Cross-Border Trucking Rates Surge Ahead of Tariff Deadline

(Reuters) – In a dramatic turn of events, rates for cross-border trucking to and from the U.S. have skyrocketed as companies scramble to expedite shipments before President Donald Trump’s new tariffs on Canada and Mexico take effect. This surge in rates marks a brief resurgence for the U.S. trucking industry, which has been grappling with a prolonged downturn lasting nearly three years—the longest and most severe since the global financial crisis.

Understanding the Surge in Trucking Rates

The recent spike in trucking rates can be attributed to a combination of factors. Historically low demand and an oversupply of trucks on the road have kept rates depressed. However, data from DAT Freight & Analytics reveals that in the past two weeks, spot rates for dry vans and refrigerated trucks moving from the U.S. to Canada have reached a two-year high, with increases of 18% and 35%, respectively, since the November election.

Desperation Among Shippers

Dean Croke, principal analyst at DAT, commented, “There’s clear evidence shippers north of the border were desperate to get loads into the U.S. before midnight on Monday this week.” This urgency reflects the broader concern that once the new duties are imposed, rates will likely plummet. Croke warns that uncertainty in the manufacturing sector due to tariffs could dampen demand further, leading to a decrease in truckload volumes.

Regional Impacts: Laredo, Texas

In Laredo, Texas, a key southern border city, the volume of loads moved by DAT’s carrier network surged by 12% last week. This uptick suggests that companies made a last-ditch effort to transport goods into the U.S. before the tariff deadline. Notably, the refrigerated goods market experienced a remarkable 35% increase in volumes on a weekly basis, driven by a surge in produce crossing into the McAllen freight market in Pharr, Texas.

Month-Over-Month Trends

When examining month-over-month trends, volumes and rates for dry vans moving from Mexico to the U.S. increased by 1.5% and 3.5%, respectively. However, these figures pale in comparison to the more significant jumps observed at the Canadian border. This disparity highlights the varying impacts of the impending tariffs on different regions.

Future Outlook: Caution Among Shippers

Looking ahead, many industry experts anticipate that shippers will exercise caution regarding new orders in the days following the implementation of tariffs. Mike Short, president of C.H. Robinson’s Global Forwarding division, noted, “It’s possible many shippers will be cautious about new orders the first few days after tariffs are implemented to gauge if the tariffs are temporary.” This sentiment underscores the uncertainty that tariffs introduce into the market.

Impact on Major Trucking Firms

Major trucking and delivery firms, including J.B. Hunt and United Parcel Service, are among the U.S. companies that could face revenue downturns due to tariff-related challenges. The ripple effects of these tariffs are expected to impact nearly every transportation company across the nation, raising concerns about the overall health of the trucking industry.

As the situation continues to evolve, stakeholders in the trucking sector are closely monitoring developments. The full impact of the tariffs on cross-border trucking rates and overall industry dynamics remains to be seen. For more detailed insights, you can read the original article here.