Market Shifts, Fleet Trends & What's Next with James Menzies

In this episode, James Menzies, Editor of Today's Trucking and TruckNews.com, returns for a timely discussion on the key forces shaping the transportation industry in 2026. From shifting market conditions and regulatory developments to fleet purchasing trends and the outlook for the months ahead, James shares his insights on the challenges, opportunities, and uncertainties influencing the industry today, and what they could mean for carriers, fleets, and equipment buyers moving forward.

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Welcome And Mid-Year Setup

Jason Cuddy 0:15

Hello, welcome to another episode of the Transportation Exchange Podcast presented by Rush Trucks of Canada. I'm your host, Jason Cuddy, and joining us today for a mid-year review is James Menzies, editor of today's Truck In Truck News. James, welcome back to the podcast again.

James Menzies 0:29

Thanks, Jason. It's always fun to catch up with you.

Jason Cuddy 0:31

Yeah, we're a little overdue on this one as we speak. It's August here of 2026. So there's been a lot of moving pieces and probably a lot of more moving after we talk, but we'll kind of do a snapshot of where we are today with regards to the industry. It's been it's been an interesting year, uh, you know, kind of as we predicted it would be uh back at the end of last year. So maybe start as we normally do.

Trailer Orders Jump And Why

Jason Cuddy 0:50

Trailers usually delete an indicator of the industry. What uh what are you seeing out there?

Speaker 1 0:54

Yeah, trailer orders are up actually quite quite sharply. The the first or the most recent data we have is from July, and orders were up 130% year over year. So that's really encouraging. Fleets are are beginning to replace some of those trailers that are getting along a little bit long in the tooth. And also there's some concern about the tariffs and the impact that's going to have on trailers. So I think that the fleets are trying to get those those orders locked in. Um, one manual manufacturer, Wabash, actually pushed forward it's the opening of its 2027 order ports because it sees very strong demand through the end of the year. So um that's a good sign for the industry because as you said, trailers ironically tend to lead when it when it comes to uh fleets feeling better about where they are with their with their capital

Class 8 Demand And Sold-Out Slots

Speaker 1 1:36

decisions.

Jason Cuddy 1:36

Yeah, I know for sure. I'd usually is the case and traditionally behind that would be your you know your class eight and your medium duty side. What uh what have you seen out there with regards to the that's positive too?

Speaker 1 1:45

I mean, uh class eight orders in July are up 75% year over year. And um by all accounts, the the OEMs are pretty much sold out for the rest of this year. And you can say, well, maybe that's because of the pre-buy for 2027. I don't know if that's the case because orders have really just started coming on stronger over the last couple of couple of months, really. So um that's a good news story. Fleets are are buying new equipment again, and um, I don't think that it's because they're they're looking to grow. I don't think the environment really supports that, but at least they're replacing older equipment right now, and the OEMs are finally have some confidence that they can they can ramp up production at the plants going into next year.

Jason Cuddy 2:22

Yeah, definitely. I think you know, we see in our world is the you know, the order board for for new orders to put in definitely sold out, you know, for the most part across the product lines. And to your point, all the other OEs are are about the same. And I think part of it is you know customer demand. The other part might just be dealerships getting in front of you know the potential cost uptick next year we might see with regards to you know potential changes or tariffs or basically the unknown, you know, trying to

EPA 2027 Rules And Real Costs

Jason Cuddy 2:43

do that.

James Menzies 2:43

Yeah, that's that's really interesting because we don't know whether the cost increase is going to be next year. I mean, we thought we knew, but then everything changes, right? In this world, everything is constantly in flux. So there there was some um the there was some talk about whether or not the EPA 27 emissions rules would be maintained, and they will be based on on what we hear now. The Knox limit of 0.035 grams per horsepower hour, that's going to stay. What's not going to stay is the extended warranty coverage that was being forced upon the OEMs by the EPA. They wanted them to guarantee the after-treatment systems for 450,000 miles, as opposed to the 100,000 miles that it is today. And that was going to be where a lot of the added cost came in. And people were talking about $20,000 or $30,000 more for a new class A truck with EPA 27. That seems to no longer be the case. Now we're talking about a more modest price increase of maybe $5,000, $6,000. And at the same time, the EPA has given the OEMs a little more flexibility in how they roll out those engines. So we're just starting to hear now from the engine manufacturers what they're going to do with that. I know Daimler has said that they're going to go all in on EPA 27 starting January. I think you you'd know better than me. I think international is just sort of waiting to see what the market appetizes like. And comments has come out and said that they're going to um they're going to have a two-engine strategy, at least initially, and they will pay some fines for those non-EPA 27 compliant engines, but it might ease um the concerns that that any fleet buyers have on what those engines will entail.

