Tariffs may have big implications on trucking industry

U.S. & World

(CNBC) – As the trade war with China continues, another industry is taking a hard hit: trucking.

Trucking companies and drivers are reporting key revenue losses throughout 2019.

The daily rates for trucking, known as the spot market, have seen declines since the tariffs went into effect in 2018.

Retailers and manufacturers front-loaded shipments into the United states at the end of 2018 to get ahead of tariffs.

With their warehouses and stock rooms full, those companies are in the driver’s seat.

“They say, I don’t have to move it right. I’m going to negoatiate a rate that’s a little bit lower than what I though I was going to pay initially,'” Eric Starks, FTR Chairman and CEO, said. “And the trucker then is saying ‘okay, if I want to move that load, I have to be willing to negotiate and come up with a lower rate.'”

“With the shippers having the pricing power at this time, it definitely has an effect on the lower revenue,” Mark Zimmerman said. “It’s also dropping to our bottom line where we don’t have the ability to increase as our costs increase for 2019.”

The rates for standard trucks have fallen 19 percent since April 2018. for refrigerated trucks that carry food, the rates have fallen 14 percent. Flatbed rates for industrial goods were down about the same amount.

The impact felt by Zimmerman and big names like J.B. Hunt, Schneider National, and Knight Swift, all reporting lower revenues this year, all seeing their stock price drop double-digits over the past year.

There is hope that a trade deal can reverse the trend, as the industry seeks new roads to revenues.

Lower U.S. exports are also hurting trucking margins.

When drivers are able to drop off a trailer and pick another one up at the same place, it’s called a dual transaction.

This type of transaction is more profitable, but trucking companies say its happening less and less at major ports.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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