🇲🇽 Mexico Freight Surge

Good Friday morning. Despite the U.S.-Mexico trade boom, it may be harder for America to break up with China than it appears. Plus, we've got an "Ask Kary Anything" session with Trucker Tools CEO, our favorite Manifest 2024 moments, and XPO stock outshines Bitcoin.

In today's email:

• Three Freight Headlines: "AKA" with Trucker Tools CEO, best moments of Manifest 2024, and transportation stocks to the moon.
• U.S. Trade with Mexico Booms, But Tariffs on China Not Working
• Around the Freight Web: Tackling towing disputes, Flexport's ex-executive issues, and financial struggles continue at Uber Freight.
• Freight Meme of the Day

TOP LANE MOVERS POWERED BY GREENSCREENS.AI

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🐔 WHAT’S COOKIN’ IN FREIGHT

✈️ Ask Kary Jablonski Anything. During the flight back from Manifest, the FreightCaviar community got the chance to have their questions answered by Kary Jablonski, CEO of Trucker Tools, in an "Ask Kary Anything" session. Kary shared insights on the freight industry's future, strategies for small fleets, and the unique positioning of Trucker Tools. From the importance of legroom to differentiation in the Digital Freight Management (DFM) space, the AKA offered valuable perspectives at 30,000 feet.

🔥 Manifest 2024 Was Lit. Who wasn't at Manifest this year? It's hard to tell since everyone's LinkedIn feed was all about Manifest this week. The show, which doubled in size from last year, brought in the heat. We rounded up our favorite photos and insights from the conference so you can relive it all in one place. For FreightCaviar (our second year at the conference) it was lit; we debuted on stage, sharing our journey with ShipperCRM and previewed what's to come.

💪 Transportation Stocks Outpace Bitcoin. Who would have thought that transportation stocks would perform better than Bitcoin? Apparently, the general consensus on Wall Street is that there's money to be made in trucking; whereas Bitcoin is just fake money, right? Timothy Dooner, of FreightWaves, highlighted this week in his newsletter all the freight stocks that are booming. XPO Logistics and Saia are at the forefront of this rally. Over the past six months, XPO's stock soared by 63%. Bitcoin's growth during that same period? 52%. Not bad, but not XPO great. XPO's leap is attributed to its strong fourth-quarter earnings and strategic real estate acquisitions. Yellow's bankruptcy may have also helped.

TOGETHER WITH ARMSTRONG TRANSPORT GROUP

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Mexico Freight Booms, But Tariffs on China Not Working

The U.S. has pivoted its import patterns away from its long-standing reliance on Chinese manufacturing, turning instead towards its neighbor, Mexico. This change has caused a big hype in international trade relations, signaling a possible 'decoupling' from China amidst rising tariffs and ongoing geopolitical tensions.

Key Points & Data

• For the first time in two decades, the United States imported more goods from Mexico than from China in 2023.
• This shift is not just a blip but a part of a growing trend influenced by tariffs, supply chain reliability concerns, and geopolitical strategies aiming to diversify trade and reduce dependency on a single country.

The Wall Street Journal Highlights

• The idea of a China-U.S. decoupling has been a topic of discussion, with tariffs being a tool potentially leading to significant reductions in trade links with China.
• Speculation around what a 60% tariff rate could mean for U.S.-China trade relations points to an even more drastic shift away from current patterns.

Freight Industry Weighs In

• Supply Chain Resilience: Companies are seeking to avoid the disruptions experienced during the pandemic by diversifying their manufacturing and sourcing strategies.
• Nearshoring Benefits: Proximity to the U.S. market means reduced shipping times and costs, a crucial factor given the recent logistics bottlenecks.
• Trade Policies and Tariffs: The ongoing U.S.-China trade war and the imposition of tariffs have made Mexican goods more economically attractive.

What This Means for the Industry

• Increased Investment in Mexico: Businesses are looking to invest more in Mexican manufacturing capabilities, not just for the North American market but as a base for global export.
• Logistics and Infrastructure Growth: Mexico's freight and logistics sectors are poised for expansion, with increased demand for cross-border transportation, warehousing, and logistics services.
• Challenges Ahead: Despite the opportunities, there are challenges, including the need for infrastructure improvements in Mexico and potential political and regulatory changes affecting trade policies.
• Stressed Systems?: We're also hearing grumbling about a halt in Mexico trade as customs systems crash, impacting imports and exports. The glitch has caused widespread delays over the last 48 hours. Read the Spanish-language report here.

Matt Silver's Predictions on Mexico Freight

Matt Silver, the CEO & Co-Founder of Cargado, anticipates a considerable impact on Mexico's freight dynamics due to increased manufacturing activities. His forecasts include:

• Anticipated Strain on Capacity: The push towards Mexican manufacturing is expected to trigger a "seismic shift in volume," potentially stretching capacity limits as early as the upcoming produce season.
• Northbound vs. Southbound Imbalance: The surge in manufacturing will exacerbate the existing disparity in freight movement, with northbound loads increasing substantially unless the U.S. boosts its exports to Mexico.
• Growth in Domestic Mexico Volume: As manufacturers consolidate their supply chains within Mexico, internal freight volumes will rise, leading to more intra-country movements before goods are exported to the U.S.

But Is There Really a Major Decoupling?

Senior Economist Robin Brooks sheds light on a parallel trend of export diversion, noting how Western goods continue to reach Russia via circuitous routes through Central Asia. He points out that China, too, is circumventing U.S. tariffs by rerouting exports through countries like Mexico, Vietnam, Thailand, and South Korea, suggesting that the notion of U.S.-China decoupling may be overstated.

The U.S. and China remain deeply interconnected economically. China's role as a global manufacturing hub and the U.S.'s role as a key market for Chinese goods create a complex web of dependencies that tariffs alone cannot unravel.

• Technological and Investment Ties: Beyond goods, the U.S. and China are entangled through technology exchange, investments, and intellectual property – making an even more tangled web.
• Manufacturing Shifts: While some manufacturers have moved operations out of China, others have doubled down, investing in automation and efficiency to offset tariff costs.

Sources: WSJ | NYT | Morning Brew

TOGETHER WITH ISO

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AROUND THE FREIGHT WEB

⚠️ FMCSA Calls Out Predatory Towing. The FMCSA calls for the FTC to impose more penalties on towing companies for unfair fees, an issue experienced by around 83% of carriers surveyed.

💼 Executive Hustle? Former VP Tim Collins is suing Flexport over an unpaid $500,000 bonus after being terminated before the payment date.

📉 Uber Freight Struggles. Uber Freight's Q4 earnings show little sign of improvement, with revenue and EBITDA remaining weak.

⛽️ Diesel Surges Overnight. Diesel prices rose overnight by an average of 8 cents per gallon in the States, with some states even noting 14-cent increases.

🦾 Autonomous Yard Trailers Nearing Reality. I-SEE unveils an autonomous yard truck that can attach glad hands to trailers, edging closer to production.

FREIGHT MEME OF THE DAY

Also, check out:

• 🎧 The FreightCaviar Podcast. Listen to this week's podcast on Spotify & Apple Podcasts.
• ☕️ FreightCaviar Essentials. Purchase a FreightCaviar hoodie, long-sleeve, or mug by clicking here.
• 🎧 The Bootstrapper's Guide to Logistics is a podcast that highlights and inspires supply chain entrepreneurs, sharing their stories and building a community from the ground up.
• Want to get your brand noticed by freight brokers? FreightCaviar can help. Work with us to get your services featured in our newsletter, podcast, and more. Plus, we write great articles about what you do. Get in touch with Paul at pbj@freightcaviar.com to learn more.