Abhinav Parmar and Lisa Baertlein
(Reuters) – Truck fees across the border with the US have led to new tariffs on President Donald Trump in Canada and Mexico, with businesses rushing to accelerate shipments ahead of expected costs.
It marked a brief moment in the sun for the US trucking industry after a three-year, longest and deepest downcycle since the global financial crisis. The weak demand was to blame for the surplus of trucks on the roads.
A 25% tariff on imports from Mexico and Canada came into effect Tuesday, but some automakers received a month’s reprieve.
In the past two weeks, spot rates from the US to Canada for dry vans, refrigerated trucks and containers have reached their highest level in two years, rising 18% and 35% respectively since the November election.
Drypan load weights on the Toronto-Chicago route increased by 57% to the week of 57% before the tariff deadline.
“By midnight this Monday, there was clear evidence that shippers north of the border were eager to put a load on the US,” said Dean Croke, principal analyst at DAT.
Croke added, if a new obligation is placed, the fees are likely to be reversed. “Uncertainty in the manufacturing sector due to tariffs will likely reduce demand even further, and therefore reduce the amount of trucks in the process.”
In the tropical border city of Laredo, Texas, the amount of load traveled by the DAT carrier network increased by 12% last week, suggesting that it had made a final effort to put a load on the US in 11 hours.
The refrigerated product market rose 35% a week due to an increase in agricultural products to the Fahlane freight market, Texas.
A month ago, the amount and fees for dry vans travelling from Mexico to the US increased by 1.5% and 3.5% respectively, a small jump compared to the Canadian border.
“The shippers in Dry Cargo Mexico did not appear to have responded to the package the same way except for the produce,” Croke said.
However, experts hope that current fee volatility will disappear and the volume will drop quickly once customs duties are imposed.
“After the first few days after the tariffs are implemented to measure whether or not the tariffs are temporary, many shippers may be cautious about new orders,” said Mike Short, president of Ch Robinson’s Global Forwarding.
Truck and shipping companies such as JB Hunt and United Parcel Service are some of the US companies that are exposed to a tariff-related revenue slump that affects almost all domestic carriers.
(Reporting by Abhinav Parmar and Lisa Baertlein of Bengaluru, Los Angeles, edited by Devika Syamnath)
