Ryan: Welcome to the October Robinson Edge video. My name is Ryan Hammett, and I'm joined by Mat Leo to talk about the latest developments in the global freight market. Today, we will cover the LTL and ocean markets, but we will spend quite a bit of time covering several developments out of Washington, D.C. impacting the freight and trade world, starting with, hey, potential increases in tariffs for China. 

Mat: Yeah, Ryan, and after a couple of relatively quiet months on the trade front, we find ourselves back in a period of uncertainty. And before digging in, let's review key factors behind these announcements. The first is that we know one of the U.S. administration's top priorities is ensuring that China does not have an economic or military advantage over the U.S. So much of the trade policy changes over the last year are directed at China and its economic allies. 

Meaning it should not be a surprise when we hear about the potential new tariffs and trade restrictions related to China. Now, Presidents Trump and Xi Jinping plan to meet in Korea in late October, and reciprocal tariffs are scheduled to begin on November 10th after a second 90-day pause. 

Ryan: This recent escalation comes ahead of those two approaching deadlines, so there is reason to believe it is part of a negotiating tactic by both sides. What one trade commentator called the latest in a series of lateral counterpunches. China appears to be seeking leverage using rare earths in an attempt to have the U.S. relax its controls around chip technology and manufacturing components. 

Mat: And the second important factor to remember is that we should not consider an announcement final until it is published in the Federal Register and posted on an official government website. Trade policy by social media posts is often used for positioning and negotiation. Now, there are several weeks between now and when these most recent tariffs between China and the U.S. were announced to be starting, and so much can happen. 

Now, companies should use this as an opportunity to scenario plan and prepare backup options and know that you will act, you should act as this could happen, but don't assume that it will happen. 

Ryan: Right. These potential Tariffs and trade restrictions between the U.S. and China come at a time when more tariffs are being announced or becoming effective. A new tariff has been proposed on heavy-duty truck imports, which has a direct impact on the U.S. trucking industry. Although implementation was changed to November 1st, but so far, no official details have been released. 

Then, on October 14, tariffs went into place for imports of wood, timber, lumber building materials, and furniture. Initially set at 10%, they're scheduled to increase to 50% in January 2026, unless a specific trade agreement is reached with countries importing those products to the U.S., like the agreement the U.K. has, where tariffs are capped at 10%.

Other Section 232 investigations are also underway for medical goods, machine tools, and industrial robots, meaning that more industries could be impacted in the near future. 

And while we await the Supreme Court's ruling on legality of the IEEPA reciprocal tariffs, the U.S. Court of Appeals upheld the legality of Section 301 tariffs on Chinese imports under lists 3 and 4 focused on intellectual property and technology. Meaning that while there is uncertainty whether IEEPA is an appropriate channel to levy tariffs, the powers provided in Section 301 seem to be affirmed. 

Mat: Yeah, and with all of that, that's not all that's been coming out of DC.

Ryan: Hold on, is this your, "But wait, there's more!" moment?

Mat: Yeah, exactly, because we're only halfway through the developments that have been coming recently. So the U.S. has opened the process for public feedback on USMCA, which is the US-Mexico-Canada trade agreement. And this step in the official review process was part of the agreement that began back in July of 2020. 

With ongoing trade discussions between the three North American countries, it is expected that this review process could turn into a renegotiation process as the countries decide over the next year whether to extend the deal for another 16 years or to allow it expire in 2036. 

Ryan: So shippers that currently participate in USMCA are encouraged to provide their feedback on the Federal Register. Continuing in DC-related topics, on October 14, the U.S. began implementing new port fees on vessels tied to China, with a goal of curbing China's influence on shipbuilding and maritime logistics. The tiered fee structure starting this month will gradually increase over the next three years. 

At this time, significant rate impacts for shippers are not expected. Ocean carriers are expected to adjust vessel rotations to limit the exposure and mitigate fees. This flexibility, combined with the slack and global shipping capacity, should help absorb much to the impact and prevent broad cost increases from reaching shippers. 

