Freight brokers are going to have to do some tightening up of their carrier vetting process, including providing documented proof of its rigorousness, in light of this month’s U.S. Supreme Court decision. Until now, a 1994 federal law shielded them from liability under state tort laws in most accident cases. But another “new normal” has set in.
Elsewhere in the news, trucking associations are voicing their displeasure at a proposed fuel tax holiday — whether three months or more open-ended — while carriers have resisted the urge to reduce their 2026 capex budgets in their Q1 reports, signaling optimism about demand. Here’s more on what we’re seeing that’s affecting the logistics sector.
Supreme Court Resets Bar for Brokers’ Accident Liability
In a 9-0 decision, the Supreme Court on May 14 ruled in Montgomery v. Caribe Transport II LLC that freight brokers were no longer exempt from damage claims arising from accidents involving carriers they contract with on behalf of shippers. The decision could tighten capacity and boost rates as brokers take a harder look at carriers that lack a safety rating from the FMCSA.
The major decision (you can view the oral arguments here) removes legal ambiguity that had some courts ruling that a 1994 federal law allowed the cases to go forward against brokers, based on a “safety exemption,” while other courts found it shielded them.
Now freight brokers will have to prove in court that they exercised a “reasonable standard of care” in selecting a carrier if they find themselves on the business end of a negligence lawsuit.
One route to achieve this is using monitoring and screening software that analyzes publicly available safety data as part of the carrier vetting process.
Brokers also need to develop a policy that clearly defines their carrier vetting criteria; to be able to prove it is consistently applied with every carrier and load; and be able to provide documented evidence to back up that claim.
Before the new ruling, the Federal Aviation Administration Authorization Act of 1994 effectively blocked states from enacting laws related to a broker's services, preempting state tort lawsuits against brokers for negligence in carrier hiring.
But the high court found that a section of the FAAAA that gave states regulatory authority over safety involving motor vehicles applied to cases in which freight brokers were sued for accident liability. Previously, brokers in some cases were able to claim such actions were an attack on their business function as providers of transportation services, thus preempting liability under the federal law.
The case arose from a 2017 accident in Illinois in which truck driver Shawn Montgomery suffered severe injuries when a tractor-trailer driven by Yosniel Varela-Mojena rear-ended Montgomery’s stopped vehicle. Varela-Mojena was employed by Caribe Transport of Indiana, and the shipment had been arranged by freight broker C.H. Robinson. Montgomery sued the broker, claiming it “knew or should have known” that Caribe was an unsafe carrier. Robinson moved to dismiss the case, citing preemption under the FAAAA. A district court and appellate court agreed with C.H. Robinson, while two other appellate courts ruled in favor of Montgomery.
Trucking Groups Oppose Proposed Fuel Tax Holiday
A proposal from President Trump to suspend the federal tax on motor fuels for an undefined period is being opposed by trucking groups that say the measure will only yield minimal benefit for consumers while withholding funds for infrastructure. An alternative plan from Sen. Josh Hawley, R-Mo., would limit the tax holiday to 90 days, from June 1 through September 1, while giving Trump the authority to extend it.
In a joint statement, the American Trucking Associations, Truckload Carriers Association, and National Tank Truck Carriers said the fact that the federal tax is collected at the wholesale rather than the retail level is the reason for the negligible savings for consumers.
An analysis by the Penn Wharton Business Model estimated that a four-month federal fuel tax holiday would reduce the Highway Trust Fund by about $11.5 billion, while saving consumers 13.2 cents per gallon for gasoline and 14.6 cents per gallon for diesel.
“America’s highways are truckers’ shop floors,” the groups said in the statement. “While trucks are only four percent of vehicles on the road, the trucking industry covers nearly half of all Highway Trust Fund revenue. We look forward to working with members of Congress on solutions that deliver meaningful relief to consumers while preserving the long-term integrity of our transportation system.”
