Mexico exports are declining, Canada faces uncertainty
U.S.–Mexico
Mexico economic conditions
The Mexican manufacturing sector contracted 2.4% y/y in February, marking the fourth consecutive month of decline. Meanwhile, general exports declined after growth earlier in the year. Automotive exports remain under pressure, impacting cross-border freight flows.
In January, Mexico’s exports grew by 5.5% y/y, driven by an 8.8% increase in manufactured goods. This growth was fueled by substantial gains in machinery (54.1%), mining products (27.3%), and scientific equipment (14.3%). Exports then shrank 2.9% in February, compared to February 2024. The automotive sector experienced a steeper 11.5% decline in exports, highlighting softening demand and regulatory challenges impacting the industry.
Cross-border movements
The cross-border freight market between Mexico and the United States remains influenced by shifting trade dynamics. Tariff-related uncertainties and lower automotive exports may dampen demand in specific lanes. However, growth in non-automotive manufacturing sectors could provide counterbalancing opportunities for carriers.
Some carriers are delaying truck purchases, preferring to wait out trade uncertainty. Capacity is still broadly available across most border-crossing locations, spanning from central Mexico, Bajio, and northeast regions to the U.S. Midwest, Southeast and industrial regions. But carriers are prioritizing return loads to Mexico to optimize border crossing logistics on lanes like Laredo to Puebla or Aguascalientes.
As April unfolds, continued monitoring of trade policies, U.S. economic conditions and shifts in manufacturing output will be crucial for businesses engaged in cross-border trade. Shippers should remain proactive in identifying growth opportunities within resilient manufacturing sectors and in navigating potential disruptions. Develop flexible routing strategies and maintain close communication with brokers and transportation providers. For example, at Laredo, Texas, consider alternative crossing points like the Colombia Bridge for faster processing.
In times like these, shippers can benefit the most from working with an experienced cross-border provider that has a presence along the entire U.S.-Mexico border.
U.S.–Canada
The Canadian freight market is experiencing a turbulent period as multiple economic and regulatory factors weigh on capacity, pricing, and operational decisions. With tariffs creating uncertainty, carbon taxes yet to materially impact freight rates, and rail congestion driving intra-Canada rate hikes, the industry remains in a state of flux. Below are key developments currently shaping the market.
Tariff uncertainty impacting carrier supply
Elevated spot rates have provided short-term opportunities for carriers, but for some, they have not offset the disruption of longstanding cross-border trade flows.
As a result, some carriers have been forced to reduce operating costs through layoffs and fleet downsizing. With uncertainty clouding long-term planning, carriers are waiting for greater clarity on trade policies before committing to network adjustments.
Carbon tax removal: No immediate impact on pricing, yet
The removal of Canada’s consumer carbon tax, effective April 1, is expected to lower fuel costs for freight carriers, reducing a key operational expense. However, this has yet to produce a measurable impact on freight pricing, as many carriers are still navigating financial pressures stemming from tariffs and market volatility.
While fuel is largely considered a pass-through component, carriers still must consider several other factors, such as deadhead not covered by a freight rate, and other macro-economic conditions before being able to assess the impact of the carbon tax being lifted.
Rail congestion leads to delays and increased truckload rates
For the past several weeks, rail congestion has significantly impacted intra-Canada long-haul capacity, creating upward pressure on truckload rates. Congestion issues at key rail hubs, compounded by seasonal weather-related disruptions, have caused a backup of container ships at many ports.
As rail backlogs persist, more shippers are turning to full truckload to mitigate transit delays, placing additional demand on an already constrained market. The resulting capacity crunch has led to rate increases for long-haul intra-Canada truckload moves.