Trucking could be in for a period of improved conditions with the North American trade agreement updated, says the American Trucking Associations.
In 2019, general economic activity, freight tonnage and rates all softened. Exports took a hit. Investment slipped, manufacturing orders fell and production lines slowed.
“We want stability,” said ATA president Chris Spear. “We want certainty in the market.”
President Trump is expected to sign the new United States-Mexico-Canada Agreement, which once agreed to by Canada, as expected, will establish detailed, phased-in updates to long-standing rules affecting trade in North America.
Additionally, Trump on Jan. 15 signed the first phase of the China trade deal, after reaching a truce on the 18-month trade war between the two countries.
“We hope these agreements in place are going to bring the certainty that is necessary to bring manufacturing back online as an equal performer with construction and retail,” which make up the other pillars of freight movement, Spear said. “We look for probably as early as the latter half of 2020 to be a strong year for trucking.”
Trucks move 76.5% of surface freight between U.S. neighbors — 81% and 72% of the border crossings with Mexico and Canada, respectively, Spear said.
For November alone, the U.S. Department of Transportation’s most recent data, trucks led transborder shipments with $62.7 billion in freight, down 4.1% from a year ago. U.S.-Canada freight movement was $28.3 billion while U.S.-Mexico accounted for $34.4 billion.
Freight moved across the borders by all modes of transportation tallied $99 billion in November, down 3.9% from a year ago, the agency said.
“We have a lot of work to do in terms of the implementation and to be certain [USMCA] is successful going forward,” Spear said.
The goal with USMCA was not to change the underlying language of the earlier NAFTA agreement because if that had happened, “we were going to start back at zero,” and that would have prevented either keeping NAFTA or crafting something new, she said.
A key aspect of USMCA, aimed at boosting manufacturing, requires vehicle manufacturers to ensure 70% of the steel and aluminum they use is purchased from North America, she added.
The full benefits of the agreements will take time to ripple through, said Spears.
How and who companies do business with is changing, and will continue to change, said Bob Dieli, economist at MacKay & Co., which presented the Heavy Duty Aftermarket Dialogue along with the Heavy Duty Manufacturers Association.
“We are in a trade war and supply chains won’t reset anytime soon,” Dieli said.
He suggested companies ask themselves three questions: How is your biggest customer doing? How is your biggest supplier doing? And how is your biggest competitor doing?
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