Landstar has cut more than 35,000 carriers from approved network

Commercial Carrier Journal first highlighted the size of the reduction. Overdrive, a sister publication of CCJ, reported that Landstar’s effort initially focused on combating cargo theft and freight fraud, with the company deploying enhanced vetting technology, identity checks and stricter compliance measures.

Jacksonville, Florida-based Landstar (Nasdaq: LSTR) is a major asset-light transportation logistics company operating through a network of independent freight agents and third-party capacity providers.

Landstar’s approved carrier pool stood at approximately 64,600 at the end of the second quarter, down another 7% year over year after declining 19% in the first quarter, according to previous FreightWaves reporting.

Miller indicated that the company has no plans to ease its scrutiny of carriers.

“As new technologies and information become available, we’re going to continue to do just that, exactly what we’ve been doing,” Miller said. “We’re always looking for opportunities to drive safety, security, and service.”

Related: Landstar expects to emerge a winner in post-Montgomery world

Carrier vetting takes on greater significance after Montgomery

Landstar’s multiyear carrier purge takes on additional significance following the U.S. Supreme Court’s May ruling in Montgomery v. Caribe Transport II, which widened the potential liability exposure facing freight brokers over the selection of motor carriers.

The ruling has heightened concerns across the brokerage industry about how companies select and monitor carriers, potentially increasing the importance of documented vetting procedures.

Landstar CEO Frank Lonegro said during the earnings call that the company believes federal regulators need to provide clearer standards for the industry.

“We believe greater Federal clarity around carrier vetting and selection standards would help support a more predictable operations, insurance, and claims environment for truck brokers, carriers, and shippers,” Lonegro said.

Landstar reported approximately $10.5 million in unfavorable adjustments to prior-year claims during the second quarter. Three of the five claims responsible for nearly all of that adjustment involved truck brokerage operations.

The company has also said its scale, safety record, technology and insurance programs could become competitive advantages following Montgomery. Landstar recently signed an $18 million Midwest freight broker as an independent agent, and Lonegro said inquiries from prospective agents have accelerated since the Supreme Court decision was released in mid-May.

Landstar CFO Jim Todd said the decision means broker liability cases that previously may have been dismissed on federal preemption grounds could now have to be litigated.

“I think there’s certainly going to be some element of plaintiffs being more emboldened to pursue these cases,” Todd said during the Q2 earnings call.

Landstar nevertheless reported a relatively favorable insurance renewal after the Montgomery decision. Its auto liability coverage was effectively flat at its June 1 renewal, while broker liability costs increased about 3%, according to Miller.

Fewer carriers enter a tightening freight market

The removal of tens of thousands of carriers from Landstar’s approved pool also comes as the truckload market shows signs of tightening.

Lonegro said truck capacity “tightened significantly” during the second quarter and that conditions that had favored shippers since late 2022 were “shifting rather rapidly in favor of the transportation provider.”

Landstar’s total truck revenue increased 19% year over year to $1.33 billion during the second quarter, while loads increased approximately 2% and revenue per load jumped 17%.

National dry van spot rates — tracked via the SONAR National Truckload Index (linehaul only – NTIL.USA) — shows a seven-day moving average of linehaul spot rates excluding fuel. As of Monday, rates remain significantly higher on a year-over-year comparison from February through August. 

Why it matters: Landstar’s decision to eliminate roughly one-third of its approved carrier network illustrates how safety, fraud and liability concerns are reshaping broker-carrier relationships — and Montgomery could accelerate the pressure on brokers to become even more selective about which trucking companies haul their customers’ freight.