BREAKINGVIEWS-Cargo rush belies a coming crash for US trucking

By Sebastian Pellejero

NEW YORK, May 2 (Reuters Breakingviews) - Trade fears fueled a freight binge to kick off the year. It probably presages a nasty hangover. U.S. companies rushing to get ahead of President Donald Trump’s tariff barrage sent imports spiking in the first three months of 2025, lifting a key cost measure for 20 global shipping routes, the Baltic Dry Index, by over 40% year-to-date, according to LSEG data. No matter what happens with trade policy, a pullback is inevitable.

The global scramble to get ahead of the highest U.S. trade levies in a century is a fillip to firms that can handle the complexity. A.P. Moller-Maersk MAERSKb.CO, the world’s largest container carrier, said that it hasn’t yet cancelled a single trans-Pacific crossing this year. U.S. railroad traffic was up 5% year-over-year during the week ending April 26th, according to the Association of American Railroads, while routes that incorporate a mixture of rail, ships and trucks saw volume climb 8%.

Yet these look like increasingly lonely outliers as tariffs begin to bite. Germany’s Hapag-Lloyd HLAG.DE, the globe’s fifth-biggest carrier, reported a 30% cancellation rate on China-to-U.S. cargo in April. Port of Los Angeles executive director Gene Seroka expects volume from China to plunge 35% next week.

All of this will eventually feed through to the onshore business of moving goods from point A to point B. Some 3.5 million people are truck drivers, says the American Trucking Associations, more than all U.S. firefighters, police and correctional officers combined. A slowdown threatens not just the industry, but the broader economy.

Flatbed truck delivery rates slipped for the first time this year during the week ending April 18th, according to industry research outfits Truckstop and FTR. Shares of 101-year-old hauler Saia plunged 31% after badly missing analyst expectations for its first-quarter results. Finance chief Matthew Batteh said April shipment growth has turned negative compared with last year, following a 3% bump in March.

Any relief on levies may be too late to avoid some pain. United Parcel Service announced 20,000 job cuts, as it sheds some 50% of shipping volume from its biggest customer, Amazon.com AMZN.O. Andy Jassy, Amazon’s CEO, said both merchants and his team moved to stockpile inventories, implying a downshift to come.

Moreover, the pandemic showed just how difficult a sudden stop-start is to manage. As activity resumed following lockdowns, warehouses delayed container pickups, jamming terminals. Investors are already getting the message, with the Dow Jones Transportation Average index down 14% this year. At this point, there may not be a course left to chart around the impact.

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CONTEXT NEWS

The Commerce Department said on April 30 that U.S. imports increased at a 41.3% annualized pace in the first quarter, as businesses looked to get ahead of tariffs.