RXO says the truckload market flipped against brokers late in the third quarter: buy rates climbed as carrier capacity exited, while contracted sell rates lagged. The result is the classic brokerage “rate squeeze” now pressing RXO’s largest business — and the company expects that pressure to persist into the holiday quarter. In Q3, revenue reached roughly $1.4 billion, brokerage gross margin landed at 13.5%, and management guided Q4 brokerage margins down to 12%-13% with overall brokerage volumes slipping low single digits. LTL volumes were a bright spot, up 43% year over year, offsetting an 11% decline in full truckload. Adjusted EBITDA was $32 million.
Management’s explanation for the squeeze: capacity is thinning faster than demand, pushing up the cost to buy trucks on contracted freight where RXO’s ability to reprice is slower. Leaders said roughly 70% of truckload brokerage is contract-heavy today, magnifying the hit to gross profit per load. They also pointed to counter-seasonal tightening in September that intensified in October, with linehaul spot rates climbing about six cents per mile in the last two months — and acute tightness noted in California and Texas.
Investors registered the margin risk immediately. Shares fell sharply on November 6 after RXO posted a penny of adjusted EPS and lowered margin expectations, reflecting concerns that buy-rate inflation is outrunning sell-rate resets.
What’s changed in the freight backdrop? Public spot data still shows a tepid market overall, underscoring how quickly conditions turned inside certain lanes. As of the week ended November 4, DAT reported a national dry van load-to-truck ratio near 1.9 and linehaul spot rates of about $1.66 per mile — soft by historical standards. RXO, however, is signaling localized tightness and regulatory-driven capacity reductions that are not yet fully visible in nationwide indices. That disconnect helps explain why a broker with a large contract book can feel a margin squeeze even while headline spot averages look muted.
RXO also sketched what happens next. The company says the “squeeze dynamic” is likely to be most acute near term: buy rates have risen, sell rates on enterprise contracts trail, and accretive spot opportunities remain limited. To cushion the impact, RXO is leaning into cost actions expected to add more than $30 million of savings and is scaling AI-driven tools that cut manual work in areas like carrier support and last-mile photo validation.
For carriers, this is one of the first clear signs in 2025 that pricing leverage is shifting back — selectively. RXO’s commentary that buy rates moved up counter-seasonally and that two-thirds of its freight originated from tightening states in Q3 suggests owner-operators and small fleets concentrated in those pockets can command better prices, at least for now. Yet the lack of broad spot strength implies the window remains narrow and lane-specific, not a wholesale turn of the cycle.
For shippers, RXO’s guidance is a warning that contract portfolios set earlier in the year are under strain. If buy-side inflation persists through peak season, brokers will push for faster repricing or look to triage volume away from the most unprofitable awards. Meanwhile, RXO is using mix to stabilize results: LTL and last mile continue to outgrow a soft truckload backdrop, with last-mile stops up 12% year over year in Q3.
Bottom line for the 3PL set: RXO’s quarter shows how quickly a supply-led turn can compress contract-heavy brokerage margins before top-line pricing catches up. If lane-level tightness broadens beyond California and Texas and starts to register in national indices, the squeeze should fade as sell rates reset and spot contributes more gross profit. Until then, expect more emphasis on cost takeout, tech-enabled productivity, and mix shift to services with steadier margin — plus choppier earnings prints when buy rates jump faster than customers are willing to pay.
Sources: FreightWaves, RXO Investor Relations, Investing.com, GuruFocus, DAT Freight & Analytics, Nasdaq/Zacks
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