforcement
quickly restarts under a new name and DOT number
keeps the same trucks, same drivers, and same owners and same customers
avoids audits and safety interventions
avoids creditors
resumes operations as if nothing happened.
DOT’s memo states that analysts identified “behavioral patterns that mirror the tactics used by high-risk carriers attempting to disguise operational identity.” These patterns include:
shared or recycled business addresses
duplicate or nearly identical contact information
inconsistent or suspicious equipment reporting
clusters of related companies operating in the same geographic areas
DOT’s Proposed Solution: A Severity Matrix to Flag Fraud
The memo outlines a plan to build a “data-driven severity matrix” which is a risk score for every carrier based on indicators that suggest identity alterations. The concept would:
Collect core data points associated with fraudulent identity changes
Apply a scoring model that evaluates the likelihood of chameleon behavior
Prioritize enforcement for carriers with high severity scores
Instead of waiting for a crash, a complaint, or an inspection issue, DOT would move to a proactive model that identifies, and presumably, shuts down chameleon carriers before an issue arose.
Why This Matters: The Impact on the Industry
Chameleon carriers don’t merely violate rules, they distort and disrupt the freight market. By evading safety penalties and insurance costs, they gain unfair pricing advantages that harm legitimate carriers. According to the memo, chameleon carriers:
drive down rates
worsen safety outcomes
raise insurance premiums for the entire industry
Negatively affect broker and shipper trust
undermine carriers who operate responsibly
The Bigger Picture for Carriers and Factors: A Turning Point in Federal Enforcement
The memo signals something deeper than a new scoring system. It reflects a broader recognition inside DOT that chameleon carriers are a real and present problem. The proposed risk matrix signals a change from reactive to proactive carrier enforcement.
While DOT’s initiative is one founded in safety, Factors will benefit from a risk matrix as it can act as a “pre-screen” of fraudulent carriers that present both a particularly unstable business and one that has left a trail of bad debt in previous carnations. Factors win in a proactive DOT risk assessment model.
Industry stakeholders have been calling for this level of enforcement for many years. Now, for the first time, DOT appears poised to act.
III. 2026 Outlook: The Trucking Industry’s Economic Reset and Move Forward
The motor carrier sector is not simply experiencing a cyclical downturn - it is undergoing one of the most significant structural transitions in its history creating a “new norm” for carriers and their Factors alike. Industry estimates suggest that as many as 600,000 drivers or carrier-entity equivalents may exit the market amid suppressed freight volumes, elevated operating costs, regulatory burdens and changes, and margin compression. These headwinds could herald amplified credit, operational and fraud risks. The emerging landscape in 2026 brings those potential risks, but an improving or stabilizing sector also brings some level of opportunity.
Freight-Capacity Dislocation: The Present Landscape
Although total freight volume remains tepid, and capacity is dropping slightly, it remains elevated. Load-to-truck ratios continue to underperform historical norms, while cost pressures from fuel and insurance to equipment maintenance are squeezing carriers. The excess capacity built during post pandemic phases continues to be a contributing factor depressing the sector. As a result:
Utilization rates remain weak.
Spot freight pricing has limited upside.
Margins are dangerously thin.
Input costs remain high
Adding a New Regulatory Layer: English-Proficiency Enforcement
Compounding the structural pressures is a less-noticed but meaningful factor: renewed enforcement of the driver English-language-proficiency requirement under Federal Motor Carrier Safety Administration regulation (49 C.F.R. §391.11(b)(2)). This regulation mandates that drivers “read and speak the English language sufficiently to converse with the general public… to understand highway traffic signs and signals… to respond to official inquiries, and to make entries on reports and records.” Historically, enforcement of this rule was lax. But recent executive directives have elevated non-compliance risk for carriers that rely heavily on non-native English-speaking drivers. For smaller fleets and owner-operators - already operating under tight margins - unexpected driver out-of-service events, recruitment/replacement costs, and operational disruptions tied to this rule may accelerate attrition. In short: this regulatory shift is a credible contributing factor to the projected exit of carriers/drivers. A mass exit of carriers and drivers will result in a quick shift from 3 years of over capacity to under capacity which in turn will dramatically shift freight rates upward.
What’s Coming in 2026: Predictions & Implications for the Carrier Sector
Forecasts for 2026 point to a modest rebound with structural shifts across the carrier universe. Key predictions include:
Moderate growth in freight volumes, but not a boom: Industry commentary suggests that 2026 will bring greater stability rather than explosive expansion. Some analysts project roughly 4.4% growth in the trucking industry overall.[1]
Rate recovery slowly emerging: As capacity tightens from exits and attrition, carriers may begin to regain pricing power. For example, spot van freight rates are projected to achieve up to 6% year-over-year growth in Q4 2026.[2]
Carrier population contraction and authority counts returning to historic norms: According to a market update, if current attrition continues, for-hire carrier authority counts in the U.S. would revert to historical norms in 2026.[3]
Fleet renewal takes priority over expansion: Given weak order activity and regulatory uncertainty, many fleets will focus on asset replacement rather than growth. Backlogs are rising modestly, but most investment will be in “replacement mode”.[4]
Segment divergence: niche / specialized services outperform: Carriers that serve high-value, time-sensitive, or service-intensive lanes (e.g., healthcare logistics, refrigerated loads, hot shot trucking) are forecasted to perform better. The hot-shot trucking market alone could hit roughly $11 billion in 2026. [5]
Implications for Factors
For transportation Factors, the 2026 outlook could mean several strategic adjustments:
Credit Risk
Carriers heavily exposed to spot freight, thin margins, or regulatory compliance vulnerability (including English-proficiency risk) will warrant increased scrutiny.
