At Spot, we understand the vital role that up-to-date information plays in navigating the dynamic logistics market. Each month, we bring you a comprehensive logistics market update. We dive into the latest trends, challenges, and innovations shaping the logistics sector. Join us as we empower you with the knowledge needed to make informed decisions in this fast-paced industry.
Inflationary Pressures from Tariffs
The economic dynamics of tariffs indicate a direct inflationary impact on manufacturers and, consequently, on the freight sector.
•Aluminum: The U.S. imports ~47% of its aluminum, mostly from Canada. Tariffs will increase costs, prompting both importers and domestic producers to raise prices.
•Steel: Only ~13% of U.S. steel is imported, yet past behavior (e.g., 2018 tariffs) suggests that domestic mills will follow suit by raising prices.
Cross-Border Freight: Laredo Sees Capacity Constraints
Rejection Rates & Trade Uncertainty
Laredo, Texas, the largest U.S.-Mexico freight crossing, has seen rejection rates climb to their highest levels since the pandemic era. The Outbound Tender Reject Index rose from a 3.8% average (October–mid-December) to over 6% in late December and remains elevated.
This increase suggests that market tightening is influenced by more than demand, which has been running 10% higher year-over-year. One potential factor is trade uncertainty, as fluctuating U.S. tariff policies on Mexico drive shippers to accelerate cross-border shipments before potential cost increases.
The Closing Gap: Spot vs. Contract Rates
The gap between dry van truckload contract and spot rates (excluding estimated fuel costs) has narrowed steadily over the past 2.5 years. This trend is driven by gradual capacity reduction and slow yet consistent demand growth, reshaping freight dynamics despite going largely unnoticed by market participants.
Contract Rates Begin to Rebound
Most contract rate declines happened in 2023, continuing into late 2024 before rebounding slightly. Leading into peak season (Nov-Dec 2024), the spot-contract spread hovered at 16%, compared to 10-15% in 2029. A key shift in market expectation may be influencing pricing decisions, as stakeholders anticipate tightening capacity.