Jason Cuddy 4:14

Yeah, I agree. And I that's kind of been good that they've been allowed to have that kind of split split decision going to market, you know, obviously for audio, but Cummins definitely is is you know taking advantage of it. And I think to your point, it helps with the you know the the truck OEs to be able to still carry certain engines for certain product lines as as things were you know changed and evolved for for the the launch of the different engines with Cummins. Um, you know, but also with regards to new engine rollouts, is you know, you know, nothing ever goes perfectly smooth on day one. So by and maybe not having all the you know engine manufacturers change over on January 1st might also help the industry a bit too, where you don't have you know crazy, you know, potential delays in production. You can everything kind of be spread out a bit. So no one OE is going to be handcuffed by you know a major rollout of the engines. So that's been nice to see. And I think it'll give you know a little bit of uh certainty into the market, knowing, okay, you know, there's still some you know legacy engines that we can at least pull forward until you know we have confidence in in the new technology as it rolls out through next year.

New Engine Oils And Shop Readiness

James Menzies 5:11

Yeah, and I I think that um another thing that isn't that well understood right now is that with these new engines comes a new category of engine oils. And so fleets also have to think about when they're gonna be able to access the the new oils, the CL4 and FB4 oils that will be coming online in January and are intended for the EPA 27 engines. Um, they need to they need to plan for that. They need to know when their oil supplier is going to be able to provide those oils, and then they have to plan when they're gonna transition over to the new oils. So it's not just the engine itself, it's the oils that go in the engines that are gonna change in the new year.

Jason Cuddy 5:43

Yeah, and and to your point, and there's a whole bunch of other items soft to that as well, you know, like the trainings for all the shops and the technicians on on the new technology parts. There's, you know, there's a lot of things behind the scenes other than just the new engine block in a in a truck that that is changing and needs to be supported and rolled out, you know, as smooth as possible. Yeah, I think any flexibility that um the fleets can can receive is is going to be welcomed. Yeah, definitely agree. And then, you know, tied to that, so that's the EPA side, the the constant unknown back and forth we're seeing in the industry that that probably causes the most uncertainty um with regards to at least purchasing

Tariffs Reshape Freight And Trade

Jason Cuddy 6:16

new equipment. Obviously, it affects rates, affects everything, is has been the ongoing you know, tariff strategies um that we see, you know, some stuff's on, some stuff's off, whether it applies to the goods that the carriers are moving back and forth, and that slows things down, or actually impacting, you know, the products that they're looking to buy for their fleets. You know, what uh it's hard to say what we've seen, but you know, kind of overall, what's been the the industry's you know input as far as how how much kind of havoc the tariffs have created to this last year, anyways?

James Menzies 6:42

It kind of depends on what commodity you're hauling. Obviously, if you're hauling steel, you've been hit hard. You've been hit hard with those 25% tariffs. And uh if you're hauling automotive parts, you've been hit hard as well. Um, that's where the most of the uncertainty seems to be. And then other folks, and a lot of the the impact of the tariffs is just changing how trade flows. You know, at one time there might be more northbound than southbound, or vice versa. That's really changing beyond the traditional norms that the fleets used to be able to count on. Um, and then what commodity might might be targeted next. That that's a concern as well. So the good news is um, the good news is fleets seem to be doing a lot better this year in general, if you look at the big picture, and that's largely because not because freight is booming and not because everyone's confident in the the future of the the economy with all these tariffs, it's more to do with changes to enforcement on both sides of the border, but especially in the United States.

