Borderlands Mexico: Tariffs could lead Mexico into recession, report says

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week in Borderlands: Tariffs could lead Mexico into recession, report says; Echo Global Logistics expands operations in Mexico; Americold acquires logistics facility near Houston; and GM agrees to 10.25% wage increase at Mexican plant.

Tariffs could lead Mexico into recession, report says

Mexico’s economy could be the most affected by an escalating global trade war, leading the nation into a recession by the end of the year, the Organization for Economic Cooperation and Development says in a report.

The OECD’s “Interim Economic Outlook,” released Monday, predicted Mexico could fall into a recession with a 1.3% contraction in GDP in 2025. That compares to a GDP growth forecast of 1.2% the OECD estimated in a report released in December.

“The overall picture is one of generalized downgrades partly because of trade uncertainty and economic policy uncertainty, but also the imposition of tariffs,” Alvaro Pereira, the OECD’s chief economist, said during a news conference on Monday. “We’re already seeing high trade uncertainty and economic policy uncertainty. This is already having an impact on confidence. We have downgraded almost every single country.”

The OECD, based in Paris, has 38 member countries – including the U.S., Canada and Mexico – that promote economic growth and sustainable development through public policies.

Its latest economic forecast hinges on the Trump administration going forward with 25% tariffs on imports from Canada and Mexico, as well as implementing broad reciprocal tariffs on other nations on April 2.

The tariffs could “sap confidence and add to the downward pressures on corporate and household spending around the world,” the OECD said in its latest report.

Mexican President Claudia Sheinbaum said her administration does not anticipate a recession.

“They think we’re not going to do anything in the face of an international situation, but we work every day to address that situation. We don’t have that expectation because we have a plan and we’re working to strengthen the economy from the bottom up,” Sheinbaum said Wednesday during her daily news conference.

As of Thursday, outbound truck volumes out of Laredo, Texas, are up compared to last year but down significantly compared to the same periods in 2023 and 2022, according to the SONAR Outbound Tender Volume Index (OTVI.LRD).

The Laredo port of entry is the No. 1 international gateway for trade between the U.S. and Mexico, though it was ranked No. 4 overall in the nation in January, the port of entry’s lowest ranking since 2018.

Trade at Port Laredo totaled $27.9 billion in January, an 11% year-over-year increase.

SONAR’s Outbound Tender Volume Index for Laredo, Texas, (OTVI.LRD) shows 2025 trucking volumes (blue line) are trending higher compared to 2024 but lower than 2022 and 2023. To learn more about SONAR, click here.

President Donald Trump has already imposed 25% tariffs on all steel and aluminium imports from all countries, along with a 20% duty on Chinese goods.

Canada and Mexico could face broader 25% tariffs on April 2 after a roughly 30-day pause was announced March 6.

For the past 17 days, importers weren’t required to pay tariffs on imports from Canada and Mexico that adhered to the United States-Mexico-Canada Agreement.

Trump has called April 2, when the tariff policy is to be revealed, “Liberation Day,” and would include broad reciprocal tariffs to match duties that other countries charge on U.S. imports.

“April 2nd is Liberation Day in America!!! For DECADES we have been ripped off and abused by every nation in the World, both friend and foe. Now it is finally time for the Good Ol’ USA to get some of that MONEY, and RESPECT, BACK. GOD BLESS AMERICA!!!,” Trump posted on Truth Social on Friday.

The OECD’s growth projection for Canada was also lowered. The forecast is for only a 0.7% increase in GDP in both 2025 and 2026, down from a previous forecast of 2%.

China’s economy will grow by 4.8% this year before slowing to 4.4% in 2026, the OECD said.

Growth in the U.S. has also been downgraded: 2.2% expected this year and 1.6% in 2026, down from previous forecasts of 2.4% and 2.1%, respectively.

Echo Global Logistics expands operations in Mexico

Supply chain services provider Echo Global Logistics has expanded operations in Mexico City to support cross-border customers.

The Chicago-based company opened its first office in Mexico City in March 2024 and named Troy Ryley president of Echo Mexico.

“We’re excited to continue to develop our cross-border solutions with the opening of our Mexico City division headquarters,” Doug Waggoner, Echo’s CEO, said in a news release.

Echo Global Logistics also has locations in Monterrey, Mexico, and Laredo, Texas. The company now has 29 operations across the U.S. and Mexico.

In addition to Laredo, Echo has Texas operations in Houston and Dallas.

Americold acquires logistics facility near Houston

Atlanta-based Americold has acquired a 10.7 million-cubic-foot cold storage warehouse in Cedar Port Industrial Park in Baytown, Texas.

The facility was acquired for $127 million and adds 35,700 pallet positions to Americold’s cold storage warehouse portfolio.

“The catalyst for this acquisition was the award of a large grocery retail contract with one of the world’s largest retailers,” George Chappelle, CEO of Americold, said in a news release.

Baytown is 29 miles southeast of Houston.

Americold (NYSE: COLD) owns and operates 239 temperature-controlled warehouses around the world, and manages approximately 1.4 billion refrigerated cubic feet of storage space internationally.

