Wells Fargo upgrades transport outlook on tight capacity, intermodal gains

Investing.com - Wells Fargo reports that a senior vice president of fleet and transportation at a large shipper with approximately $150 million in spending across modes sees improving freight conditions, tight truckload capacity, and rising prices ahead. The shipper is shifting more volume to intermodal transport due to cost savings versus truckload and better service acceptance rates.

All-in truckload pricing is more than 25% more expensive than intermodal at approximately $2.30 per mile versus $1.70 per mile for intermodal. The shipper expects intermodal rates to increase high single digits next year compared with 3% to 5% in 2026, and anticipates potentially higher intermodal fuel surcharges given a 67% discount to truckload.

The shipper believes truckload supply and demand will remain tight due to enforcement and demographic challenges. The company plans to extend contract length, increase use of higher-priced dedicated capacity, and expand its private fleet this bid season to provide insulation against rising costs.

The Montgomery ruling is reinforcing spend consolidation toward larger, scaled providers across brokerage and asset-based carriers. Shippers were caught off guard by recent court rulings, and internal counsel is actively reassessing broker liability exposure.

Wells Fargo favors JB Hunt in intermodal as its growth potential remains elevated and sufficient to offset costs in 2027. The firm also prefers XPO and Old Dominion Freight Line (NASDAQ: ODFL) in less-than-truckload where pricing and positive fuel exposure likely benefit profitability.

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