From the desk of Eric Heath
Last month, my colleague Reid Stack wrote in this space that public markets and private buyers were underwriting an earnings inflection that had not yet been reflected in most sellers’ reported results. One earnings season later, that gap has closed. The Q2 2026 results across rail, LTL, truckload, and brokerage confirm what buyers had already priced: the recovery is no longer a forward bet running ahead of the fundamentals. It is in the numbers, and it is broad. For owners who have spent three years hearing that the turn was coming, this is the quarter where the public record caught up with the argument.
The evidence is the most convincing I have seen in this cycle, and what makes it convincing is not any single result but the pattern across every mode. All three Class I domestics set quarterly revenue records, led by Union Pacific at $6.9 billion, up 12%. In LTL, XPO broke below an 80% adjusted operating ratio for the first time in company history. In comparison, Old Dominion lifted yield 15.2% against falling tonnage and tied its all-time earnings record. Pricing power of that magnitude, delivered against declining volume, means the discipline held through the trough and the operating leverage on a volume recovery is still ahead of us. In truckload, Werner grew one-way revenue per truck per week 27.7%, its strongest gain in a decade, and Knight-Swift reported June contract rates up double digits, with the reset reaching the contract book, where the bulk of carrier revenue is set. Brokerage delivered the cleanest inflection of the quarter: J.B. Hunt’s brokerage unit posted its first operating profit in fourteen quarters, and RXO’s adjusted EBITDA rose from $6 million to $40 million quarter over quarter. Reid framed July’s open question as durability: whether pricing would hold through the next bid cycles. The early answer is yes: spot has settled off its seasonal early-July peak, as it does every year, while holding well above prior-year levels heading into bid season.
None of these mean the operating environment is easy, and the hard parts are doing exactly what a supply-driven recovery should: separating operators. Diesel sits at a record seasonal high — roughly $5.40 a gallon nationally, up from $3.70 a year ago — which will make margin conversion choppier quarter to quarter, but also keeps capacity from returning and rewards the carriers whose surcharge recovery and pricing discipline were built before the market turned. The diligence bar rose again this month. Hub Group’s August 11 disclosure that it will miss a second consecutive 10-Q deadline, with a September 14 Nasdaq compliance date now in view, is a company-specific situation rather than a sector signal, but it is a timely reminder that buyers now underwrite the quality of a seller’s financial reporting as rigorously as the earnings themselves. And policy remains a timing variable rather than a directional one. The August 19 effective date for new 50% tariffs on roughly $20 billion of Canadian goods arrives with negotiations still live, which keeps raising the strategic value of customs capability and cross-border density. Union Pacific and Norfolk Southern completed their supplemental STB responses in late July and now point to a mid-2027 close. Separately, intermodal’s roughly 30% price advantage over truckload is pressuring regional carriers today, whatever that timeline holds.
The M&A implication is direct. We tracked 189 North American transportation and logistics transactions in the first half of 2026 — the highest first-half count in our database — with a balanced buyer set of strategics at 51% and sponsor-linked capital at 49%, and the view from outside our own numbers matches: PwC’s midyear outlook shows median sector deal multiples moving from 9.5x to 10.2x EBITDA in the first four months of the year. The premium is not going to the biggest businesses. It is going to the ones a buyer can least afford to have fail — differentiated capability, embedded customer relationships, and safety, compliance, and reporting practices that hold up in diligence. In July, Reid wrote that materially more sellers would reach market through the back half; our pipeline says that is now underway, which means the competition for buyer attention is building even as the earnings evidence improves.
If you are thinking about what this market means for your business as a seller, a buyer, or simply to understand what your company is worth today, I would welcome the conversation.