GM agrees to 10.25% wage increase at Mexican plant

Mexico’s National Independent Union of Automotive Industry Workers announced an agreement for wage increases of up to 10.25% at the General Motors plant in Silao, Mexico, according to El Economista.

Workers in four categories who make up more than 60% of the plant’s workforce will receive a 10.25% raise, while the remaining 40% will get 9.25%.

The GM plant in Silao produces Chevy Silverado and GMC Sierra pickup trucks. The factory employs 8,745 workers, according to the union.

The 2024 average wage in Mexico for an unskilled factory laborer is around $4.18 per hour, according to Tucson, Arizona-based Tetakawi, a provider of services for foreign manufacturing companies in the country.

China’s largest shipping line sees stunning gains in revenue, profits

China’s largest container shipping line saw massive gains in revenue and profits in 2024.

Cosco Shipping Holdings reported operating revenue of $33.29 billion in 2024, an increase of 33.29% from the previous year.

The world’s fourth-largest container carrier (OTC: CICOF) said earnings before interest and taxes (EBIT) totaled $9.79 billion, an increase of 90.74% year over year.

Net profit soared by 95% to $7.75 billion, while net profit attributable to shareholders was $6.87 billion, an increase of 105.78% from the previous year.

Many of the largest shipping lines in 2024 saw remarkable gains in revenue and profits thanks to durable consumer demand in the United States, and the Red Sea crisis which led carriers to divert vessels away from the region on longer, costlier routes that helped absorb capacity and push up rates.

But Costco is facing serious obstacles in the U.S., from trade tariffs and proposed port fees on Chinese ships which could add tens of millions of dollars to operating costs.

Cosco is part of the Ocean Alliance with Orient Overseas Container Line of Hong Kong, which it owns; CMA CGM of France; and Taiwan’s Evergreen Marine.

Find more articles by Stuart Chirls here.

Related coverage:

Trans-Pacific container rates below lowest 2024 levels: Freightos

Hapag-Lloyd sees mixed earnings in 2024

Port of Los Angeles sees strong container volumes in February

Chassis manufacturers look to navigate supply chain, trade changes ahead

Port of Seattle says newly approved city housing plan would interfere with truck traffic

Maritime industry stakeholders in Seattle this week again voiced fierce opposition to approval by the City Council of a controversial plan for residential development near the port and downtown industrial district.

Bill 120933, approved Tuesday by a 6-3 vote at a packed meeting of the council, would permit construction of 990 apartments in the Sodo neighborhood of the city’s Industrial District near T-Mobile Park, home of Major League Baseball’s Seattle Mariners. Supporters see it as a way to provide much-needed housing and establish a base for artisan manufacturing in an area that has been the site of increasing violence.

But opponents say the plan would bring residential development to the port’s doorstep, followed by complaints by residents over noise and activity that would eventually chip away at the area’s industry. They also say development will interfere with vital freight mobility.

“There are thousands of drivers that service the Seattle port and railroads every week, many that are here locally and depend on the fluidity of our heavy haul corridors and surrounding streets,” said Curt Nuccitelli, president and owner of Spirit Transport Systems, in a LinkedIn post.

They also say the vote undermines a 2023 compromise agreement between the port and City Council that protects maritime and other business interests while allowing limited residential development without rezoning.

At the time, Mayor Bruce Harrell’s office told the council it could revisit the proposal, according to local reports. That effort was led by Council President Sara Nelson.

“The Port of Seattle is disappointed in the Seattle City Council’s decision to move forward rushed legislation that will directly harm our city’s maritime and industrial operations, threaten thousands of union jobs, and negatively impact our region’s economic competitiveness in trade,” the port said in a statement posted to its website. “It pushes us down a slippery slope of encroachment on industrial lands. This is a loss for the public who will pay in the future with resources, missed opportunities, and heartache.”

The property south of the baseball stadium is owned by billionaire hedge fund executive Chris Hansen, who wanted to construct a basketball arena in an effort to bring an NBA team back to Seattle.

“Today’s biggest winner is an out-of-state billionaire developer, who more than a decade ago made a bet that he could buy industrial land on the cheap and get the city council to add millions to his property value just by changing the zoning,” the statement went on. “Sodo needs to be a destination for the maritime and clean energy economy, not condos. We need to execute on competing for trade and activating the clean energy transformation. We are not done fighting for that long-term vision for Seattle.”

In a February letter to the council, the port and the Northwest Seaport Alliance, which includes Washington’s Port of Tacoma, said the project could violate certain environmental review laws. The alliance said it is still considering its legal options.

The alliance handled approximately 438,000 twenty-foot equivalent units in 2024, part of a total $70 billion in annual trade that includes breakbulk, vehicles and bulk cargo.

Find more articles by Stuart Chirls here.

Related coverage:

Trans-Pacific container rates below lowest 2024 levels: Freightos

Hapag-Lloyd sees mixed earnings in 2024

Port of Los Angeles sees strong container volumes in February

Chassis manufacturers look to navigate supply chain, trade changes ahead

FedEx orders Boeing 777 and ATR cargo aircraft, delays MD-11 retirements

FedEx Corp. has exercised options to purchase eight additional Boeing 777 freighters from Boeing and pushed back retirement of the tri-engine MD-11 fleet in response to rising demand for international nonparcel freight service, the company said in third-quarter results.

