Ryan: Welcome to the June edition of Robinson Roundup. My name is Ryan Hammett and I'm joined as always by my colleague Mat Leo to talk about the latest developments in the transportation markets. Mat, today we're going to cover the latest in tariffs and the impact that it's having on ocean and intermodal markets.

But let's start with a domestic freight topic and that's the upcoming NMFC changes affecting the LTL industry. We're starting with this because it's now only a matter of weeks before these changes begin on 19th July.

So, the time for action for any LTL shippers that need to modify data or process is now. Ideally, before folks are taking summer holidays and the 4th of July holiday hits. The big thing you should know is that the NMFC system will classify your commodities based on four main factors.

The first and the big one, is density, with lower density items having higher freight class. The other three are stowability of the freight, the handling requirements for the freight and the liability of the freight, which is basically how fragile or easily damaged is it. 

Mat: And while this classification change is intended to simplify the system and decrease the number of misclassifications and changes to reclass charges, the process of making the change can seem daunting to shippers, particularly when it comes to updating data on system around weights and dimensions, which are critical to classification. New tools are available to help with data accuracy, like dimensionisers and electronic BOLs, but if you haven't considered those tools or your own way to make these updates, it can feel a bit stressful. 

Now, Ryan, you and I typically try to avoid talking up C.H. Robinson solutions on these videos. But our LTL team has done a great job of creating a guide related to these changes that we wanted everyone to know about. And it includes an on-demand video walking through the upcoming changes on 19th July. and this information, links to NMFTA data, FAQs. And if you're still among those working through this process, please make sure to check out this resource. We'll provide a link to this on the page you found this video. 

Ryan: Well, Mat, I guess that's about as long as we can go without mentioning tariffs. What was that, like maybe 2 minutes?

Mat: It was longer than I expected. 

Ryan: Well, when we recorded our video last month, we had just learnt about the temporary lowering of tariffs between the U.S. and China and we were waiting to see the impact. The typical 30-day transit for China to the U.S. trade lane means that the bookings made this time last month immediately after the lowering of the tariffs are just now approaching U.S. ports. 

West Coast ports in particular and the associated transportation and warehousing companies experienced a significant drop in volume in May due to the extraordinarily high tariffs of around 145% on imports from China that had been implemented. But that trend is quickly turning into a rapid recovery in the weeks ahead. But China's not the only country of import affected.

Don't forget that July 9th is the target date for when the pause of reciprocal tariffs for most other countries is expected to end. So Southeast Asia is also an area we are seeing shippers try to beat a date when higher tariffs might come back. 

Mat: Yeah and the first half of this year has definitely been a volatile environment, especially when it comes to intermodal volumes. and the impact of shifting import patterns on the West Coast. Historically, the West Coast is the demand engine for U.S. intermodal market and a large portion of that is driven by port activity, specifically from the ports of L.A. and Long Beach. 

The temporary reductions in U.S. tariffs has started to unlock a wave of delayed freight from China and bookings have picked up in June. This in turn is expected to cause a spike in demand of intermodal containers on the West Coast. And it's important to note that there are more intermodal containers available today than there were back in the COVID days. But the important element is intermodal providers need to know what freight to expect so they can position the container capacity in the right place ahead of these imports. 

Ryan: Exactly.

Mat: Communication of your plan is critical in the next two months. And for shippers that haven't got hard delivery deadlines, this could be a good opportunity to leverage the cost savings of intermodal, especially for those cross-country moves where timing isn't quite as critical. 

But now is the time to act, especially for that summer intermodal freight, as June and July capacity is being consumed and spot rates are increasing and expected to rise through August, particularly from L.A. And of course, locking in planned committed volume with three to four weeks’ notice is ideal.

Ryan: Yep. It's still unclear how strong or sustained of a surge this will be since some importers already pulled forward freight in April in anticipation of the higher U.S. tariffs. But other shippers paused their production orders while waiting for clarity on the tariff situation. 

Now, what is clear is that many Chinese factories have ramped up production to produce as much as possible to export to the United States before the 90-day period that went into effect on 14th May that is scheduled to expire on, call it mid-August. There's still time to bring merchandise in before the 90-day window closes, particularly as we think about back-to-school and seasonal retail imports. 

