What’s On Tap for Transportation in 2025 with a Change in Politics?
With the presidential election results now determined and the new administration getting itself set up to take over, we thought it would be a good time to take another look at what’s on tap for the coming year for the freight and transportation markets. Some things are still obviously up in the air and others are moving targets at this point, but there are already some trends coming into focus that could impact the market in 2025.
Let’s start with the election and incoming president, who is talking about double-digit tariff increases both on countries like China and on closer-proximity trading partners like Mexico and Canada. None of these plans have been solidified, but the related buzz has some organizations taking preliminary measures to ward off any potentially negative impacts.
For example, Axios says Black and Decker is investing in extra inventory, ports on the West Coast are seeing higher cargo volumes than usual and some companies are considering shifting production closer to home. Automaker Stellantis is reevaluating its Mexican manufacturing operations, and other manufacturers in the space are expected to follow suit.
Regardless of how the tariff issues shake out in 2025, the momentum could lay the foundation for a healthier transportation market over the next year or so. “The year 2024 was by all accounts one of struggle and perseverance for supply chain practitioners,” writes DC Velocity’s Gary Frantz. “No one was immune, from shippers and their third-party service providers, to the truckers providing freight capacity, brokers managing transportation, and technology providers seeking to deliver the next big tech innovation.”
The outlook for the 2025 freight markets is cautiously optimistic at this point. For example, Frantz says that the less-than-truckload (LTL) segment may get a “welcome bump” from any rise in nearshoring and reshoring. “I definitely think we will continue to see growth [along the U.S.-Mexico border] in 2025,” Chris Kelley, SVP of operations at Old Dominion Freight Line told the publication. “During Covid, shippers found out that having products on the water for weeks or months at a time puts their business at risk. So shortening the supply chain became an imperative.”
Coming Out of a Slump
Having endured a prolonged downturn that started post-pandemic and has yet to ease, domestic transportation markets could see positive impacts from any move to “localize” more manufacturing and sourcing. This will also help create jobs, give companies more control over their supply chains and ultimately benefit the national economy.
“Now that we have consistency in the head office, we expect to see a potential inflow of new opportunities to build manufacturing in the U.S., plus more near-shoring by companies that want to move those activities closer to home,” says Jeremy Estep, Chief Revenue Officer at Revenova.
Reflecting on President Trump’s previous term, Estep says some of the promises made during that era have yet to be fulfilled from the organizational perspective. For example, the head of one major U.S. electronics manufacturer promised to establish three new domestic manufacturing facilities. And despite the tariffs being levied at the time, those facilities never came to fruition.
This is just one of several ways the tariffs and trade policies currently being discussed may positively impact the national economy. “It’s going to open up the opportunities and drive more companies to handle their manufacturing in the U.S. or close by,” says Estep. “This, in turn, will lead to greater demand for freight, transportation and logistics services.”
Estep points to Tesla as proof that American companies possess the ingenuity and agility to manage what’s coming next, stay busy and continue to serve their customers well. “Tesla has a flexible sourcing team that can pivot manufacturing and sourcing of parts anywhere in the world,” he says. “And if they can’t source or build somewhere due to tariffs, they’ll just move the operation elsewhere to avoid them.”
The Bright Side
For now at least, it’s still kind of a “wait and see” situation as the new administration hashes out its plans and comes up with ways to put those plans into action. Ultimately, the goal is to put the U.S. on a level playing field with other countries, and one way to do that is by placing tariffs on imported goods. “If the tariffs are put in place properly, it should actually help lower taxes in the U.S. while also creating a more level playing field for all trading partners,” Estep says.
“Just look at the steel industry, which is in the midst of a slow rebound because companies realize that, if they buy domestically, they won’t have to pay double-digit tariffs,” he continues. “This is just one of many ways that the new policies can make us more competitive as a marketplace while also giving our transportation and freight markets a boost.”
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