On Friday, Toulouse, France-based ATR, a manufacturer of regional aircraft, announced that FedEx (NYSE: FDX) will acquire 10 extra ATR 72-600 turboprop freighter aircraft, with deliveries scheduled between 2027 and 2029.

FedEx said in Thursday’s quarterly filing that it has extended the retirement deadline for the full MD-11 fleet from 2028 until 2032. Boeing is expected to deliver three factory-built 777 freighters in 2026 and five in 2027. Chief Financial Officer John Dietrich said during a conference call with analysts that FedEx also recently bought two used 777 freighters from an undisclosed party.

FedEx currently operates 57 Boeing 777 freighters and has two deliveries from its 2018 order scheduled this year.

The decision to acquire more widebody cargo jets and hold on to the MD-11s is motivated by the need to replace legacy aircraft with more modern ones, the availability of Boeing jets at attractive prices and growth projections for international heavy freight, Dietrich said.

Growth in freight demand is largely a function of FedEx’s recent strategy to segregate its Express air network along product lines, dedicating a portion of the fleet to go after premium international air cargo that is traditionally consolidated and booked on airlines by freight forwarders.

“Given the demand that we’re seeing out there, particularly in the international economy [segment], we elected to extend the life of those aircraft,” Dietrich said of the MD-11s. “Those assets are mostly depreciated but have some useful life left in them and can support our profitable growth strategy. So if the demand environment doesn’t pan out, we also have the ability to accelerate any retirements on MD-11s.”

FedEx needs extra capacity after permanently removing 31 aircraft from the fleet last year, including nine MD-11s and 22 Boeing 757s, Dietrich said. The airline division has retired 20 MD-11s over the past three years and currently has 37 of the large freighters in service.

The fleet upsizing represents a change in thinking given that FedEx had excess aircraft following the expiration in September of its domestic air cargo contract with the U.S. Postal Service and that as recently as last year the company was downsizing the air fleet in response to a slowdown in parcel demand.

The express carrier had decreased total U.S. domestic flight hours by 24% in the second quarter, primarily due to a 60% reduction in daytime flying for the Postal Service. It expects to realize large savings, starting this quarter, by not having to dedicate more aircraft and other resources to meet service commitments when planes routinely weren’t full of letters and packages.

“Taking down the daytime network that supports the post office, that really increases our flexibility,” President and CEO Raj Subramaniam said.

*FedEx has committed to buy 10 additional ATR 72-600 cargo aircraft to support regional feeder routes. (Photo: ATR)*

The pivot appears directly connected to FedEx’s Tricolor strategy to streamline the air network and compete more aggressively for deferred cargo business as part of an enterprisewide campaign to remove $4 billion in permanent costs and improve profitability. Management has previously explained it intends to capture a larger share of the $80 billion airfreight market, where it currently has low-single-digit penetration, by reallocating assets, building a dedicated sales organization and investing in digital customer technology.

FedEx has spent 20 months building to the point of tackling the third-party airfreight market at scale.

Under the plan, a Purple network of aircraft and facilities is geared toward international express parcel shipments that move at night for next-day delivery. Those flights accept fewer large freight shipments to maximize sorting efficiency.

The Orange network operates off-schedule to carry heavy freight that doesn’t require maximum speed and is better suited for a truck-fly-truck delivery model than flying the entire trip. FedEx says it is targeting high-yield freight with similar characteristics to less-than-truckload freight – such as pharmaceuticals, perishables, electronics and automotive components – that is more profitable per pound than larger shipments of general goods. Flights are scheduled into primary and regional sortation centers during the daytime, when workers have more time to build dense pallets and then layer on small parcels or poly mailer bags with e-commerce orders to maximize capacity.

The White network is for low-priority shipments booked on commercial passenger aircraft by FedEx’s freight forwarding arm.

“Tricolor is driving better asset utilization. As we improve aircraft density and better leverage our surface network, we have a broad range of KPIs that we are tracking to measure our progress,” said Subramaniam. “We’re especially pleased that on a year-over-year basis, payloads across our air network are up 9% with a 5% improvement in density. This is a key objective of our tricolor operating model.”

Management said the changes are already having a positive impact, especially as trucking increasingly replaces flights to connect smaller markets with hubs.

The Express segment boosted adjusted operating income by 17% to $1.4 billion on a 2.7% increase in revenue during the third quarter, despite the negative impact of losing the U.S. Postal Service contract. Higher U.S. and international export volume buoyed results. International economy package volume increased 48% in the third quarter and airfreight average daily pounds increased 3% for International Priority Freight primarily due to continued growth in deferred air service and e-commerce.

The acquisition of 777 production freighters was influenced by the fact that FedEx hasn’t ordered any widebody aircraft in several years and Boeing was offering them at a good price because they are the last ones to be built before Boeing closes the 777 production line in 2027 so it can focus on a new freighter model, Dietrich said. The newer aircraft are more fuel efficient and require less maintenance than aging units.

As CEO of Atlas Air before joining FedEx, Dietrich purchased the last four 747-8 jumbo jet freighters Boeing produced. Atlas Air, the largest operator of 747 freighter aircraft in the world, took delivery of the final 747 in January 2023. “That turned out to be one of the best financial acquisitions for that company,” Dietrich said.