Rates Rise Then Briefly Cool

James Menzies 7:37

So we saw spot market prices went up 47% year over year, and that uh was for the van segment back in May. And then they've weakened, you know, right after all the the big fleets reported their second quarter earnings, and most of them declare that the freight recession after three plus years has finally ended. Now we see a softening in in the rates almost immediately. Um now, hopefully that's just a blip. Um, you know, in August rates were were fairly weak relative to July. But is that going to be a trend or is that just a blip because no recovery is a straight arrow?

Jason Cuddy 8:11

Fair. Yeah. I mean it's it's summertime too, right? So you're you're a few weeks away from the big quick Christmas push, right? So that'll be interesting to see what that does with regards to the market, right? It's September is usually your your your run to stores from you know from shipping containers and DCs out and making their way out. So the next big wave of of consumer purchasing is is on the horizon, anyways.

James Menzies 8:30

Yeah, I I think everyone would like to see a recovery that's driven by robust freight growth. We're just not seeing that right now.

Enforcement Crackdown Pulls Capacity

James Menzies 8:36

Freight is steady. I mean, it's not declining, which is a good thing, but at the same time, so much capacity is being stripped out of the US market. And some of that's about what we talked about six months ago. They were starting to crack down on English language proficiency. Yeah, non-domiciled CDL holders who somehow got their license in the United States without being a legal resident. Those people are being stripped out. At the same time, a lot of fleets are going broke right now. A lot of them hung in as long as they could, and now they've gone bankrupt. So there's a lot of consolidation and a lot of capacity leaving the market, which that's one way you get a recovery when it comes to rates. But it, you know, I think everyone would prefer to see strong freight growth, and that's just not there yet.

Jason Cuddy 9:14

Yeah, and I think tied to that for the Canadian side. Obviously, you've seen some bankruptcy since we last talked, unfortunately. But the other part is there's definitely a crackdown from the CRA side, too, is how recoveries are classified from a from a tax point of view, and that seems to be maybe not directly impacting it, but you know, maybe you can kind of dot some follow the dots and piece it together. But definitely there's there's a crackdown in Canada with regards to that as well.

James Menzies 9:34

Yeah, we're we're seeing real evidence of that crackdown, uh, both on the driver side, who are getting audited by CRA and in some cases being um deemed a personal services business and having taxes, um, tax claims denied, and at the same time, uh audits, um, federal and provincial audits of some of the carriers that misclassified drivers, and

CRA Audits And Driver Classification

James Menzies 9:54

they're receiving some pretty big hefty fines. So that could trim some capacity out of the Canadian market as well.

Jason Cuddy 10:00

Yeah, so there's that's you know, it's been a big push. I know a lot of you know other carriers have been pushing for that, just you know, for fair playing ground, you know, everybody. So there's progress there, finally. Yeah, it's taken a while. You know, progress there, and there's definitely, you know, more push for from a training point of view, make sure that gets, you know, again auditing the truck driving schools, trying to trying to clean everything up where it needs to be clean, you know, make it fair so that you have the right people in the right place doing the right thing.

Training Schools And Safety Data Gaps

James Menzies 10:23

Yeah, and we're seeing evidence of that in several provinces. I think Alberta has been really aggressive lately. They they recently put 20 training schools and carriers out of business. Um, Ontario is getting a little more serious. Uh, they had a really damning auditor general report on the state of qual of training here in Ontario, which actually led Quebec to put in some initiatives so that they um they have higher expectations of people that relocate from Ontario and Quebec and want to exchange their license for a Quebec license. So it's happening, but it's piecework right across the country. And that that's what's a little bit difficult. It would be nice. It's still amazing to me. We don't even have one national database of all truck carriers and their safety records from coast to coast. Why we don't have that? It seems like it'd be an easy thing to institute and a good starting point for being able to crack down on some of these fleets, especially the so-called chameleon carriers that go to business and then pop up under a different name in a different province a few months later.

