Ryan: Hello, and welcome to the March edition of Robinson Roundup. My name is Ryan Hammett, and I'm joined, as always, by my colleague Mat Leo. We're diving into what's shaping global transportation markets in March. And Mat, well, there's a lot of moving pieces still.

Mat: Hey, yes, there is, Ryan. And tariffs are still dominating headlines. Specifically, the impact of U.S. tariffs on global trade is front and center impacting businesses and freight markets. You know, with recent tariff pauses, potential reinstatements. And pending investigations due in early April, it is a dynamic situation.

And because of the complexity and constant change today, we're not going to try to cover all aspects of tariffs, but we do want to ensure that everyone knows that you can always find the latest updates under our client advisory page on the C.H Robinson website, as well as throughout LinkedIn, where many of our leaders are regularly posting changes as they occur.

Ryan: Both great points. Well, let's start out by talking about North America, where the recent pause on tariffs for Canada and Mexico for USMCA compliant goods has sparked a notable surge in interest by shippers to investigate USMCA qualification.

Currently there is a pause on tariffs for Canada and Mexico on USMCA compliant goods, whereas all non-USMCA products are under a 10% tariff for potash and energy and 25% for all others. Many companies have not previously considered qualifying their products under USMCA, but with these new 25% and 10% tariffs, suddenly qualifying has become a critical step to consider.

Mat: And to be clear, USMCA qualification is not as simple as checking a box. It requires significant resources and expertise. And at C.H. Robinson we've already seen requests spike as shippers aim to avoid these tariffs. The other new tariffs impacting North America are the steel and aluminum tariffs that began on March 12th creating significant cost pressures, especially for auto manufacturers and the related industries who have already have substantial investments in Canada and Mexico, causing late nights for leaders over the last month or so.

And across the automotive industry specifically, we've seen a wide variety of reactions from pausing shipments for several days in early March to kick the can down the road in hopes of resolution, to continuing to ship as normally scheduled, agnostic of any trade talks and policy. With automotive's just in time inventory practices, flexibility is limited, making planning critical, but also requires the constant flow of goods to maintain production.

Ryan: Yeah. Oh, and by the way, while the news has been focused on North American tariffs, we've also seen 20% tariffs added to all imports from China. And then there's the reciprocal tariffs being imposed in these countries against U.S. goods and also the upcoming trade reports due at the beginning of April that could set off another round of tariff announcements across all industries. These changes are prompting proactive measures. Companies are evaluating risks, diversifying suppliers and adjusting inventory strategies. 

C.H. Robinson's sourcing analysis tool and supply chain engineering teams have become particularly valuable here, offering comparative insights on sourcing strategies to navigate these uncertain waters as well as modeling capabilities to evaluate trade-offs. On the freight side, Mat, there has been a noticeable trend over the last month across the two large freight modes of ocean and full truckload, and that trend has been downward spot pricing. Let's talk through what's been happening in both of those markets. Sure.

Mat: And let's start off with the truckload market trends. the U.S. spot market has seen a significant rate decrease through the holidays and winter storms in January and February and as we enter into the second quarter, we're nearing what should likely be the floor of 2025. We expect that we will see nationwide averages stabilize at a low point throughout early decreased carrier capacity.

Ryan: Meanwhile, cost pressures for carriers remain high. Operating costs rose 25% over a three-year period. Significantly outpacing general inflation. While we estimate carrier cost inflation is slowing, our spot rate forecast is influenced by carriers' need to catch up on that cumulative 25% inflation of the last few years. This will be pushing carriers to maintain higher rate floors. At the same time, we continue to see carriers exiting the market. So with freight demand generally being soft right now, much of the expected increase in truckload market pricing this year will be influenced by supply side factors.

Mat: Yeah, and that's right. And those dynamics that you're talking about did lead us to cut our spot rate forecast for 2025. But with the U.S. trade policy being so fluid at the moment, we are continuously watching these tariffs negotiations and freight demand indicators in the next several weeks. We have also seen trade policy create some lumpy demand patterns because of the uncertainty and particularly related to cross-border Canada and Mexico freight and in the days leading up to the pending tariff implementation.

There is also surges of last minute orders to cross-border which disrupts them expected supply and demand balances leading to temporary market tightness and increased pricing. That has been followed quickly by decreasing demand since everyone already shipped everything, bringing that market back into balance in the other direction.

Now for shippers with cross-border freight, it is critical to have good communication and thoughtful plans with your contract carriers to ensure that they're prepared for any changes in these order patterns as you're considering it. That way they can prioritize your freight.

Ryan: Shifting back globally, let's briefly touch on ocean shipping. We've previously mentioned here on this video ocean alliances are undergoing significant changes to the East West trades such as MSC going solo and the emergence of the Premier Alliance. These reshuffles are already leading to reduced reliability, more blank sailings and extended transit times. March could be particularly rocky as these changes unfold.

Additionally, port congestion continues, notably in New York and major West Coast ports, partly due to vessel redeployments and empty container issues. Shippers should anticipate continued delays and disruptions, and at the same time. 

Mat: We're also seeing ocean container rates dropping. Vessel utilization is not materializing to carriers' expectations, which is causing rates to fall to attract more bookings. March bookings were not as strong as shippers weighted decisions on tariff increases but seemed to be caught by surprise whenever the tariffs were implemented.

We are currently watching April bookings with thought that they might increase slightly, particularly for those shippers that held those exports in March. With this background, carriers have advised that blank sailings will take place at the end of March and early April to balance the supply, so we advise that everyone take note of these carriers' schedules.

Ryan: As we wrap up, let's recap some critical action items. Evaluate your tariff exposure, consider diversifying suppliers, leverage foreign trade zones to defer tariffs, and collaborate closely with your logistics providers to manage your inventory effectively. Additionally, it is critical to stay informed, especially given how quickly trade policies are evolving. Utilize resources from C.H. Robinson such as analytical tools, webinars, our monthly report and expert consultations to stay ahead of the disruptions.

Mat: Yeah, Thanks, Ryan, and thanks for everyone joining us. And remember. C.H. Robinson goes further than anyone else, providing you with global perspectives on how to manage your complex transportation strategy. For more details and additional insights, reference the Resources section on our website.