“These aircraft are in very high demand, and we didn’t want to let them go, for one. But our decision was really informed by both our MD-11 retirement plans, as well as our growth projections for the international freight market,” he explained.

Dietrich reiterated that the deal doesn’t depart from FedEx’s plan to contain capital expenditures, including a $1 billion target for aircraft in the upcoming fiscal year, as part of the effort to run a leaner organization and increase shareholder value.

“We’re planning to stay within that area of investment not only in FY 2026, but for the immediate years beyond, and these aircraft acquisitions are within that framework,” he said.

Feeder fleet upgrade

But FedEx isn’t only focused on large cargo aircraft.

The ATR order adds to a previous FedEx commitment for 30 aircraft. FedEx has received 23 aircraft so far and expects the remainder of the first order to be delivered by the end of 2026, according to its latest fleet update.

FedEx subleases the ATR fleet to partner carriers that operate smaller aircraft between smaller cities and hub airports to feed its mainline aircraft. The new ATR 72-600s are being acquired to replace older ATR 72 aircraft, of which FedEx operates 19.

The ATR 72-600 has a payload of about 10 tons. It can be optimized for bulk transport with nine vertical nets attached to the floor but also has a large cargo door, wide cross section and loading system to handle shipping containers, which are compatible with larger freighters.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

FedEx says economic uncertainty slowing parcel and freight demand

FedEx makes big push for third-party air cargo

FedEx to close pilot bases in Alaska, California and Germany

Running on Ice: Pharmaceutical supply chain headed for $5.3B valuation

All thawed out

The global pharmaceutical industry is expected to reach a valuation of $5.3 billion by 2032. The current valuation is $2.6 billion, as of 2024. This includes everything from raw materials and active ingredients to finished products and medical devices from manufacturers to distributors, wholesalers, pharmacies and health care facilities.

IAG cargo, the cargo division of International Airlines Group, recently reported a 22% increase in tonnage in 2024 versus 2022, which signals anticipated growth in demand for temperature-sensitive airfreight in the pharmaceutical industry.

Jordan Kohlbeck, head of pharmaceutical at IAG Cargo, said in an American Journal of Transportation article: “The safe, controlled movement of pharmaceuticals is more important than ever due to increasing global demand, medical advances, regulatory requirements and the undeniable need for rapid response to medical crises. As the industry continues to grow, ensuring life-saving medicines and treatments reach patients in optimal condition will become even more important.”

Temperature checks

(Photo: Alexandros Michailidis/Shutterstock)

The pharmaceutical industry and the cold chain go hand in hand. However, in more remote parts of the world, difficulty ensuring the reliability of the cold chain can put pharmaceuticals at risk. Vaccine storage in such regions has long been a struggle as power outages, fuel shortages and other issues can ruin vaccines before children receive them. Some progress is being made with vaccines and applications that don’t require temperature-controlled transportation, but there is still a long way to go.

This need for reliability has spurred innovation in solar-powered fridges and freezers, originally created in the 1980s. This technology has become such a valuable resource for the country of Malawi that it has since replaced all of its gas- and battery-powered fridges with solar-powered ones. This swap has increased the nation’s pharmaceutical cold chain locations to 1,200, meaning people don’t have to travel as far for the care they need.

In a Gates Foundation article, Gray Phiri, a cold chain manager in Malawi, said, “Even in places with grid power, we realized we should also be thinking about having solar fridges at those facilities.” The article noted, “Today, all 29 of the country’s district-level vaccine storage facilities use solar-powered units, with electricity available as backup.” Roughly 60% of Malawi’s cold chain locations are now supported by solar-powered fridges funded by Gavi, the Vaccine Alliance.

Food and drug

As if the freezer aisle couldn’t get any cooler, Little Debbie comes along and says, but wait there’s more. Notable in the freezer section is the company’s partnership with Hudsonville Creamery that produces Little Debbie ice cream pints, in iconic flavors of time-honored classics like Zebra Cakes, Star Crunch and Cosmic Brownies.

Now Little Debbie has moved into the ever-popular ice cream bar market. Again teaming with Hudsonville, the brand has brought back four ice cream bar flavors in time for summer: Birthday Cake, Strawberry Shortcake Rolls, Nutty Bars and Star Crunch.

The ice cream bar market was valued at $6.35 billion in 2024 and is expected to grow to $10.58 billion by 2033. It’s one of the fastest-growing markets in the frozen dessert sector. Popsicles still have over 60% of market share, but ice cream bars are rapidly taking a bite out of that.

Cold chain lanes

SONAR Tickers: ROTRI.IA, ROTRI.CID, ROTRI.DBQ, ROTRI.DSM

This week’s market under a microscope is a broader look at Iowa, made up of three relatively small markets: Des Moines, Dubuque and Cedar Rapids. While these markets might not be the largest, they have held the top spots for reefer outbound tender rejections pretty much since the beginning of the year. Reefer outbound tender rejection rates consistently above 20% indicate some inflationary spot rates in the market.