Now, speaking of tariffs affecting imports, the United States raised tariffs on imported steel and aluminium. While this applies to all industries that import steel or aluminium, some industries that rely more on these metals will feel an outsized impact. 

Mat: Exactly. And specifically, automotive supply chains will be affected by the higher U.S. tariffs that went into effect June 4th. The 25% tariff on imported steel, aluminium and goods, made those materials and goods that use those materials to be made, has now been raised to 50%. This change applies to goods from all countries except the UK, which will continue to be subject to the 25% steel and aluminium tariffs until July 9th, when the rate will either increase to 50% or quotas may be imposed. 

So, let's break it down on how changes specifically affect the auto parts. And there's a lot here, so bear with me on this, but we will be putting out a client advisory on this topic too to help out with it. So if they are imported from Mexico or Canada, compliance with USMCA free trade agreement still exempts auto parts from the 25% auto part tariff imposed on 3rd May and also from the 25% earlier this year. But the applicable steel and aluminium tariffs are now 50%. 

If imported from a European country other than the UK, when the new 25% auto tariff was imposed in May, any applicable steel or aluminium tariffs were no longer stacked on top of each other and this did not change as of June 4th. 

If imported from China, after May 3rd, steel and aluminium tariffs were no longer stacked on other tariffs that apply to Chinese-made auto parts and that continues to be the case. 
Now, the change has implications for importers who take advantage of foreign trade zones or FTZs, to defer tariffs. Those who placed steel or aluminium goods into an FTZ before June 4th and were hoping for lower rates, will now be subject to 50% tariffs when those goods are withdrawn. 

And goods admitted into an FTZ on or after June 4th will be subject to whatever trade duty is in place whenever they're withdrawn. But for auto parts, entering imports into a foreign trade zone before, on or after June 4th does not affect how the steel an aluminium tariffs apply. 

Ryan: All right. I think I caught all of that. It's definitely a mouthful. We definitely proved that we're not doing AI videos here, right? But Mat, as you just said, that was a lot to keep up with. So we have a client advisory available on our website under resources. But beyond the cost to produce, utilising some of these materials that are being affected by tariffs, these trade policy changes have resulted in a mixed outlook for auto sales for automakers to contend with. 

In the second annual American Perspective Survey released by tax and audit firm KPMG in mid-May, a change in consumer spending intent was attributed to the lack of clarity surrounding tariffs on U.S. imports. The survey sought to understand how consumers might adapt to changing economic forces and it showed 68% of respondents didn't want to take on more credit, with 43% stating they will delay buying a car because of tariffs.

Meanwhile, the Federal Reserve reported that April saw moderate to robust sales of vehicles and of some non-durables, generally attributed to a rush to purchase a vehicle ahead of tariff-related price increases. 

Mat: And in other tariff news, on 28th May of this year, a court ruled that the U.S. president cannot impose tariffs by declaring a national emergency. This ruling applies specifically to the 10% reciprocal tariffs on imports globally, as well as the 20% to 25% tariffs on goods made in China, Canada and Mexico that were imposed as a deterrent to drug trafficking. Now, a federal appeals court quickly stayed the decision and the tariffs remain in effect while this appeal process unfolds. Arguments were due to the court by June 9th this year. 

Now, regarding new deals on tariffs, there has been talk recently that a new trade deal may have been reached between the U.S. and China. But Ryan, as we've learnt in the past few months, we should wait for all these final details to be posted on official government websites. And at the time of recording this, no official confirmation or details have yet to be released. 

Now, we are closely monitoring the situation and as soon as a deal is finalised and details are available, we'll promptly share the key information through a customer advisory. 

Ryan: The next two months of imports, trade deals and the consumer response will be critical in understanding what's in store for the second-half of 2025 for transportation markets. For now, as we evaluate all of these developments, we've kept our outlook for the rest of the year dry van truckload spot forecast the same as it was in May. 

Well, thanks for joining us this month. Remember, Robinson goes further than anyone else in providing you with the edge you need to manage your complex transportation strategy, especially during complex times like these. For more details and additional insights, reference the insights page of our website.