March 6 (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 ( CHRW ) Global
Forwarding president, Mike Short.
Trucking and delivery firms such as J.B. Hunt and
United Parcel Service ( UPS ) 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)