The News
Conagra Brands says a shortage of truck drivers is pushing its freight costs up twice as fast as it planned. CFO Dave Marberger told analysts on last week’s earnings call that transportation inflation is running at about double the company’s budget, “really driven by the driver shortage and oil prices.”
The maker of Birds Eye and Healthy Choice now expects total cost inflation at the high end of its 5% to 6% range. Cheaper protein covered the freight increase in the first quarter, but Marberger expects inflation to run higher in the second and third quarters.
Why It Matters
Conagra’s freight bill is rising while the trucking market moves less freight, not more. Carriers have pricing power because trucks and drivers are leaving the road, not because demand is growing.
So a transportation team heading into 2027 bids cannot count on a soft economy to bring rates back down.
By The Numbers
The wider market shows the same split Conagra described:
Spending up: Shippers spent 28.1% more on trucking in the second quarter than a year earlier, US Bank found.
Shipments down: They moved 2.8% fewer loads over the same period.
Rejections: Contract carriers are turning down about 14% of the loads offered to them, FreightWaves data show. Its analysts treat about 7% as a balanced market.
Routing guides: More than 6% of loads now fall through every carrier in the routing guide, well above last year, C.H. Robinson said.
So freight costs more even though there is less of it, which happens only when capacity is shrinking.
How It Works
Two things are taking trucks off the road:
Enforcement: The Department of Transportation has revoked 28,000 licenses held by non-domiciled drivers. It has also put more than 20,000 drivers out of service for failing English proficiency checks since June 2025, it said in May.
Smaller fleets: The Class 8 truck fleet is 1.6% smaller than a year ago, Arrive Logistics says.
When a contract carrier runs short of trucks, it turns down the load. The load then drops to the next carrier in the routing guide at a higher rate, or out to the spot market. That is why Conagra’s bill moved in the middle of the year instead of at bid time. Routing guides have been “falling apart” since March, J.B. Hunt sales chief Spencer Frazier said in June.
Some shippers are moving freight to rail instead:
Domestic intermodal volumes hit an all-time high last week, FreightWaves reported.
Pushback
Two things to weigh before calling this a driver story:
Fuel is doing a lot of the work. FTR analyst Avery Vise put the revoked licenses and English proficiency removals at less than 1% of Class 8 drivers. He said fuel costs tied to the Iran war did more to lift spot rates. Conagra named oil right next to drivers.
September loosened. Dry van rejections fell below 11% after Labor Day while spot rates stayed under their summer highs, Arrive Logistics said.
So some of the squeeze will ease if diesel does.
What’s Next
Trucking employment rose over the year in September for the first time since April 2023, though only by 800 jobs, according to Labor Department data. If that hiring holds, capacity starts to come back. Until it does, Conagra’s next two quarters will show what the squeeze costs a shipper.