Jason Cuddy 11:15

Yeah, and that's been in the news the last little while. We've had a few of those, you know, the kind of the Midwest area of Canada uh pop up in the news for all the wrong reasons. And I know, you know, the guys like Mike at PMTC have been pushing hard to, to your point, it it shouldn't be that hard to standardize a safety rate. I mean, you obviously it exists in the US from a from an overall general point of view. You still have states, you know, have some some say, but it at least you could follow fleets a lot easier, right? You can't just hop from one province to another and you know, especially for you know, for the customers who are using them, you know, the brokers who are using them, it's hard to you know validate who's who and and are they actually a clean, do they have a clean record? Absolutely.

Pre-Buy Timing And EPA 2027 Confidence

Jason Cuddy 11:50

Yeah, so normally I'd say at this point we'd we'd say is you know what what's our outlook for the pre-buy of 27? But I think I think it's it's there, I think it's happened, you know, what whatever is.

James Menzies 11:58

Yeah, it's if you if you're if you're waiting now to pre-buy, you're too late. You can't get an order slot right now. So you you're gonna have to wait and see what you're dealt, uh, what hands you're dealt in 2027. But by all accounts, I don't think there's much to be afraid of. There's not a major significant change to the engine technology coming in 2027. A lot of it is just more of the same of what you have today. And um, you know, they've had they've been working on it for several years. The OEMs didn't want to see this rule go away because they've spent billions of dollars developing the EPA 27 engines, and every OEM I've talked to is pretty confident that it's gonna be a better product for the end user. So it's not something you have to be fearful of. And yes, if it costs five, six grand more, well, hopefully you're gonna get some operational efficiencies out of that. That's gonna help you recover that pretty quickly.

DEF Derate Changes And Dealer Updates

James Menzies 12:43

And the other thing that's been happening with the EPA in the US is they've really relaxed the rules around the diesel exhaust fluid uh to the point now where D rates are going away. You know, that's gonna make everyone happy if you don't have a D rate, but it doesn't mean that you can operate without the DEF. You still have to have the DEF, you still have to have a functioning def system, but it's not gonna shut you down to five miles an hour almost right away. Um, you're gonna have more warning, you're gonna have more time to fix any issues that you have with the deaf system. Uh ultimately you're still gonna have to use it, but there's less likely less likelihood of being stuck on the side of the road trying to deal with that situation.

Jason Cuddy 13:18

Yeah, that's huge. I think that's been a kind of a quiet one that's that's snuck through. You know, even for us, I mean, we're aware of it, and obviously you can come in and and and get the updates done. Um, but it's been, I guess given all the other noise, it's kind of hasn't been such a big one. But to your point, you know, for anyone who's who's had a truck where it it basically goes in limp mode, right? You've you've been completely handcuffed, like you said. If it if it hits that point where even if it's a bad sense or whatever it is that that triggers that, you are, you know, whatever, five miles an hour down the highway, you're done until you get towed back, right? So at least this will allow you to, you know, validate what is the actual cause, you know, and then bring it in, get it fixed without totally kind of shutting you down on the side of the road, which which I think is huge for a lot of carriers.

James Menzies 13:55

Yeah, and I don't think it's well understood currently. I think a lot of people think, well, we don't have to use deaf now, they're taking deaf away. That's not the case. However, you are gonna have more flexibility, and I would urge everyone to get into rush or get into your dealer and and get those updates because that's gonna afford you a lot more flexibility when it comes to dealing with deaf.

Jason Cuddy 14:11

Yeah, definitely. Yeah. So there's been some, you know, despite all the, I guess, the chaos of it, there's been a lot of positives kind of come out of it. And to your point, you know, traditionally, every time you you the new engines roll out, whether it's to meet EPA regulations or not, they're always seem to be significantly more fuel efficient, at least in the past generation with that OE, anyways. So, you know, so if the uptick in you know capital cost isn't too drastic, that might be you know taken care of by a you know savings in fuel over the lifetime of the vehicle. So to your point, it might not be as as in as crazy of a bump we were expecting, you know, two, three years ago when this was kind of on the horizon.

James Menzies 14:45

It's probably for the best, too, for the entire industry, because when you have a $20,000, $30,000 cost increase, like we were first hearing, then you know, people go out there and they buy all kinds of kinds of trucks and they might not need them, and then next year there's no demand. And then the factories have just ramped up, yeah. All of a sudden they have to lay people off and they slow down production. It's very disruptive. And so I think this is a more palatable cost increase that people can can get back through the operation of the trucks. So all things considered, I I think EPA 27 is going to be a good thing for the industry.