As attrition reduces total carrier pool, fewer carriers may bid on marginal lanes - raising pricing pressure and default risk for those still operating.
Sudden driver shutdowns tied to enforcement or regulatory non-compliance could cascade quickly into carrier failure.
Portfolio Stress & Fraud Risk
While it seems Factors got a break in the last quarter of 2025 from pervasive fraud schemes, with contraction underway, fraud risk tends to surge - double-brokering, ghost-carrier schemes, forged PODs, manipulated confirmations remain salient.
Strategic Takeaways: Navigating the Structural Reset
The 600,000-carrier/driver exit estimate should be viewed not as a guarantee but as a realistic scenario given the confluence of suppressed demand, regulatory acceleration (including driver English-proficiency enforcement), and margin erosion.
Carriers that will thrive in 2026 will be those with financial strength, compliance discipline (including driver language and safety credentials), asset-light models or renewal-prudent strategies, and exposure to specialized freight segments.
Factors that modernize their underwriting, incorporate compliance-risk and cyber risk into carrier selection, embrace technology for monitoring and fraud-reduction, and diversify portfolios across carrier size/segment/geography will be better positioned.
The structural purge creates quality but not quantity of Factor opportunities: Carriers that survive this reset may command better pricing, stronger broker/shipper relationships and more stable cash-flows.
There are three cases for the carrier sector in 2026. Let’s gauge these cases in May and September when we are together:
1. Base Case: Gradual Stabilization (Most Probable)
Under the base scenario, the trucking market moves toward slow stabilization rather than a rapid recovery.
Key Characteristics:
Freight volumes return to modest growth (4-5%).
Carrier exits continue through mid-2026 but at a decelerating rate.
Spot rates recover gradually, tightening more meaningfully by late 2026.
ELP enforcement continues but is orderly and slowly tightens capacity
Factoring environment remains risk-elevated but manageable.
Implications for Factors:
Invoice size improves, attrition stabilizes.
Dispute volumes stabilize but do not materially improve.
Client Portfolio testing remains essential.
2. Upside Case: Stronger Capacity Rebalancing
The upside scenario envisions a faster removal of excess capacity, resulting in more robust pricing power for the carriers who remain.
Key Characteristics:
Accelerated carrier attrition through ELP and economic factors tightens capacity sooner.
Spot van rates rise 6–8%, particularly in service-intensive lanes.
Carrier profitability improves and credit risk decreases.
Implications for Factors:
Lower dispute activity and reduced charge-back exposure.
Increased opportunities to finance well-capitalized mid-sized fleets.
Competitive pressures among Factors increase as better credits enter the market.
· Factoring volumes increase as carriers move more freight and generate stronger cashflows.
3. Downside Case: Extended Weakness
The downside scenario accounts for the possibility that 2026 freight demand underperforms expectations, or that regulatory enforcement accelerates driver attrition.
Key Characteristics:
Freight demand grows only 0-2% or remains flat.
Carriers exit due to cost stress plus ELP enforcement plus insurance revocations while capacity tightening lags
Spot rates remain weak as capacity fails to rebalance quickly.
Fraud activity rises: ghost carriers, double-brokering, POD manipulation.
Carrier shutdowns and Broker insolvency create pockets of defaults, dilution and loss.
Implications for Factors:
Elevated expected losses and dilution
Continued consistent portfolio triage.
Industry Predictions for 2026 (Across All Scenarios)
Despite differences among the scenarios, the core expectations are unchanged: freight volumes should grow modestly, rates are expected to recover later in the year, spot van rates should strengthen, and carrier counts are likely to contract back toward historical norms. What remains uncertain is the degree to which these forecasts ultimately improve.
I’ll be back in March to discuss some developing case law that affect Factors. Happy Holidays, and here’s to an improved 2026.
About David Jencks, Esq.
David Jencks is an attorney with more than 25 years of experience in transportation and transportation finance. He represents factors and transportation companies in both transactional matters and litigation. David is a member of the Transportation Lawyers Association and serves as co–general counsel to the International Factoring Association. For nearly two decades, he has been a featured keynote speaker at the IFA’s Annual Conference and its Transportation Factoring Meeting. He has also led numerous trainings and webinars on all facets of transportation factoring, including account management, credit, technology issues, fraud prevention, risk management, problem-load resolution, billing practices, and legal compliance. David can be reached at davidjencks@jenckslaw.com.
[1] TransPlus, Trucking Industry Trends & Projections for 2026.
[2] Arrive Logistics, Truckload Freight Forecast 2025–2026.
[3] C.H. Robinson, North America Freight Market Update (2025).
[4] ACT Research, Trucking Industry Forecast for 2026.
[5] Exclusive Transportation for Industry, Hot-Shot Trucking Market Outlook for 2026.