Trump tariffs anxiety peaks, from trucking rush to China freight crash

A surge in freight trucking activity, from the Texas-Mexico border to the warehouses and distribution centers of major U.S. retailers, shows the extent to which U.S. companies have rushed to move more imports into the country ahead of President Donald Trump’s reciprocal tariffs reveal day, with an announcement expected Wednesday afternoon detailing wide-ranging tariffs on trading partners that will take effect “immediately,” according to the White House.

But all of that frontloading of imports into the U.S. economy also corresponds to a more concerning trend in the trade data that is now taking shape: a steep decline in new freight order activity in every region across the U.S., as uncertainty about consumer demand spreads.

Data shared with CNBC by supply chain research firm Motive shows a significant surge in trucking activity at the Port of Laredo, the busiest land port in the U.S., with a 48.5% year-over-year increase that hit peak levels as of March 31. 

Trucking visits to North American distribution facilities for the top five retailers, meanwhile, just hit “unprecedented” levels, according to Hamish Woodrow, head of strategic analytics at Motive. “Last week marked the highest activity levels recorded,” he wrote in an email. “This unprecedented influx mirrors the heightened activity typically seen during the holiday season, suggesting that businesses are accelerating shipments in anticipation of impending tariffs.”

Woodrow said with the tariffs expected to be in force immediately, “we expect to see a drop as early as the next two weeks. There may be some lag as shipments that didn’t make the deadline still get shipped, but now that the tariffs are in effect we’d expect the imports to drop in Q2 as companies adopt a cautious ‘wait and see’ approach, minimizing imports until there is more stability and clarity in trade policies,” he wrote.

Similar surges in freight volumes and spot rates were seen in February and March on cross-border lanes from Canada to the U.S., according to Paul Brashier, vice president of global supply chain at ITS Logistics. Volumes from the Toronto market to the Chicago market were up over 50%, and rates are up around 10%, with critical expedited shipments 50% higher in some cases. Brashier added that there have been many cases of truck drivers paid to run empty from the U.S. to get back in position to meet surging demand out of Canada into the U.S.

European pharmaceutical companies have been moving more key high-priced drugs into North America through air freight. Though with an average trade cycle of five to six days versus weeks to months for ocean freight, that activity is more muted.

“There was some pulling forward of larger shipments of higher-value pharmaceuticals out of Ireland, Germany, Switzerland because a tariff would have a material impact on consumers,” said Sebastien Podgorski, vice president of airline solutions at Freightos. “Any generics out of India and China we have not seen such movement mostly because they are lower priced goods and tariffs would have a marginal impact.”

Podgorski said insurers and large hospital groups typically negotiate pricing for six months at a time so there won’t be much of an impact in the short-medium term. But consumers who are buying prescription or over-the-counter medications may feel the impact within weeks because pharmacies usually procure at market pricing.

Consumer demand warning in freight orders decline

While the North American cross-border warehouse moves have been elevated, future freight scheduled for truck delivery or pickup shows a nationwide hesitation among U.S. importers, according to DataDocks, a global supply chain scheduling system.

In contrast to January and February when there was a high level of scheduled bookings because of the pulling forward of freight ahead of tariffs, volume bookings for the near-term future have plummeted, according to Nick Rakovsky, CEO of DataDocks.

DataDocks began to see a decline in March bookings, which has accelerated. Freight volume bookings scheduled for April dropped 41% month-over-month and, year over year, bookings for April are down 35%. The sharpest declines in freight volume bookings for April, according to DataDocks, are in the Northwest (-61%) and West (-52%) regions.

But Rakovsky said the biggest signal from the data is the depth of the decline across the U.S. “What’s striking is how widespread the pullback has been,” he said. “Regions that were showing strength just a month or two ago, like the Southeast and Southwest, are now seeing sharp declines in April bookings.”

While he said the Northwest signal a particularly significant slowdown in logistics appointments out of ports and logistics hubs in that area, he added, “It’s not isolated; this is a broad-based softening across the entire network.”

The message businesses are sending is that the only decision is a “wait-and-see” one.

“They’ve pulled back significantly, and there’s very little visibility into forward months. Organizations aren’t committing right now. They’re pausing to see how things unfold before making any big decisions,” Rakovsky said.

A steep drop in China trade and global shipping prices

The pullback in freight orders was first reflected in the ocean carrier volumes out of China, according to data from international shipping association BIMCO, which says there was a 28% fall in the China Containerized Freight Index (CCFI) from the beginning of the year to the end of the first quarter.

The benchmark reflects the general export freight rate level from ten major ports, and since 2006, it has on average only fallen 2% during the first quarter, according to BIMCO. It has only declined more than 10% four times, said Niels Rasmussen, chief shipping analyst at BIMCO. It was the worst first quarter in 20 years, according to BIMCO.

Ocean freight and air freight are the first legs in the global supply chain, preceding activity in the trucking or rails closer to the final market. Once all the pulling forward of freight was completed, fewer containers are on the move from China.

A sign of increased trade from China early in the year came from the financial market in which companies borrow from banks to pay their freight invoices to preserve liquidity and maximize working capital. Supply chain financing transactions from Wells Fargo showed a sharp uptick in invoicing out of China, which indicated an increase in pulling forward of freight ahead of tariffs.

“We did see a sharp uptick out of China with a 20-25% increase in supplier invoices purchased in January and February,” said Jeremy Jansen, Wells Fargo’s global head of receivables and trade finance.

Jansen said the bank has not seen a similar increase in financing linked to invoices from U.S.-based importers bringing in freight from Mexico, Canada, or the EU.

The more recent freight weakness out of China is pressuring spot rates for Shanghai exports, which have fallen 46% since the beginning of the year, the largest first-quarter fall since BIMCO began tracking the Shanghai Containerized Freight Index in late 2009.

To try and put a floor in the ocean freight slide, ocean carriers are suspending service lines. By cutting lines, it tightens up available space on ocean vessels. In a recent note to clients, Honour Lane Shipping noted that with consecutive declines in Transpacific spot market since the Chinese New Year holiday, “carriers are finally beginning to cut capacity from the trade, pulling out vessels or increasing omit calls at China/SEA origins.”

But the logistics and freight forwarding company said that hasn’t moved ocean rates higher. Although the market rate in the first week of April firmed up at $2500/$3500/$5200 for U.S. West Coast/U.S. East Coast/Chicago, “there is no signals of any volume increase. It’s clear that space crunch is all because of capacity cut by blanks or vessel downsize,” it wrote.