US freight industry sees back-to-school demand pick up after tariff truce

A 90-day tariff truce between the US and China has raised hopes for a recovery in the US trucking industry, with increased imports ahead of the back-to-school season likely to revive domestic demand and freight rates.

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Port of Los Angeles, US (Photo: Port of Los Angeles / Phaata)

A 90-day trade “cooling off” period between Washington and Beijing is expected to provide significant relief to the US freight industry, as importers rush to place orders ahead of the peak back-to-school season, experts say.

The US trucking industry, worth $906 billion, has suffered nearly three years of decline due to excess capacity, exacerbated by the Trump administration’s tariffs on the country’s largest trading partners.

But Monday’s agreement between the world’s two largest economies to temporarily halt tariffs for at least 90 days — along with a new deal between the White House and the U.K., and ongoing talks with other partners — has shifted expectations from concerns about a slowdown in shipping activity to the possibility of a surge in imports ahead of the peak holiday shopping season starting in late July.

While most shipping companies have lowered their second-quarter or full-year profit forecasts due to the impact of tariffs and weak consumer sentiment, “there is now a scenario where Q2 forecasts may be beatable,” said Jonathan Chappell, an analyst at Evercore ISI.

Rolf Jansen, CEO of German container line Hapag-Lloyd, said Wednesday that bookings for the U.S.-China route were up 50% from the previous week, and the company is deploying flexible ship sizes to meet demand.

China customs data shows that bilateral trade between the United States and China will reach $668 billion in 2024.

The increase in cargo traffic at ports will increase the demand for trucking to move containers out of ports as well as for rail lines to carry freight inland. This will typically boost freight revenue, with profits depending on the ability to manage costs and capacity.

The upcoming import surge could benefit carriers such as JB Hunt, Knight-Swift, Hub Group and Old Dominion, while railroads such as Union Pacific and CSX are expected to benefit from a rebound in intermodal volumes.

The U.S. ground transportation industry is often the first to respond to changes in business activity, serving as a reliable indicator of macroeconomic fluctuations.

Mike Short, President of Global Freight Forwarding at C.H. Robinson, told Reuters that while some customers had stocked up ahead of the tariffs, many small and midsize retailers were waiting and are now rushing to place orders.

“Given we're in the back-to-school and retail season ordering period, importers will very likely place large orders and pressure the manufacturers in China to produce as quickly as possible,” said Dean Croke, principal analyst at DAT Freight & Analytics.

In terms of transit times, experts expect additional shipments to begin arriving on the U.S. West Coast in late June, leading to an increase in spot rates, coinciding with the peak season for agricultural shipments.

“We're advising clients to lock in capacity early, given the likelihood of tighter space and rising spot rates,” said Chad Schilleman, vice-president of Drayage Services at Trinity Logistics.

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