Reefer outbound tender rejections in Des Moines have fallen 246 basis points week over week, whereas Dubuque and Cedar Rapids have seen increases of 114 basis points and 2,446 basis points, respectively, in the same time period.

While reefer rejections remain elevated, the impact is not as significant as if, for example, it were Atlanta, with an average of 20% rejections. That would hamper such a large market, drastically affecting supply and capacity compared with when a smaller market is elevated.

Is SONAR for you? Check it out with a demo!

Shelf life

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Pennsylvania bills would benefit port truck drivers, reefer units

CCT and Tower Cold Chain unite to unveil major product launch at LogiPharma 2025

Tive signs strategic partnership agreement with Nippon Express Holdings, Inc.

Porter Logistics expands services to cold chain logistics

Wanna chat in the cooler? Shoot me an email with comments, questions or story ideas at moconnell@freightwaves.com.

See you on the internet.

Mary

If this newsletter was forwarded to you, you must be pretty chill. Join the coolest community in freight and subscribe for more at freightwaves.com/subscribe.

Vibe coding hits freight gaming; a woman’s journey in heavy haul | WHAT THE TRUCK?!?

On Episode 816 of WHAT THE TRUCK?!?, Dooner is talking to FreightGames.io’s Stephen Ruhe about his latest AI-generated trucking video game Freight Frenzy. Freight Frenzy was born of the vibe coding phenomenon that’s been accelerated by recent advances in AI large language models. We’ll go deep on the vibe coding phenomenon with special guest play-testers: my sons.

Casey Stone joins us to talk about a woman’s journey in heavy haul.

Plus, the freight market is “weird”; have you seen this missing trucker; and more.

1:20 Have you seen this trucker?

2:45 “The freight market is weird”

6:54 A Women’s Journey in Heavy Haul | Casey Stone

17:52 Tiny trucks

18:37 Vibe coding hits freight gaming | Stephen Ruhe and Dooner boys

Catch new shows live at noon EDT Mondays, Wednesdays and Fridays on FreightWaves LinkedIn, Facebook, X or YouTube, or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player and at 5 p.m. Eastern on SiriusXM’s Road Dog Trucking Channel 146.

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FedEx prepping LTL unit ahead of spinoff

A FedEx Freight daycab pulling two pup trailers

FedEx continues to pretty up the nation’s largest less-than-truckload business, FedEx Freight, ahead of a 2026 spinoff. However, a lackluster industrial complex continued to present a headwind during its recent fiscal quarter ended Feb. 28.

Revenue at FedEx Freight declined 5.3% year over year to $2.09 billion as tonnage fell 7.6% and revenue per hundredweight, or yield, increased just 2.2%. The tonnage decline was the combination of a 4.7% decline in shipments and a 3.1% decline in weight per shipment. A weak industrial economy along with lower fuel surcharge revenues were cited as the culprits.

Table: FedEx Freight’s key performance indicators

Approximately 90% of the LTL unit’s top line comes from business-to-business transactions. Uncertainty around a rapidly changing trade landscape is weighing on capital investment and domestic manufacturing, which only recently punched through a two-year-plus downturn.

The Thursday update from FedEx (NYSE: FDX) showed trends in line with recent updates from other LTL carriers, which have reported mid- to high-single-digit tonnage declines to start the year. Saia (NASDAQ: SAIA) and ArcBest (NASDAQ: ARCB) are outliers to the trend given the idiosyncratic strategies they have in place: The former aggressively added terminals and freight following Yellow Corp.’s (OTC: YELLQ) 2023 collapse, and the latter is backfilling its network with truckload freight to offset LTL volume declines.

The LTLs have been the worst-performing group among transports since the beginning of the year. A 20%-plus sell-off in shares is tied to the tariff overhang and the possibility that Amazon (NASDAQ: AMZN) becomes a more meaningful player in the space. Valuation multiples are also resetting, giving back some of the froth captured during the pandemic, when the sector was rewarded for its industrial-focused, final-mile-type networks that played an important part in restocking inventories. The group also remained in favor due to advantageous pricing dynamics.

FedEx Freight’s fiscal second quarter (ended Nov. 30) may be the nadir for the y/y declines. (Tonnage was down 11.3% y/y in that period.) Management is hoping for a return in B2B volumes at some point but still expects sequential top-line improvement in the current quarter (fiscal fourth quarter ended May 31), albeit still lower y/y, regardless.

“At freight, we expect a continued revenue decline on a year-over-year basis in Q4 but also expect the Q4 decline to moderate sequentially,” said Brie Carere, FedEx’s chief customer officer, on a conference call with analysts. The unit is focused on increasing density and weight per shipment, which should produce a better margin in the fiscal fourth quarter.

The unit recorded an 87.5% operating ratio (inverse of operating margin) in the recent quarter, which was 300 basis points worse y/y. Weak volumes and lower fuel surcharge revenues were just partially offset by improvement in base yields and cost actions, which included “headcount management.”

Carere provided some positive commentary on yields.

“We remain focused on quality growth amid a competitive but rational pricing environment. I am encouraged by recent pricing trends. Holiday demand surcharges supported our results.” She also pointed to a “strong capture rate” on the 5.9% general rate increase implemented in January.

