Cross-Border Trucking Rates Surge Ahead of Tariff Deadline

(Reuters) – In a significant development, rates for cross-border trucking to and from the U.S. have surged as companies scramble to expedite shipments before President Donald Trump’s new tariffs on Canada and Mexico take effect. This sudden spike 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.

Impact of Tariffs on Trucking Rates

The trucking industry has faced challenges due to weak demand and an oversupply of trucks on the road, leading to historically low rates. However, recent data from DAT Freight & Analytics indicates a dramatic shift. In the past two weeks, spot rates for dry vans and refrigerated trucks transporting goods from the U.S. to Canada have reached a two-year high, increasing by 18% and 35%, respectively, since the November election.

Dean Croke, principal analyst at DAT, noted, “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 anticipation of increased costs due to the impending tariffs.

Future Outlook for Trucking Rates

Despite the current surge, experts warn that rates are likely to reverse once the new duties are imposed. Croke added, “Uncertainty in the manufacturing sector due to tariffs will most likely dampen demand even further and therefore reduce truckload volumes in the process.” This sentiment highlights the potential for a challenging period ahead for the trucking industry.

Increased Activity at the Southern Border

In Laredo, Texas, a key southern border city, the volume of loads moved by DAT’s carrier network increased by 12% last week. This uptick suggests that companies made a last-ditch effort to transport goods into the U.S. before the tariffs took effect. The refrigerated goods market, in particular, saw 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.

Comparative Analysis of Border Volumes

On a month-over-month basis, volumes and rates for dry vans moving from Mexico to the U.S. were up 1.5% and 3.5%, respectively. However, these figures pale in comparison to the significant jumps observed at the Canadian border. The disparity in rates and volumes underscores the varying impacts of tariffs on different regions.

Shippers’ Cautious Approach Post-Tariff Implementation

As the new tariffs come into effect, many shippers are expected to adopt a cautious approach regarding new orders. Mike Short, president of C.H. Robinson’s Global Forwarding division, stated, “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 cautious sentiment could further influence trucking volumes in the coming weeks.

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 may face revenue downturns due to tariff-related challenges. The ripple effects of these tariffs are anticipated to impact nearly every transportation company across the nation.

As the situation unfolds, stakeholders in the trucking industry will be closely monitoring the effects of these tariffs on rates, volumes, and overall market dynamics. For more detailed insights, you can read the original article here.