This week:
- President Trump announces 25% tariffs for US automotive imports, more key sectors
- Despite earlier optimism, Red Sea crisis to continue amid ongoing instability and high insurance rates
- Large US truckload carriers cut capacity in Q4 ‘24, but data indicates increase in demand for ‘25
- Amazon may become for-hire US LTL carrier, potentially causing major industry shakeup
Trump Announces 25% Tariffs on Automotive Products, More Imports
At a press conference last Tuesday, US President Donald Trump announced plans for 25% tariffs on all imports in the automotive, semiconductor, and pharmaceutical sectors. At a separate event Friday, Trump said the new duties will likely go into effect on April 2, one day after the due date for a report from federal agencies on US trade policy.
The announcement came days after Trump announced reciprocal tariffs for all US trading partners. At Tuesday’s press conference, the President said the automotive, semiconductor, and pharmaceutical tariffs incentivize manufacturers to make their products in the US.
“It’ll be 25%…(and) we want to give them time to come in because, as you know, when they come into the United States and they have their plant or factory here, there is no tariff,” Trump said.
Earlier this month, Trump signed executive orders mandating 25% tariffs on steel and aluminum imports. On February 4, he also ordered 25% tariffs on all imports from Canada and Mexico but later delayed their implementation for 30 days.
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Ongoing Instability, Rising Insurance Costs Further Delay Return to Red Sea
Despite feeling optimism last month about a return to the Red Sea, ocean carriers now say the timeline is uncertain. Following January’s Israel-Hamas ceasefire, Houthi militants pledged to limit attacks to Israeli-affiliated ships, leading multiple shipping companies to consider resuming Red Sea transits. However, one executive now says the region’s ongoing instability and rising insurance costs will further delay such a return.
For the past 15 months, ocean carriers have diverted around Southern Africa to avoid Red Sea conflict. The diversions have kept shipping rates high and increased vessel mileage, a situation industry observers call the Red Sea crisis. In a webinar hosted by risk management firm Ambrey last Wednesday, Inchcape VP of Survey and Inspection Chris Greenwood said an end to the costly diversions would require a “full and permanent” ceasefire between Israel and Hamas.
Greenwood said a return to the Red Sea and Suez depends on Israel and Hamas adhering to a long-term ceasefire agreement, each shipping company’s individual risk assessment, and insurance companies’ willingness to underwrite these voyages. Insurance costs for one-way transits have risen dramatically, from about 0.05% of a ship’s value before the attacks to approximately 1%. Greenwood said underwriters will likely demand significant changes in the Red Sea and Suez Canal before substantially lowering premiums.
After Q4 Cut in Capacity, Large US Truckload Carriers Expect Uptick in Demand
According to a recent analysis by JoC Senior Editor William B. Cassidy, large US truckload carriers reduced their fleets in Q4 2024, a move to manage capacity amid a freight downturn of more than two years. However, Cassidy said the JoC Truckload Capacity Index (TCI) indicates an increase in demand later this year.
The freight downturn gave shippers unprecedented pricing power — a situation truckload carriers are now eager to change. Landstar System CEO Frank Lonegro acknowledged the buyer’s market, citing “choppy conditions” in the industrial economy. Cassidy said that instead of drastic cuts like those made from 2022 through mid-2024, carriers represented in the TCI were only trimming their fleets, suggesting they foresee a market shift. Covenant Logistics CFO James Grant confirmed this, stating they’re now better positioned to negotiate pricing.
The TCI, which measures truck capacity at major US truckload providers, reached a ten-year low of 75.7 in Q4, down from 76.6 in Q3 and 18.8% from its mid-2022 peak. Despite the downward turn, the rate of fleet reductions has slowed in recent quarters as business gradually improves for many carriers. According to Cassidy’s analysis, there are signs ahead that TCI may begin to rise by Q3 2025.
Reports Indicate Amazon is About to Expand Into the US LTL Market
According to multiple news reports, Amazon is poised to enter the US less-than-truckload (LTL) market. Writing for Freightwaves on Friday, Michael Rudolph said rumors about Amazon’s apparent move into LTL are substantiated by recent job postings within Amazon Freight, its existing truckload and intermodal division.
If Amazon becomes a for-hire LTL carrier, industry observers say the potential for market disruption is significant. JP Morgan analyst Brian Ossenbeck said Amazon’s extensive network and logistics infrastructure represent a competitive threat to current LTL carriers.
Amazon’s apparent move into the market comes at a difficult time for LTL operators. TFI International CEO Alain Bedard recently described the freight industry as being in a “deep recession,” pointing to low volumes. Bedard predicts the first half of 2025 will be even more challenging for the LTL sector.
However, some carriers are cautiously optimistic about a potential recovery in the latter half of the year. Old Dominion cited positive indicators like the Purchasing Managers’ Index (PMI) returning to expansion in January.
Rail Container Dwell Times Rise at LA-LB Port Complex as Imports Surge
Rail container dwell times at the Ports of Los Angeles and Long Beach rose in January due to a surge in pre-Lunar New Year imports and frontloading ahead of new US tariffs. According to reporting from JoC Senior Editor Bill Mongelluzzo, the import surge helped create one of the strongest Januarys on record for eastbound trans-Pacific shipping.
Infor Nexus data shows an average rail container dwell time of 8.6 days at Long Beach in January, compared to 8.29 days in December. However, dwell times can vary significantly between terminals within the LA-LB port complex, the largest in the US. For example, SSA Marine reported a much lower three-day dwell time at their Long Beach terminals last month.
Yusen Terminals in Los Angeles reported progress in reducing backlogs from the fourth quarter, with an average rail container dwell of 6.8 days. Port of Long Beach COO Noel Hacegaba estimated container volumes were up about 13% from December, but that average dwell time actually improved to around four days, down from 4.64 days in December, highlighting the variability across the complex.
According to Mongelluzzo, a significant drop in imports is expected in the second half of February due to Lunar New Year factory closures. However, terminal operators anticipate a return to normal dwell times and cargo fluidity by the end of the month.