SONAR: Longhaul LTL Monthly Rate per Ton Mile, Class 50-65 Index. Less-than-truckload monthly indices are based on the median rate per ton mile for four National Motor Freight Classification groupings and five different mileage bands. To learn more about SONAR, click here.

Spinoff is on track, looking for new LTL leader

Management said the plan to spin off FedEx Freight into a separately traded public company is on track to conclude by June 2026. The company recently established a separation management office and transition team. It also executed a $16 billion debt exchange and consent solicitation to facilitate the breakup.

“This will create more flexibility for both companies’ capital structures as we prepare for the separation, which will come in the form of a tax-efficient spinoff,” said CFO John Dietrich. “As our separation management office continues to advance our spin-related work, it’s business as usual for our other team members and all our customers.”

He said the unit remains focused on “revenue quality, network utilization and operational efficiency,” levers that will presumably support a favorable valuation when the transaction occurs. The company continues to bolster sales staff to improve the freight mix.

FedEx also said it was looking for a new leader to run the stand-alone business.

“We are conducting a very comprehensive search for the CEO of FedEx Freight, and I’m confident that through our thorough process that we will provide FedEx Freight with the right visionary leader who can help chart the course of this new stand-alone company,” said FedEx CEO Raj Subramaniam.

FedEx again lowered its outlook for fiscal 2025 on Thursday, reeling in adjusted earnings per share to a range of $18 to $18.60 – a 6% reduction at the midpoint. It said consolidated revenue is now expected to be “flat to slightly down y/y” versus the prior call for no change. The company reiterated cost savings from its Drive initiative to total $2.2 billion in the current fiscal year ($4 billion in aggregate).

Shares of FDX were off 8.2% at 12:19 p.m. EDT on Friday compared to the S&P 500, which was off 0.3%.

More FreightWaves articles by Todd Maiden:

Regulator vows to back US exporters fearful about Trump’s shipping fees

WASHINGTON — Federal Maritime Commission Chairman Louis Sola told port executives that a priority under his tenure would be assisting U.S. exporters, but that didn’t quell concerns about the effect that million-dollar port fees planned against Chinese vessel operators would have on American ports.

“Exports, particularly energy and agriculture, could be priced out and make competitors from other nations more affordable for our customers abroad,” an attendee told Sola at a legislative conference sponsored by the American Association of Port Authorities in Washington this week, after Sola gave a keynote speech.

“From your perspective, and the new administration’s perspective, do you think there’s a willingness to alter what has been proposed to take into account what would be the effects on exports, particularly since American exports seem to be a priority?”

Sola – who emphasized he was speaking on his own behalf and not for the FMC or the Trump administration – responded that the U.S. trade representative (USTR), which is proposing the fees following an investigation into China’s shipping practices, is “very well aware” of how the fines could impact American exporters.

“And we have drawn up our concerns to [USTR] to represent everybody here in the room,” he said. “I can say that we are definitely advocating for U.S. exporters and the U.S.-flag fleet.”

Under the USTR proposal, unveiled by the Trump administration in February, ships constructed in China would face fees of up to $1.5 million per U.S. port call. Vessel operators with even one Chinese-built ship in their fleet could be charged $500,000 per call, while Chinese shipping companies like Cosco would incur $1 million per call for any vessel, regardless of its origin.

The unprecedented fees aim to counter China’s dominance in global shipbuilding and maritime transport but could inadvertently disrupt U.S. trade flows and supply chains.

Brian Clark, executive director of the North Carolina State Ports Authority, has been told by major port customers that should USTR move ahead with the fees, carriers will consolidate their port calls to a minimum number of major ports to minimize costs, bypassing smaller ports like his.

“Not only would carriers remove midsized ports from rotations entirely, precipitating the sure demise of such ports, but larger ports would experience immense congestion leading to inefficiencies worse than what was experienced during the peak of the pandemic supply chain disruptions,” Clark wrote in comments filed on Friday with USTR.

“Without access to port alternatives like the Port of Wilmington and the Port of Morehead City, North Carolina businesses will face higher transportation costs, driven by significant increases in first- and last-mile expenses to reach major ports.”

John McCown, a container shipping expert, told USTR that the fees would have more adverse consequences than tariffs, particularly on exports.

“By having the proposed fees apply to all ships whether involved with imports or exports, they will effectively be a direct tariff on exports … and the American jobs linked to those exports,” he warned.

The fees have raised concern about possible effects from all parts of the U.S. supply chain, including trucking.

“The trucking industry is still in a deep recession and companies are going out of business all over the country,” wrote Mitchell Bros. Truck Line, a drayage trucking company serving the ports of Seattle and Tacoma, Washington, in comments to USTR.

“These policies would be catastrophic for our industry as a whole. We need policies that promote economic growth and promote a sense of stability. These policies would cause major disruption and create extreme economic instability.”

Sola was confident, however, that the trade policies being implemented by the administration would ultimately benefit the U.S. maritime sector, and attested to President Donald Trump’s focus on the sector.

“I’ve spoken to him on numerous occasions about shipping, and he understands the supply chain as well. We’ve never had a president prioritize shipping the way this one has” in the first two months of an administration, Sola told conference attendees.

