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Sunday, June 24 2018
Are Trade Wars Good or Bad for the Trucking Industry?

ORLANDO, Fla.— Global trade has taken off with the rise of outsourcing, the opening of emerging markets and technological advances. For 2018, the World Trade Organization projects a 4.4 percent world merchandise trade volume growth rate following a 4.7 percent rate in 2017, the strongest rate since 2011. However, new tariffs could threaten port trucking just as the industry is dealing with dramatically rising costs for fuel, driver pay and maintenance of increasingly more complicated vehicles.

New tariffs put up to 7 percent of Asia-to-U.S. shipping at risk and impact 1 percent of total global shipping. The trucking industry, already beset with such problems as declining drivers and regulatory requirements, including electronic logging of driving hours and limits on how long truckers can drive daily and in a week, will also feel the pain. Cross-border trade with Canada and Mexico is at risk. With NAFTA already in a questionable state, tariffs could financially impact revenues of leading U.S. trucking firms. 

There’s much speculation concerning what tariffs and a potential trade war could mean for the U.S. Based on basic economic theory and past history, the result could mean more regional versus global trade with supply chains focusing on domestic transportation and warehousing.

According to industry experts, if tariffs are imposed on steel, aluminum, and other relatively low value/ high-density items, unless it sets off a trade war (which is always possible) there shouldn’t be much of a change on the other end of the tangible goods spectrum. The currently proposed tariffs are centered upon goods that are relatively low value / high density in their nature, but tariffs on steel would make us less competitive in the world market for the manufacture of autos, so we will make fewer of them. That is important to understand because there is a big difference between the freight flow of an imported car and a domestically produced or exported car. Moving a car produced with steel that is cheaper overseas results in one freight move, from the port to the dealership. The freight moves for making a car here or making a car here and exporting it are multifold. You move the iron ore and metallurgical coal from the mine to the steel plant, steel from the steel plant to the auto parts or engine plant, auto parts and engines from the plant where they are produced to the car assembly plant, and from the car assembly plant to the dealership or to the port to be exported to another country. 

It has been the opening of markets and the deregulation of transportation in the late 70s and early 80s first in airfreight and then in railroads and trucking that helped create an environment in which the world’s largest and most competitive transportation companies (and national transportation infrastructure) were built. 

Regarding the negotiations with NAFTA, the American Trucking Association’s—Chief Economist, Bob Costello, noted in a recent series of industry presentations that “NAFTA is critical to trucking,” with cross-border NAFTA freight representing $6.5 billion in revenues annually for trucking firms, with 31,000 truck driver jobs “completely dependent” on hauling cross-border goods.

“Suffice to say that NAFTA is a really big deal to the trucking industry”

Posted by: Annie Rodriguez AT 07:32 pm   |  Permalink   |  0 Comments  |  Email
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