Up next, the U.S. government shutdown has shown limited impact on the freight world.

We continue to monitor for impacts, but freight disruption has been minimal. The bigger impact to the freight market is reduced economic activity from furloughed government employees in a time when freight demand has been challenged. 

Mat: Yeah, and Ryan, after all of that, I think the topic we've heard the most intrigue around has been the U.S. Department of Transportation's recent rules and enforcement of regulations. 

Ryan: For sure.

Mat: Particularly related to the standards of commercial driver's licenses. Now, the CDL rule highlights FMCSA's focus on safety and could reshape foreign driver participation, likely adding upward pressure on carrier rates over time. Now, enforcement on this rule, along with other enforcements of the English language proficiency requirements and visa pauses, are expected to have a slow but compounding effect on carrier attrition and driver availability. 

Now, this will likely have a larger impact on smaller fleets and owner-operators, as the larger fleets have additional resources and scrutiny for their drivers. The reality is that we continue to be in an oversupplied market with more capacity than freight demand. And yes, the market is more balanced than it has been in years, and some areas might feel this a little bit more than others. But overall, it will take time. 

This is a slow burn as renewals occur, and the reality is that we will also need new drivers that will come into the market, and we see this time and time again, so the situation will remain dynamic.

Ryan: All right, enough with DC. Let's shift our attention to LTL. Mat, you pointed out something in our October edge report that the LTL PPI in August saw the largest year-over-year increase in nearly three years, but that may not necessarily be what shippers are experiencing, so What's going on with LTL?

Mat: Correct. We did see the long-distance LTL producer price index, or PPI, as you mentioned, show a 10% increase in August compared to the previous year. But all other months' years have been below that 10% mark by a decent margin. Now, the fact that rates have been increasing more than the long-term average stands out given declining LTL shipments and tonnage. Now, rates are up while demand is down. And I think this points to the continuing influence of Yellow's closure over two years ago. 

Now, at its peak, Yellow operated more than 300 terminals nationwide. Now, while over 200 of them have been sold through bankruptcy options, not all went to LTL carriers. And of those that did, many of those remain non-operational. And the ongoing lack of doors in the system has constrained network supply even as demand has eased. Now, there are other factors such as slowly increasing fuel costs and increase the cost to operate a truck. And I also think that carriers continue to optimize their networks, which means they are increasing prices for freight that isn't ideal for that network. 

Ryan: Yeah, I think it's important to note that LTL tonnage is expected to remain slightly negative year-over-year for the first half of 2026, but inflect positively in the second-half of next year. To maintain their current service levels, mid-single-digit price increases are expected in 2026, which aligns with the nearly 5% year-over-year average growth in the PPI over the last three decades. 

It will also be important to monitor the truckload market, as increased pricing will eventually result in freight shifting back to LTL, which would drive greater rate increases in the LTL mode as well. Well, Mat, should we wrap up with Ocean? 

Mat: Yeah, I think so, and I'll make it quick, but with the Golden Week ending October 8th, the slow beginning of October for Asia container shipping to the U.S. will begin to see increases as manufacturing activity resumes in the second-half of the month. And after a turbulent summer, rates are expected to remain stable between Asia and the U.S. as demand is not expected to rebound due to the tariffs and capacity moderately decreasing. 

As mentioned earlier, with the new U.S. port fees beginning for Chinese carriers, COSCO faces the most exposure, but all major carriers have committed to maintaining current capacity levels without imposing additional fees on shippers. Now, on the export side, equipment shortages are becoming more prevalent, and there are some expected capacity constraints, particularly out of the U.S. Gulf Coast. 

Ryan: As trade announcements are made, visit our website's resources section for both client advisories and our trade and tariff insights. Our team continues to monitor these developments on your behalf. C.H. Robinson goes further than anyone else in providing you with the edge you need to manage your complex global transportation strategy. For more details and additional content, reference the Insights page on our website.