Soaring US freight costs are not just about fuel. A key contributing factor is a shrinking supply of truckers, which is partly due to stricter immigration enforcement affecting the availability of drivers crossing the border from Mexico. This labor shortage has helped push shipping rates to unprecedented levels.

According to Travis Kalanick, trial lawyers and insurance companies are the main forces behind bad transportation regulations. He argues that insurance companies are not incentivized to eliminate accidents, as their business model relies on making a margin on predictable risk. More accidents, as long as they are priced correctly, mean higher premiums and a larger business.

In an effort to increase driver supply, major trucking companies supported deregulation that enabled 'CDL mills' to issue licenses with minimal training. This flooded the market, destroying their own pricing power and contributing to a 40% rise in fatal accidents.

A vast ecosystem of law firms, lobbyists, and compliance officers profits from navigating and creating regulatory complexity. This powerful economic interest group has no incentive to simplify the system, ensuring its perpetuation regardless of its harm to the public good.

In heavily regulated industries like insurance, large carriers must justify their rates to the government. Becoming significantly more efficient could lead to regulators forcing price cuts, thus reducing revenue. This creates a perverse incentive to maintain high operational costs and headcount to protect their pricing power.

When an industry is threatened by an external force like AI, consolidation is a key defensive strategy. Ironically, this is when regulators are most likely to intervene. Because these declining companies are knowable and easy to analyze, it makes it easier for regulators to block deals, preventing a necessary survival response.

A recent Supreme Court ruling upends the long-standing model where freight brokers were not liable for a carrier's negligence. This creates massive financial risk for brokers, forcing them to re-evaluate carrier relationships and potentially creating a premium for carriers with strong safety records.

Companies often advocate for federal preemption over state-by-state rules as a strategy for regulatory capture. By creating a single, complex federal standard, large incumbents can squeeze out smaller competitors who lack the resources to navigate the system. This contrasts with a ground-up, market-opening approach.

Recent enforcement against non-domiciled Commercial Driver's Licenses (CDLs) and English proficiency standards are a primary cause of the current rate surge. This is a structural supply shock, not a cyclical demand increase, as it removes drivers from the market, complicating hiring for many fleets.