With tariffs mostly out of the equation compared to last year, North American freight is way up. However, negotiations over the United States-Mexico-Canada Agreement (USMCA) could determine the long-term fate of cross-border trucking.
In April, cross-border freight hauled by trucks surged by 19% year-over-year. That marks the largest increase since 2022.
While the spike in cross-border freight looks good on paper, the reason is less impressive. Last April, North American freight dropped by 9% after President Donald Trump implemented sweeping tariffs. This April’s jump is more of a correction.
Similar spikes in cross-border freight occurred in 2021 and 2022. After the COVID-19 pandemic sent freight plummeting in 2020, trucking freight surged the following two years. In April 2021, cross-border trucking freight skyrocketed by 77.5% year-over-year.
A major difference this year is the enforcement of English-language proficiency rules. Last April, Trump signed an executive order resurrecting the out-of-service criteria for English proficiency violations. Since then, more than 70,000 violations have led to more than 21,000 out-of-service orders, according to the OOIDA Foundation.
According to Uber Freight, Mexican drivers are scaling back cross-border freight operations for fear of losing their CDLs or visas. Consequently, more freight is being transloaded in Laredo, raising costs by using CDL drivers rather than B1 drivers.
Border enforcement is also causing some friction for Canadian drivers as well, Uber Freight points out in its Q2 Market Update Report.
“Shippers are running more mini-bids and routing guide resets as they respond to new Canadian tax rules, immigration constraints, and U.S. border enforcement,” the report states. “The pressure is concentrated on lanes exposed to CRA Driver Inc. cleanup and cross-border inspections.”
All eyes on USMCA review
On July 1, trade representatives for the United States, Mexico and Canada will decide the future of USMCA, which brings much-needed certainty for shippers and manufacturers.
In the first six-year USMCA review, the three countries will decide whether to extend the agreement for another 16 years. If just one country does not agree to an extension, annual reviews will be conducted until issues are resolved or the deal reaches its 2036 expiration date.
USMCA provides investors and manufacturers with something they need: certainty. Major decisions behind building assembly plants and distribution centers can be based on a 10- to 20-year timeline.
There appears to be bipartisan support for changes to USMCA. Trump has expressed skepticism over extending the agreement. Meanwhile, Democratic senators have urged U.S. Trade Representative Jamieson Greer to take certain actions during the review.
Most industry think tanks and organizations have stressed the importance of USMCA, including the U.S. Chamber of Commerce, Center for Strategic and International Studies, Atlantic Council and Consumer Choice Center.
“Maintaining and reinforcing USMCA is essential to sustaining economic growth, promoting investment, and ensuring North America remains one of the most competitive and dynamic regions in the world,” the U.S. Chamber of Commerce states. LL
Related: FMCSA cooking up proposed rule on English proficiency
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