By Abhinav Parmar and Lisa Baertlein
(Reuters) – Rates for cross-border trucking to and from the U.S. jumped in the lead up to President Donald Trump’s new tariffs on Canada and Mexico, as companies scrambled to accelerate shipments ahead of an expected increase in costs.
It marked a brief moment in the sun for the U.S. trucking industry after a down cycle that has now lasted for nearly three years, the longest and deepest since the global financial crisis. Weak demand and a surplus of trucks on the road were to blame for the low rates.
The 25% tariffs on imports from Mexico and Canada took effect on Tuesday, though some automakers received a one-month reprieve.
In the past two weeks, spot rates from U.S. to Canada for dry vans and refrigerated trucks and containers hit a two-year high, having risen 18% and 35%, respectively, since the November election, data from DAT freight & analytics showed.
Load volumes for dry vans on the Toronto to Chicago route surged 57% week-over-week before the tariff deadline.
“There’s clear evidence shippers north of the border were desperate to get loads into the U.S. before midnight on Monday this week,” said Dean Croke, principal analyst at DAT.
Rates will likely 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.”
In the southern border city of Laredo, Texas, the volume of loads being moved by DAT’s carrier network increased 12% last week, suggesting companies made a last-ditch effort to get loads into the U.S. at the eleventh hour.
The refrigerated goods market saw volumes rise 35% on a weekly basis, driven by an increase in produce crossing into the McAllen freight market in Pharr Texas.
On a month-over-month basis, volumes and rates for dry vans moving from Mexico to U.S. were up 1.5% and 3.5%, respectively, a smaller jump compared with the Canadian border.
“Dry freight Mexican shippers did not appear to react the same way except for produce shippers,” Croke said.
However, experts expect the current volatility in rates to disappear and volumes to drop quickly as tariffs are imposed.
“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,” said C.H. Robinson’s Global Forwarding president, Mike Short.
Trucking and delivery firms such as J.B. Hunt and United Parcel Service are some of the U.S. firms exposed to tariff-related revenue downturns that will impact almost every transportation company in the country.
(Reporting by Abhinav Parmar in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Devika Syamnath)
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