For the first time in years, ground and ocean transport are facing significant impacts, some negative while others will only cause re-assignments.
As announced by the Department of Commerce and with the Administration’s approval, the US has enacted tariffs effective March 23 on foreign aluminum and steel products with limited exceptions. The government designs tariffs to engage and support American Manufacturing. As a result, it is our opinion that transportation affected by tariffs will affect the Truck Transportation industry in several ways.
Transportation Affected by Tariffs:
- Imports of Aluminum and Steel-We expect, with strict tariffs, the volume of imports will start lessening in April 2018. With the reducing books, the Truck demand at our Ports handling these materials will weaken.
- In addition, the US has implemented sanctions against the massive Russian Mining enterprise, United Co. Rusal. The Russian operative produced 3.7 million tons of aluminum last year, shipping 15% to 20% to the US. As a result of the lost volume, there will be a reduction in Truck freight volume at affected ports. Further, this reduction is anticipated to be replaced, as Traders can source new supply lines.
- At most Ports, the initial Carriers to handle the materials usually operate within a 50-mile radius of port operations. As a result of the sanction and tariffs, the available work, especially at the Gulf Coast Ports, will diminish. With the lesser quantities at the Ports, the Administration expects truck transportation to redirect to individual manufacturing plants.
- These factors will force the Short Hauler (operating within 100-miles) to consider supplementing the reduced work by traveling a greater distance. This will immediately cause investment into Electronic Logging Devices, which the FMCSA does not require for the Short Hauler. Installation costs about an average of $200/truck, with service fees approximating $20/month.
- As conditions affect the Long-Hauler, they will need to refocus on the available loads required to be secured at US-based manufacturers. As an example, the importation of steel coils from Japan, Turkey, and other countries not afforded exemptions in all likelihood will minimize. The Commerce Department expects that the shortfall will be filled with new US manufactured products.
- Within the country, there are two larger steel mills located in Alabama. These production facilities are expected to replace the imports on the Southern East Coast and throughout the Gulf region. Again, we encourage the Over The Road Carriers to evaluate and redirect focus where the freight will be availed.
Based on these facts, our opinion that Short Line Hauls of aluminum and steel at our country’s ports will weaken. As a result, to stay at capacity, we strongly recommend Carriers to consider Longer Transport. This redirection is precisely that which our Administration and Department of Commerce are expecting. In turn, to make the transition seamless, we suggest contacting Single Point Carrier Services. We can assist with qualifying Authority, meeting Compliance requirements, obtaining insurance, and critically providing working capital to sustain operations.