But he cautioned that with Trump emphasizing shipping, “a lot of things may affect you in a bad way and may give you some concern. Don’t discredit at first sight; go ahead and work through it. The president is going to use a chain saw at first and then he’s going to use a scalpel. So if you have concerns on [executive orders] or proposed legislation, now’s the time to be involved.

“That being said, we’re also going to see an investment in the United States maritime sector that I don’t think that we have seen in my lifetime, and that is really saying something.”

Click for more FreightWaves articles by John Gallagher.

Clash on legal status of California transportation waivers highlighted at TCA

PHOENIX – The attempt by the Trump administration’s Environmental Protection Agency to overturn various clean transportation waivers granted to California by the Biden administration may have suffered a recent setback, but the trucking industry still hopes for victory in Congress.

Jim Mullen, a former acting administrator of the Federal Motor Carrier Safety Administration and now executive director of the industry-sponsored Clean Freight Coalition, sought to sum up recent events during his slot at a rapid-fire series of press conferences at the annual meeting of the Truckload Carriers Association meeting. Mullen is also president of Mullen Consulting.

Given recent events, he had plenty of updates to try to stuff into his small allotted time.

Mullen joked that the timing of the recent action by the EPA to roll back various Biden administration emissions regulations caught him by surprise. “I thought maybe the EPA would wait for the TCA annual convention, but they did so last week,” he said.

Mullen also discussed the March 6 release of a memo by the General Accounting Office, which challenges the legal basis of EPA’s earlier decision to try to reverse the California waivers that granted the state the ability to implement its Advanced Clean Trucks (ACT) rule and other regulations promulgated by the California Air Resources Board (CARB). The EPA wants Congress to reverse those waivers.

The EPA’s attempt to reverse its own waivers, albeit those of the prior administration, was always questionable given that EPA waivers historically have not needed to be approved by Congress. The waivers approved by the Biden EPA, for example, weren’t sent to Congress for approval.

But the Trump EPA, led by Lee Zeldin, sent them to Congress last month to kick off what it hoped would be a denial of the waivers if they could be determined to be rules rather than waivers – and subject to the Congressional Review Act (CRA).

GAO weighs in

The GAO memo that could be seen as a setback supported arguments that the waivers didn’t need congressional OK. Waivers granted by the EPA are permitted for California to exceed federal environmental standards. Traditionally, those waiver requests are almost always granted, though the expectation that a waiver for the Advanced Clean Fleets rule was not going to be granted ended California’s attempt to have that regulation adopted just before the Trump administration took office.

The waivers in question were not just for the ACT, but also for its Omnibus NOx rule, which governs emissions of nitrogen oxide, and the so-called Clean Cars II rule, which builds on the earlier Clean Cars I waiver that regulates automobile emissions.

The GAO in November 2023 had ruled on the question of congressional review of waivers, coming down on the side that waivers weren’t regulations and didn’t need a congressional OK.

It did so again in its March 6 memo. “Our view is that the analysis and conclusions in our 2023 … waiver decision would also apply to the Notices of Decision recently submitted as rules to Congress by EPA,” the GAO said.

That GAO decision led to significant criticism from various interest groups. Representative of that view was the statement by the American Energy Alliance, an industry group.

The Alliance disputed what it said were media reports that the GAO action would “block Congress from voting to disapprove of the waiver.”

“The CRA grants Congress, not GAO, the power to approve or disapprove agency actions once submitted for review,” the Alliance said. “The CRA offers Congress the opportunity to reassert control over regulatory policy and prevent this overreach from disrupting the market.”

Senate Parliamentarian has a key role

Mullen, at TCA, was more ambiguous in discussing the impact of the GAO memo. He said it is the Senate parliamentarian who will decide whether a move to have Congress overturn the waivers can be reviewed by Congress. He added that his Washington contacts believe the parliamentarian’s office is leaning toward a view in line with the GAO finding, that a waiver is not the same thing as a rule under the CRA and is not subject to congressional review.

But that wouldn’t close the book on it, according to Mullen. “EPA would have to send the waivers over as a final rule to the Federal Register to trigger the CRA,” he said.

On another front, the announcement by the EPA that it was going to “reconsider” the Greenhouse Gas III regulations on heavy-duty vehicles that are seen by critics as eventually being a de facto mandate for electric vehicles is separate from the question of waivers granted to California.

In its announcement, the EPA used the term “reconsider” in one release on its plans. But the headline on another prepared statement used the word “terminate,” though it said the termination would be of what Trump officials have long described as the Biden administration’s EV mandate. The GHG Phase 3 rules are not explicitly an EV mandate, but interpretations of their impact have led to that argument.

Mullen, a self-described “reformed lawyer,” said the words chosen are important. His interpretation is that the EPA will stop the progress toward Phase 3 regulations and instead hold the regulation at the less onerous Phase 2.

Moreno bill is one to watch

The other Washington development that Mullen said should be monitored is the progress of a bill introduced recently by Sen. Bernie Moreno, R-Ohio, that would codify much of what is going on in the regulatory arena.

Moreno’s bill has been dubbed the Transportation Freedom Act. Among its provisions, it would end what Moreno called state-by-state waivers, though the only state that is eligible for a waiver under the Clean Air Act is California.

