The American trucking industry, which accommodates a massive market value of $906 billion, is presently experiencing a surge in the transport of items such as automobile components, household appliances and footwear. The reason behind this spike is intriguing: businesses are stocking up in an attempt to evade the financial blow impending from the newly imposed import tariffs by the Trump administration. However, this heightened activity might only serve as a temporary respite. There’s now a mounting concern over an impending deceleration in the industry, all due to the pressure exerted by the tariffs.
Prior to President Trump’s swearing-in on January 20, the American trucking industry was gradually recovering from a close-to-three-year freight recession. But the recent imposition of import duties leaves the anticipated rebound of the industry hanging in the balance. As a result of increased tariff-avoidance measures, truckers so far this month are dealing with higher volumes than even those observed during the peak of the 2021 pandemic.
However, this surge in volume may be misleading. Although the numbers suggest vibrant business, it doesn’t define the full picture. The reality is that there is a dwindling demand from essential sectors, notably the domestic manufacturing sector, which accounts for over 60% of the total ton-miles covered by heavy-duty trucks, and ocean imports.
An emerging trade war is casting a gloomy shadow over the industry. It’s clear that the prevailing trend is not favorable towards demand for trucking services. The outlook has rapidly morphed from a potential rebound to a potential slump.
As of the start of this week, the spot rate per mile for a semi-trailer full of goods (also known as a dry van), sans fuel, was slightly increased to $1.60 from $1.54 during the same period in the previous year. Forecasts suggest market growth stagnation with minimal, if any, increases in rates projected for 2025.
The looming prospect of tariffs and a volatile trade policy has spread caution among shippers, thereby dampening the market’s forward momentum. As the suspense continues, a hush seems to have descended over the market, hinting at the beginning of a slowdown.
Adding to the concern, the formidable US manufacturing industry, a significant contributor to the nation’s economic strength, reported a contraction in March post two consecutive months of growth. This drop might impose extra burdens on an already worrying marketplace created by the trade uncertainties.
Even the domestic construction industry is not immune to the downturn. The segment involved in building homes is now at risk, following an unpredicted slump in the issuance of permits and initiation of single-family housing projects through the month of March.
In a similar vein, American firms reliant on imports from China find themselves in a difficult position, as they are now holding back on orders. This response comes after President Trump slapped a substantial 145% tariff on the goods from China. In retaliation, China imposed a heavyweight tariff, a whopping 125%, on American goods inclusive of items such as beef.
China holds a significant role in the context of US imports. In March, one third of the total volume of US seaborne imports were accounted for by China, pushing the US ocean imports near to record levels for the year so far. However, forecasts and some port executives are projecting a reversal from May onwards.
Transport stocks are also feeling the pinch due to the ongoing trade war. After enjoying a phase of gain following President Trump’s re-election, they are now experiencing a downward trend. The current state of affairs has a fair share of losers.
A considerable number of American trucking companies are already operating on thin margins. Some of them are barely staying afloat. This precarious condition implies that the costs of operating trucks are rising faster than the rates these companies can charge their customers, due to fierce competition.
Despite the rampant uncertainties in the global trade environment and domestic economy, the resilience of the US trucking industry will be tested in the times to come. As for now, escalating operating costs and shrinking demands pose significant concerns, potentially putting a full stop to the industry’s recovery phase that was earlier predicted.