Jason Cuddy 15:15

Yeah, hopefully it should be good. And then we'll see as the the engines roll out, you know, how how that that happens and and hopefully it's as smooth as possible when when you have a new engine rollout, but we'll we'll see what uh what 27 brings. You know, so having said that, we've got a few months left. What um, you know, from the carriage you've talked to different associations, you're you're plugged into what what are you seeing as the uh the outlook for the rest of this year for the industry?

James Menzies 15:36

I

Back-Half Outlook And Border Bright Spots

James Menzies 15:37

see a lot more optimism than I've seen in years um from the fleet executives that I speak to. Uh largely that is because the rates are going up. Um, rates are supporting the business, they're they're starting to return to profitability after many, many quarters of of really difficult times. And there's no indication that this enforcement crackdown is gonna slow. Um, so you know, there could be a couple hundred thousand non-domiciled CDL holders in the US that are gone. And we're just at the start of that right now. So as that continues to increase, capacity continues to leave the industry. It should be good for rates. So I think fleets are are pretty optimistic. Um we've got a great new bridge now connecting uh Windsor and Detroit, which is a lot less uh expensive to cross. So that's good news for for fleets as well. It took a while to get that open, but with that um with that done now, uh by all accounts it's a beautiful bridge and it's really efficient. So that's good for cross-border haulers. We're still waiting for more details about a trade deal between Canada and the US, whether that be USMCA or something completely different. Um the details are, I think we're gonna have them very soon. And then it's gonna take a little time, I think, to figure out what those details mean to the trucking industry, who benefits and and who maybe doesn't. Um, but the general mood is is better than than I've seen it in in quite some time as we head into the back half of um of the year here. So, you know, knock on wood, try to be try to be optimistic, but it's it's it's still just a crazy time for the industry and politically, geopolitically, um there's a lot going on and and things can change in a hurry. So it's it's hard to make any hard and fast predictions right now, as you know.

Jason Cuddy 17:14

Yeah, no, it's fair. I but I think that's an overall you know temperature check of the industry. I think it it's it's definitely more positive than it has been in the last little while. And I think maybe part of it's you know, everyone's learned how to navigate the uncertainty and just kind of you know plow through and just you know roll with it for the most part. You you can't control a lot of it. So how do you how do you kind of insulate yourself from you know from the craziness that may impact you and then find a way to just keep moving forward and and conducting business with with what you know as of today and recognizing tomorrow can change for the good or for the worse? But you know, all you know is what you know today and keep moving forward. I agree. I think overall the industry seems to be a little bit stronger than it has been from the last time we chatted.

James Menzies 17:51

Yeah, every time we chat, we say this is a resilient industry, and if they've survived the last three years, yeah, that's the longest trucking recession that that we've seen in the history. Um, you know, some people call it a uh a freight recession, and my friends at FTR say, no, no, no, it's not a freight recession because freight hasn't shrunk, it's a rate recession because there's just too much trucks. This is still that hangover from COVID that we're dealing with. And and finally, through increased enforcement, it's it's being it's being managed and that excess capacity is being taken from the market. So that that's all good for the trucking companies that that are out there today.

Jason Cuddy 18:24

And I think that uh we'll see some pretty good quarters ahead. I think so. Yeah, and to your point, it's a resilient industry, uh, it's very cyclical. So, you know, you do have very strong ups and very strong downs. Um, and but the only unknown that we've seen is this down has been longer than normal. You know, so normally you're on the up, you know, a little bit sooner than later, but hopefully this is this is the start of the uptick that that we're starting to see, and then you know, the the business in the industry kind of grows back and you know we kind of get back to what we had a few years ago and and keep moving forward. So, but it is resilient, that is true. Yeah,

Closing Thanks And Where To Listen

Jason Cuddy 18:55

excellent. Hey, well, I want to thank you for taking the time to chat with us today. Uh that concludes episode. And uh catch past episodes or current episodes, check us out at transportation exchangepodcast.ca. And until next time, thanks for watching.