It would also render moot the GHG 3 rules for heavy-duty vehicles and require the EPA to come up with a substitute. That substitute, according to the proposed legislation, should “reflect achievable technological advancements based on market readiness and affordability.”

Mullen said he expects a companion bill to be introduced in the House soon, declining to say what member would introduce the legislation.

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Plus and Tier IV partner to tackle autonomy 2.0 in Japan

Plus and Tier IV Partner to Advance Autonomy 2.0 in Japan

Plus, an AI-based autonomous trucking software provider, and Tier IV, the world’s first open-source software for autonomous driving, announced a strategic partnership to develop autonomous driving solutions in Japan. The solution is slated to start with Level 4 autonomous trucks on Japan’s expressways and includes support from a Japanese government-led initiative to expedite the development of autonomous driving technologies, aimed at addressing the country’s critical driver shortage.

A recent study by the Nomura Research Institute said there was a 36% shortfall in Japanese truck drivers in 2023. This led the Japanese Ministry of Economy, Trade and Industry to develop a project to create autonomous trucks based on vehicles from Japanese vehicle manufacturers.

As part of the partnership, a new customized solution will integrate Plus’ end-to-end virtual driver AI model with Tier IV’s Autoware-based platform to meet the autonomous driving requirements of the Japanese market. This is part of Plus’ existing partnerships and expansion in the United States and Europe.

Tier IV CEO Shinpei Kato said in a news release: “We’ve always believed that co-creation with our partners is the fastest way to bring the best autonomous driving systems to the world. Plus is a global autonomous driving software company that’s already powering the Level 4 autonomous trucks of leading truck makers in the United States and Europe, like TRATON GROUP’s Scania, MAN and International, Iveco Group, as well as Hyundai. This makes Plus the ideal partner to accelerate deployment of Autonomy 2.0-based autonomous driving technology in Japan, starting with autonomous trucks.”

Advanced Clean Transportation Expo announces speakers ahead of April conference

Organizers of the Advanced Clean Transportation (ACT) Expo, the largest advanced commercial vehicle technology event in North America, recently announced an updated roster of speakers for their 15th annual event. The event is set to take place from April 28 to May 1 at the Anaheim Convention Center and includes fleet and transportation industry leaders.

During the four-day event, ACT has nearly 300 fleet executives and industry innovators who are slated to share case studies, strategies and insights involving the commercial vehicle space. The organizers noted sessions that focus on technologies like connected and automated vehicles, optimizing fleet operations, evaluating the current landscape of zero-emission-vehicle adoption, gaseous and renewable fuels, and strategies for a shifting U.S. regulatory environment.

“Fleets are facing an unprecedented amount of change, with an ever-expanding set of technologies and fuels to choose from, increased vehicle complexity, uncertain operating costs, evolving regulations, and growing customer demand for lower cost and cleaner solutions,” said Erik Neandross, president of Clean Transportation Solutions at TRC in a news release.

The first round of keynote speakers includes:

Jennifer Rumsey, chair and CEO, Cummins Inc.
Mathias Carlbaum, president and CEO, International.
Catharina Modahl Nilsson, member of the executive board of Traton SE, group product management, Traton.
Patti Poppe, CEO, PG&E Corp.
Lars Stenqvist, CTO, Volvo Group.
Jim Walenczak, vice president, Paccar Inc., and general manager, Kenworth Truck Co.

The full list of ACT Expo speakers can be viewed at www.actexpo.com/speakers.

Waabi announces breakthrough in model to test realism of its simulators

Toronto-based autonomous vehicle startup Waabi recently announced in a blog post that the company made a major breakthrough in its mathematical approach to definitively measure the realism of its simulators. AV companies rely heavily on simulations to ensure safe testing, but a challenge has been validating the simulators themselves. The other way, the old-fashioned one, is to simply drive enough to encounter a range of circumstances.

Raquel Urtasun, founder and CEO of Waabi, blogged: “The unpredictable nature of the real world means that, no matter how many miles an AV drives, it’s essentially impossible to guarantee exposure to every potential real-world situation, especially those safety-critical, low-frequency events. Life-threatening accidents happen roughly once for every 10 million miles that are driven by humans; a fatality is roughly once every 100 million miles.”

Urtasun adds that if one considers a human-driven truck, at best it may cover 100,000 miles annually, and it would take a fleet of 1,000 an entire year to potentially encounter one such event. Waabi adds, “This is the first time a self-driving technology company has ever proven the realism of their simulator, and subsequently the safety of their AI system.”

Briefly noted …

Kenworth recently announced three packages of advanced driver assistance system options and Bendix features available for Kenworth T680s. The package also features a new Pedestrian Autonomous Emergency Braking feature with high-beam assist using a new forward-looking camera. Based on conditions, the high-beam assist can automatically deactivate the high beams when needed.

Distributed energy solutions provider ElectricFish recently announced the launch of its fully redesigned grid power bank with ultrafast EV charging. The system called 350Squared delivers 133% faster EV charging than traditional hardware while reducing the cost of grid upgrades by up to 90%. The addition of AI forecasting brings a combination of demand response and predictive analytics that optimizes energy use, ensuring grid stability and lowering operational costs.