USMCA Annual Reviews Rattle North American Freight Networks

Spot rates on lanes out of the Texas border have climbed 24% as tightening truck capacity — not demand — drives cross-border pricing higher, with southern border freight volumes running about 6.5% above year-ago levels, according to DAT iQ principal analyst Dean Croke. The squeeze lands as shippers absorb a new layer of uncertainty: the U.S. declined on July 1 to confirm a 16-year extension of the U.S.-Mexico-Canada Agreement, triggering annual reviews that could continue until the pact expires in 2036.

Transportation providers are responding by building optionality across modes, manufacturing networks, warehousing and customs services. The calculus is complicated by how quickly policy can shift underneath them.

"The best indication of future behavior isn't past behavior where trade is concerned," said Mark McKendry, president of IMC Logistics' Canada business. "Because of the capricious nature of trade policy these days, I don't believe anyone could predict what next month will look like."

Why are shippers hesitant to act?

Some companies have frozen in place because a new plan can become obsolete almost as soon as it is implemented. George Chasteen, chief operating officer of Mesilla Valley Transportation, said customers suffered "tariff fatigue" the last time duties changed rapidly: by the time they implemented a plan for an announced tariff, the policy had shifted again the following week or month.

Jonathan Starks, CEO of FTR Transportation Intelligence, said the policy environment has stabilized somewhat since last year, giving companies greater confidence in their decisions.

What is driving rates if not demand?

Croke credits capacity exiting the market for "doing all the heavy lifting." He cited increased enforcement of English-language proficiency requirements, non-domiciled commercial driver rules and cabotage restrictions, which prohibit foreign carriers from hauling domestic loads.

The northern border shows a different imbalance. LoadLink Technologies data showed U.S.-to-Canada loads increased 24% in September, while Canada-to-U.S. loads declined 12% — a mismatch that could push rates up. Anne Reinke, president and CEO of the Intermodal Association of North America, said northbound intermodal volumes from Mexico rose 17% over the past 12 months, while U.S.-Canada volumes fell 2%. The shift suggests some shippers are moving freight from trucks to rail, easing exposure to truck capacity constraints.

Longer term, Canada's diversification effort could matter more. Ottawa has signed approximately 20 trade, economic or strategic agreements with other countries since January 2025. "Ongoing diversification will lift containerized imports and exports of goods that used to travel by truck across North America," McKendry said.

Are production networks actually moving?

Not much, so far. Bob Costello, chief economist for American Trucking Associations, said established North American manufacturing networks remain largely unchanged and he expects that to hold through the USMCA review. "[It] gives businesses heartburn and makes them worry a bit but doesn't change their business for now," he said.

MVT's Chasteen said manufacturers returning some production to the U.S. have not abandoned Mexico. "Instead, we are seeing optimization of manufacturing lines — certain products manufactured in Mexico and certain in the U.S.," he said. MVT anticipates Mexico freight volumes will keep growing at a mid- to high-single-digit pace, barring a demand-side shock, and has not delayed its own investments on the U.S. side of the southern border.

Foreign capital is more cautious. Troy Ryley, president of Echo Global Logistics' Mexico division, said some Chinese manufacturers have postponed plans for Mexican factories until country-of-origin requirements become clearer. "They need to know that clearly before they could pull the trigger to build a factory," he said. Croke said shippers increasingly err toward worst-case scenarios — declining to add a third production line or third shift.

How are providers building resilience?

The playbook centers on redundancy and flexibility:

• Redundant carriers, ports and customs brokers — "one asset-based carrier, one port and one customs broker and no backup" is no longer adequate protection, per Ryley
• Bonded and foreign trade zone warehousing along the southern border, letting customers defer duties and improve cash flow, plus crossdocks, rail-served warehouses and an in-house licensed customs broker at MVT
• Multimodal options and AI investment at IMC, which is opening a Toronto operation in the fourth quarter
• Compliance support, as Mexican crossing agents now require more pre-crossing data, including driver names and license plate numbers

Jose Minarro, Echo's managing partner for Mexico client sales, said customs decisions have climbed the corporate ladder "when they went from paying zero duty to thousands of dollars." Chasteen warned that shippers locked into a single freight network face margin compression and struggle to compete.

Despite the friction, most insiders expect the trilateral relationship to survive. "I really believe that a deal gets done and USMCA remains a trilateral agreement," Costello said, though he cautioned the finished product may not arrive until next year. IANA will urge the three countries to commit to a long-term agreement in comments to the U.S. Trade Representative for the 2027 review, with Reinke arguing the annual review requirement "increases uncertainty, creates cross-border friction and slows the movement of goods."