Vaccine mandate or not, US-Canada cross-border freight rates poised to rise

From Freight Waves.

Since Saturday, U.S. truckers who are unvaccinated or partially vaccinated against COVID-19 have been barred from crossing into Canada. A similar mandate is expected to hit Canadian drivers at the U.S. border next Saturday. Already, the mandates are being blamed for a jump in rates.

But cross-border freight pricing was already poised to increase significantly by necessity. Increasing demand for consumer goods and tight capacity have collided with higher costs and a scarce supply of drivers and equipment.

Spot rates in January across multiple U.S.-Canada lanes have been 10%-20% higher than a year ago, according to freight brokers. The big unknown: how many drivers will leave cross-border freight in response to the mandates and to what extent that will push rates higher.

“There’s going to be a new landing spot for pricing,” said Rob Piccioni, CEO of Fuel Transport, a Montreal brokerage and asset-based carrier.

“I don’t see us going back to CA$1.60 ($1.27) per mile pricing. It’s just not sustainable,” he added.

Piccioni does not agree with how the vaccine mandates are being rolled out. He worries that they are coming too soon for the supply chain to absorb the disruption and that they could help drive rates too high.

Nevertheless, the Canadian freight market — inextricably linked with cross-border operations — has been underpriced for a long time despite carriers having higher costs than in the U.S.

The NULOGX Canadian General Freight Index, which tracks costs paid by shippers, in its latest report found that base rates in October were 1.62% lower than a year earlier, though fuel surcharges have increased significantly.

See the complete article online at Freight Waves.