Carriers Hold the Line on Capex, Signaling Market Confidence
In a sign of plans to increase capacity and catch the updraft in a hoped-for market turn, several carriers, both truckload and less-than-truckload, decided against adjusting their fiscal year capital budgets downward when reporting Q1 results, according to Trucking Dive. A year earlier, J.B. Hunt, Old Dominion, Schneider, and Saia all used the occasion to modify their capital forecasts.
“We believe it is important to invest throughout the economic cycle to ensure that we always have the capacity for new growth opportunities,” Adam Satterfield, Old Dominion Freight Line’s EVP and CFO, told the publication.
Out of nine trucking firms analyzed in the report, just Knight-Swift opted to reduce its capex line by $25 million, to a range of $600 million to $650 million.
For some context, the Logistics Managers’ Index (LMI) for April increased from 65.7 to 69.9, the strongest growth in the logistics sector since March 2022, at the height of the COVID-fueled boom.The LMI acts as an indicator of logistics demand, with anything north of 50 defined as growth. Among the individual components, transportation prices surged (89.4 to 95), utilization increased (62.9 to 69.6), while capacity shrunk (39.2 to 28.4), the second lowest reading ever.
Board Approves FedEx Freight Spinoff
In a move that has been signaled for the past several years, the board of FedEx voted on May 13 to approve the spin-off of the company’s freight division, the largest LTL provider in the U.S., as of June 1.
In many combined entities like FedEx Corp., individual units have different economics, go-to-market strategies, and competitive dynamics. Capital allocation, management attention, and KPIs are often biased toward the higher‑profile units, in this case, parcel and air. Spinning off freight will let FedEx focus on parcel and air, while FedEx Freight can be run as a pure‑play LTL carrier. This will allow it to optimize for network density, dock productivity, and yield without needing to fit air or ground strategies.
Earlier this month, soon-to-be FedEx Freight CEO John A. Smith (no relation to company founder Fred Smith) told the audience at ACT Expo in Las Vegas that the spin-off strategy will involve sustainability, predictive AI, and network optimization. The overall focus will be on improved operational efficiency through technology.
Federal Court Blocks Trump’s 10% Tariff
The Court of International Trade (CIT), a federal trial court that specializes in cases involving international trade and customs laws, on May 7 struck another blow against President Trump’s trade agenda. In a 2-1 decision, the court ruled in favor of the state of Washington and two companies that had challenged the 10% tariff put forward after the Supreme Court’s February ruling against the administration’s worldwide reciprocal tariffs.
The court found that Trump lacked the legal authority under Section 122 of the Trade Act of 1974 to impose the 10% tariff, which went into effect on February 24 and was set to expire on July 13. Section 122 allows presidents to impose temporary tariffs of up to 15% to deal with “balance of payment” issues — i.e., stress in the United States’ international payments position.
While the CIT ruled in favor of Washington state and two companies that had challenged the policy — New York-based Burlap and Barrel and Basic Fun Inc. of Boca Raton, Florida — the 10% duty remains in place for most importers, pending the outcome of the appeals process. The claims of 23 other states were denied due to lack of standing because they have not been, or expect to be, subject to Section 122 import duties.
Court Rulings, Federal Moves Reshaping Logistics Landscape
With the Montgomery decision, freight brokers now have exposure in legal actions for accident damage and injury claims against carriers they have engaged. As a result, brokers have their work cut out to mitigate that exposure risk through diligent documentation of their carrier vetting and safety monitoring processes.
Concerning the proposed fuel tax holiday, trucking groups have made a strong case against the administration’s rationale, saying the limited consumer benefits are far outweighed by the loss of funding for highway infrastructure maintenance.
Wicker Park Logistics, a leading provider of 3PL services, uses an enhanced carrier vetting process that includes thorough background checks, insurance verification, performance metrics, regular audits, and ongoing training and communication. This not only ensures compliance and safety but also improves the quality of service we provide to our shippers.
We take a tech-driven, consultative approach to craft end-to-end solutions tailored to your specific transportation needs. From all aspects of inbound logistics to transportation management, freight consolidation, expedited, customs clearance, and regulatory compliance, we’re your one-stop shop for exceptional services and consistent results. Contact us today for a quick quote.
