During the freight recession that’s plagued the trucking industry since April 2022, a huge problem has been excess capacity. The number of for-hire carriers in the market has grown precipitously over the last several years, with a massive increase in the pandemic years of 2020 and 2021.  

According to SONAR data, the total number of active for-hire carriers has risen by 74,000 since early 2018 to a total of 212,000. About a decade ago, in 2015, the total number was approximately 100,000 carriers. 

Meanwhile, as capacity has skyrocketed, freight volumes have barely budged, creeping up just 1.2% since March 2018. It doesn’t take a PhD in economics to know that when there are far more active carriers competing for effectively the same amount of freight, rates will suffer. 

On September 25, FreightWaves CEO Craig Fuller proposed a controversial solution in an op-ed: a permanent federal cap on the number of active carriers at 225,000 as a way to address the overcapacity mess. That proposal wasn’t exactly embraced by supply chain experts and industry advocates.  

The very next day, however, the Department of Transportation took major action that could result in a huge capacity correction and boost rates. 

What did the DOT announce? 

On September 26, Transportation Secretary Sean Duffy declared “emergency action” concerning how states issue Commercial Driver’s Licenses and Commercial Learner’s Permits to non-citizens. The emergency order requires states to immediately stop issuing non-domiciled CDLs and CLPs until they comply with a new FMCSA interim final rule. 

After a nationwide audit, six states were pointed out as egregious offenders of the licensing process: California, Colorado, Pennsylvania, South Dakota, Texas, and Washington. The Golden State drew particular ire from the FMCSA, with more than 25% of its 60,000 non-domiciled CDLs being improperly issued. California now faces the loss of $160 million in federal highway funds. 

Moving forward, non-citizens will not be eligible for a non-domiciled CDL unless they meet much stricter requirements: 

• Hold an employment-based visa 
• Undergo mandatory federal immigration status checks using the DHS SAVE system 
• Complete in-person renewals (online and mail-in renewals eliminated) 
• Have CDL expiration dates matching Immigration Form I-94 dates or expiring in one year, whichever comes first 

Why did the FMCSA take action? 

The stated reason for this crackdown was not to take capacity out of the market and boost rates; it was safety. The action comes on the heels of several fatal truck accidents caused by non-domiciled CDL holders in 2025, including a high-profile accident involving an undocumented immigrant from India in August. 

Secretary Duffy was blunt about the findings: “What our team has discovered should disturb and anger every American. Licenses to operate a massive, 80,000-pound truck are being issued to dangerous foreign drivers – oftentimes illegally. This is a direct threat to the safety of every family on the road.” 

The audit uncovered systemic problems, including CDLs issued to ineligible drivers and licenses remaining valid years after holders’ legal U.S. stays had expired.  

The FMCSA interim final rule follows the announcement of an audit of state CDL programs in June and new English language proficiency standards in May. 

What does this mean for carriers and brokers? 

If you hire or employ non-domiciled drivers, you need to be absolutely certain your drivers are complying with the law and you are completely compliant as a fleet. Even if that’s the case and your drivers are above board, the process of keeping those CDLs active will become more stringent moving forward. 

If you hire or employ non-domiciled drivers, you need to be absolutely certain your drivers are complying with the law and you are completely compliant as a fleet. Even if that’s the case and your drivers are above board, the process of keeping those CDLs active will become more stringent moving forward. 

Key risks for carriers: 

• Increased nuclear verdict exposure from employing drivers who may operate unlawfully 
• Insurance companies implementing policies preventing hiring of non-domiciled CDL drivers within a year 
• Heightened insurance scrutiny requiring license pictures, domicile verification, clean MVRs, and confirmation statements 

Key risks for brokers: 

• Legal culpability if loads are handled by drivers with invalid licenses 
• Need for extraordinary due diligence on carrier qualifications to avoid massive judgments 

What does this crackdown mean for the freight market? 

Now, to the $533 billion question. 

The federal government estimates that as many as 194,000 non-domiciled CDL holders will drop out of the industry over the next two years. That’s a potential 5% of the labor pool. They won’t all leave in one day, but if bad actors and carriers who undercut fair wages by employing questionable labor practices are forced out of business, it will benefit drivers who want to be paid fairly and help carriers who are doing things the right way. 

However, there could also be a period of market uncertainty as rates recalibrate and respond to national and regional demands. Some analysts have already noted surprising spot market rate increases in early October that were not driven by volume increases, but by capacity tightening as some drivers began avoiding certain regions out of fear of enforcement actions. 

Interestingly, this crackdown may quietly resolve another long-standing debate: the so-called “driver shortage.” When asked directly whether removing nearly 200,000 drivers would disrupt the supply chain, Secretary Duffy was confident: “We have enough truckers to meet the demand in the industry. We feel very confident that there won’t be disruptions in the supply chain.” 

FTR’s Trucking Conditions Index suggests that while market conditions for truckers may improve in 2026 and 2027, change will take time. “We expect pressure on foreign drivers to be a significant factor for capacity in the coming months, but many questions remain about the scope and speed of the effects,” said Avery Vise, FTR’s vice president of trucking. 

One potential consequence some industry observers are watching is a surge in carrier bankruptcies from unsavory or illegal haulers. Some small and mid-sized carriers built business models that only work with drivers willing to violate hours-of-service rules and accept below-market wages. As Miranda C. of the popular YouTube channel Trucking Made Successful put it, “If you build your company on quicksand, there is only one thing you can be sure of: one day, it will crumble.” 

It’s worth noting that the new rule has drawn legal challenges, with nearly 3,000 public comments, including allegations of civil rights violations. Critics point out that FMCSA itself acknowledged insufficient evidence linking nation of domicile to safety outcomes, citing just five crashes among approximately 5,000 annual fatal truck crashes. 

Conclusion 

The bottom line is that compliance and driver legality mean more than ever. For carriers employing non-domiciled drivers, now is the time to audit your workforce thoroughly and ensure every CDL is legitimate and current. For brokers, increased due diligence on carrier qualifications is essential protection against potentially devastating liability. 

Meeting these heightened verification standards manually can be time-consuming and error-prone. Solutions like Transflo’s compliance and telematics offerings, including integrations with verification services like Haul Compliance, can help automate driver credential checks and maintain the documentation trails that protect your business from liability. 

In the current market, one thing is clear: the industry is entering a new era where following every rule for driver legality is imperative for profitability and survival.