Why Your Canada-to-US Truck Rates Jumped, and the Empty Truck Problem Behind It
Why Your Canada-to-US Truck Rates Jumped, and the Empty Truck Problem Behind It
Rates on select Canada corridors are up 20% to 35% over the past six weeks, according to FreightWaves’ SONAR data published October 13. The Canadian tender rejection rate, the share of loads that contract carriers turn down at the agreed rate, sits at about 5.5%, up from roughly 4% a year ago.
If your freight moves from Ontario or Quebec into the US, you may have seen it on a quote already. Most of the explanation sits in a place shippers rarely look: the trip home.
A truck is always pricing the trip home
A truck is always pricing the trip home
A carrier doesn’t get paid for one leg. It gets paid for a round trip, and the price of the leg you’re booking reflects what the truck is likely to do next. Picture a load going from Mississauga to Atlanta. If there’s freight waiting to come back north, the carrier can price the outbound leg close to its cost. If there isn’t, the cost of the empty run home has to be covered somewhere, and the outbound rate is where it tends to land.
Logistics people call this the backhaul problem. It’s one of the most useful ideas for reading a rate, because it explains why the same lane can cost very different amounts in different months.
“Rates aren’t climbing because carriers got greedy. They’re climbing because the math of the round trip changed. Once you can see that, the conversation with your carrier gets a lot easier for everyone.”
Michael Scalzo, President & CFO, Vitesse Transport
Why the trip north is hard to fill
The trade fight has made the trip north harder to fill. According to CCJ, the US put tariffs of up to 50% on selected Canadian goods in August. From September 8, Canada answered with tariffs of 15%, 25% and 50% on $27.6 billion of US imports. On September 29, the US banned roughly $1 billion of Canadian goods.
FreightWaves describes Canada’s problem as “a freight imbalance rather than a driver shortage,” and notes that “weak northbound return freight makes it difficult for carriers to find backhauls.” CCJ’s reporting adds that Canada was already the harder of the cross-border corridors for truck capacity before the trade fight began.
Why long hauls are exposed
The same logic applies with more force the farther south a load is headed. The longer the run, the longer the empty run home looks to the carrier who takes it, and the more that can move the rate. It’s worth keeping in mind when you compare quotes on a short lane with quotes on a long one.
What’s a tender rejection, and why does it belong in your budget?
If you have a contract carrier, a tender is simply the load you offer them at the agreed rate. A rejection is the carrier saying no. The load then goes looking for a truck on the spot market, where prices are higher right now.
The market-wide rate of about 5.5% isn’t your number. It does tell you how often contract rates are being outbid, and it points to something you can measure yourself: the share of your own tendered loads your carriers accept, lane by lane, month by month.
Questions worth putting to your carrier
None of this can be fixed from a desk, but a few questions show where you stand.
- How does the return load on my lane factor into my rate?
- What share of my tendered loads did you accept last month, lane by lane?
- If you can’t cover one of my loads at the agreed rate, how soon will I know, and what are my options?
- Can you commit capacity in writing through January, and at what rate?
They’re fair questions, and a good carrier won’t mind being asked. With the holiday weeks ahead, and FreightWaves expecting the Canadian rejection rate to rise further through year-end, December is a hard time to find out the answers.
A rate is only half the story. The other half is whether the truck has somewhere to go next.
If you’re working through Canada-to-US lanes ahead of the holidays and want to talk it through, we’re around.
Based in Montreal, Vitesse Transport has provided FTL, LTL, and 3PL transport services across Canada, the US, and Mexico for 25 years, including dry van, flatbed, rolling tarp and refrigerated trucking. That combination of long-standing cross-border experience and a focused trucking operation makes us a trusted partner for manufacturers who can’t afford to compromise.
