Freight industry in the U.S. anticipates an increase in demand due to back-to-school shopping following a tariff truce agreement
Fueling Up the Freight: Exploring the Impact of a U.S.-China Trade Truce on the American Transportation Industry
The recent 90-day trade truce between Washington and Beijing could catapult a much-needed lifeline for the U.S. freight industry, as importers scramble to secure shipments ahead of the bustling back-to-school period, experts assert.
Over the past nearly three years, the $906 billion U.S. trucking sector has been grappling with a stagnant growth, embodied by excess capacity, which was further exacerbated by President Donald Trump's tariffs on major trading partners. However, this seemingly grim picture may be poised for transformation. An agreement on tariff reduction/suspension between the globe's economic twin titans on Monday, coupled with the White House's ongoing negotiations with other trade partners, could trigger an import surge ahead of the peak shopping seasons commencing late July.
In the face of tariffs and wavering consumer sentiment, many transportation firms have slashed their second-quarter and full-year earnings projections. Yet, analysts such as Jonathan Chappell of Evercore ISI suggest that there is now a plausible scenario where Q2 forecasts could beat expectations.
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Hapag-Lloyd CEO Rolf Jansen disclosed on Wednesday that the German container shipping company's bookings for U.S.-China traffic are up by 50% week-on-week. To cater to this spike in demand, the carrier is deploying vessels of all sizes.
Trade exchange between China and the United States amounted to an astounding $668 billion in 2024, Chinese customs data indicated. This anticipated influx increases the demand for trucking capacity to unload cargo from ports as well as for railroads to transport them inland. This usually translates into higher freight revenue — the profit margin hinging on cost and capacity management.
The expected surge stands to favor carriers like JB Hunt, Knight-Swift, Hub Group, and Old Dominion, while Union Pacific and CSX railroads are anticipating a comeback in intermodal volumes. The U.S. surface transport industry, known for signaling shifts in economic activity, serves as a reliable barometer for broader economic changes.
C.H. Robinson's global forwarding president, Mike Short, reported that while some customers hoarded goods ahead of tariffs, many small-to-medium retailers adopted a "wait-and-see" stance and are now rushing to restock.
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According to Dean Croke, principal analyst at DAT Freight & Analytics, importers are predicted to make hefty orders and urge Chinese manufacturers to fast-track productions. Given the transit time, experts believe that the additional cargo will hit U.S. West Coast ports by the end of June, coinciding with the peak produce shipping season — thereby boosting spot rates simultaneously.
"We advise clients to secure capacity early, given the likelihood of tight space and rising spot rates," said Chad Schilleman, the vice-president of Drayage Services at Trinity Logistics.
Overall Landscape:
A short-term trade truce between the U.S. and China can trigger several immediate and significant impacts on the U.S. freight and trucking sector. The lessened tariffs lead to an escalation in import and export activities, which in turn increases the demand for domestic transportation services, improving fleet utilization and revenue opportunities for trucking firms.
Competitive Landscape:
Several categories of companies are expected to reap benefits from an increase in freight activity:
- Major Truckload Carriers: Companies such as Schneider National, J.B. Hunt, and Knight-Swift Transportation boast large fleets and are well-equipped to manage the influx of shipments from ports and distribution centers.
- Intermodal and Logistics Providers: Firms like Hub Group and XPO Logistics specialize in moving containers between various transportation modes, which becomes crucial during trade spikes.
- Last-Mile Delivery Firms: Companies centered on final-mile deliveries, such as FedEx Freight and UPS Freight, could witness a spike in business as more goods flood the nation.
- Port-Centric Trucking Firms: Carriers with a strong presence near major ports (e.g., the Ports of Los Angeles and Long Beach) are likely to experience an immediate uptick in business as import volumes soar.
Broader Market Implications:
While the 90-day truce focuses on tariff relief, the benefits may transcend the transportation sector. Lower tariffs and improved trade relations can promote economic growth, reduce inflation, and strengthen industries that rely on international supply chains.
Summary Table: Potential Beneficiaries
| Company Type | Example Companies | How They Benefit ||------------------------------|--------------------------|-----------------------------------------|| Major Truckload Carriers | Schneider National, J.B. Hunt, Knight-Swift | Increased shipment volumes, higher fleet utilization || Intermodal & Logistics | Hub Group, XPO/GXO/RXO | More container moves, integrated logistics solutions || Last-Mile Delivery | FedEx Freight, UPS Freight| Higher parcel and LTL (less-than-truckload) demand || Port-Centric Trucking Firms | Various regional carriers| Surge in port-to-warehouse moves |
Conclusion:
A 90-day trade truce between the U.S. and China is likely to bolster freight volumes, elevate trucking sector utilization, and support the financial health of major trucking, logistics, and delivery firms—particularly those serving key import/export hubs.
- The surge in cargo imports due to the US-China trade truce could result in increased demand for analytics to optimize logistics and trade routes, benefiting companies like Evercore ISI that specialize in freight and transportation analytics.
- With the anticipated increase in sports merchandise imports from China due to the tariff delay, sports retailers may need to invest in expanded trading activities, potentially leading to higher trading volumes in this specific sector.
