2022 Q1 Freight Market Outlook for North America
As 2021 comes to an end, and we move into 2022, what should we keep an eye out for in the North American freight market? Keep reading to find out.
The freight market in North America will most likely continue to be tense during the first quarter of 2022, as global supply chains expect to keep experiencing challenges after the holidays. Let’s take a look at what has been happening lately in the industry in each of the countries of the region and at some of the topics that will remain relevant as we transition into the new year.
United States
While processing capacity at Key West Coast ports continues to be limited, import volumes are still rising in the U.S. Moreover, the International Longshore and Warehouse Union (ILWU) contract expires next summer, so importers will keep struggling to maintain the inventory necessary to fulfill the increasing demand.
Southeast and Northeast markets are experiencing more traditional levels of activity, while Texas and California markets are experiencing high demand. Importers will look for strategies to optimize supply chains and move their shipments in a way that minimizes the impact of lead time variability that has considerably increased in the last year.
There have been no new updates to the implementation of the two executive orders mandating vaccines, and there are many court challenges against them. Truckload services will likely see minimum impact regarding this in the United States and Canada for intra-country moves.
Canada
The British Columbia State of Emergency continues, for high levels of rain and damaging floods have impacted in and out road and rail access for intra-Canada and U.S. cross-border traffic.
Regarding marine import operations, demand for anchorages continues to exceed capacity.
The vaccine mandate for cross-border trucking will be effective on January 15, 2022. Roughly 80% of cross-border truck traffic is moving with Canadian carriers. An estimated 74% of drivers are expected to be vaccinated by the deadline. Currently, U.S. drivers are estimated to be vaccinated at a rate lower than Canadian drivers. It is possible that this deadline will move if the U.S. mandate deadlines are amended.
Mexico
The delayed date of implementation of the Complemento Carta Porte legislation continues to be January 1, 2022. It could change again since the new version of the Carta Porte was not released as expected, so the trial period was suspended. Companies are waiting for authorities to announce when it will be ready to start trials.
The imbalance in cross-border trade is growing, as northbound demand for both cross-dock and direct truckload services continues to exceed southbound demand for both intra-Mexico and Laredo into the United States. Carriers are repositioning empty equipment to meet demand, which accounts for the higher costs.
Western U.S.-Mexico borders continue to experience increased freight volumes with winter produce season in full swing, creating higher demand for refrigerated units and placing increased pressure on capacity northbound. This regional crop season continues into January.
Truck drivers crossing the U.S.-Mexico border must be vaccinated in early January 2022.
In this way, the 2022 market will most likely follow the historical seasonal patterns of former years but at the elevated level of tension, we have been experiencing lately.
