Despite the recent port strikes and the ongoing postal strike, Canadian freight market conditions remain relatively stable, with capacity more than sufficient to service demand. Inbound cross-border rates have shown further moderation and outbound rates are steady. The economy continues to grow — inflation is falling in line with target rates amid improving GDP and consumer spending, supporting a stable demand outlook. Freight demand volume also rose on an annual basis in Q3.
United States President-elect Donald Trump recently announced plans to impose a 25% tariff on all Canadian imports after taking office on January 20th, which could significantly impact the Canadian economy and transportation market. U.S. shippers may accelerate freight movement before the tariffs take effect and reduce Canadian imports afterward, which could create cross-border market volatility in the coming months. However, since the implementation and impact of these tariffs remain uncertain, we have not factored them into our outlook in this report.
According to LoadLink data, the Canadian truckload market was remarkably stable in October 2024. Approximately two-thirds of shipments were cross-border, and the remainder were intra-Canada. Inbound cross-border shipments from the U.S. rose by 3% year-over-year, while outbound loads declined by 8% year-over-year, reflecting minor fluctuations in trade dynamics.
Capacity remains more than sufficient to service demand. A load-to-truck ratio of 3.64 in October marked a 10% rise from September, likely driven by the Montreal port strike. However, a 16% drop from the 4.33 ratio recorded in October 2023 underscores a broader trend of easing capacity pressures.
Overall, the Canadian freight market remains highly favorable to shippers. With moderate demand and ample capacity, the market is unlikely to experience any significant shifts in the near term.
Canada Freight Mix, LoadLink October 2024 Report
Data from the United States Department of Transportation shows consistent year-over-year growth in southbound cross-border shipments throughout Q3, with overall volumes also showing year-to-date increases. Despite this positive trend, the truckload market remains relatively flat due to the ongoing capacity surplus. Historically, southbound shipment volumes dip modestly in November and December, primarily driven by reduced activity during the U.S. holiday season.
Monthly Outbound Truck Crossings – Canada, U.S. Department of Transportation
At a macro level, Canadian truckload exports to the United States have trended upward over the past two decades, with only two major disruptions: the 2008–09 housing crisis and the onset of the COVID-19 pandemic. As the effects of the pandemic fade, exports to the U.S. are projected to grow steadily year-over-year. If current trends persist and demand strengthens in 2025, it will likely put additional upward pressure on southbound cross-border rates.
Yearly Outbound Truck Crossing – Canada, U.S. Department of Transportation
The Canadian General Freight Index (CGFI), provided by Nulogx, tracks truck transportation cost fluctuations for Canadian shippers. Recent data reveals that freight prices have risen significantly from the cycle low recorded in March 2024. However, given current demand stability and high capacity levels, sustained transportation spending increases are unlikely before mid-2025. Temporary disruptions and business closures during the holiday season could still cause a slight rate uptick in December and early January, though conditions should normalize soon after.
Canadian General Freight Index, Nulogx
LoadLink’s Canadian Spot Market Freight Index, which tracks spot market activity, showed notable year-over-year and seasonal fluctuation trends in 2024. The chart shows that 2024 started with less activity than in 2023 but stabilized by mid-year, reflecting the steady market conditions of that time. Aside from a slight dip in October, spot market activity has been trending at or above 2023 levels in the back half of 2024.
Historically, November spot market activity averages an 11% month-over-month increase, driven by cross-border demand during the U.S. Thanksgiving season. However, December tends to experience minimal growth, averaging less than 1% compared to November. Notably, activity declined sharply in December 2023, with a 13.6% drop from November levels.
Given the consistency of spot-market activity in 2023 and its alignment with 2024 trends, we expect stable conditions through year-end and into 2025. As a result, spot rates are unlikely to experience significant fluctuations unless unexpected disruptions occur.
Canadian Spot Market Freight Index, LoadLink
Canada’s inbound markets remain soft, as ample capacity keeps tender rejection rates below 2%. However, as in previous years, holiday-related disruptions and winter weather are expected to cause volatility through late 2024 and early 2025. That said, our assessment of anticipated supply and demand trends indicates inbound rejection rates will likely stay within the low single digits for most, if not all, of 2025.
Moderate inbound demand and abundant capacity continue to drive truckload rates down, with certain lanes experiencing declines of up to 15% over the past six months. While further rate reductions are unlikely, current levels should hold for the near term, barring seasonal disruptions.
Inbound Tender Reject Index – Canada, SONAR
Outbound Canada market trends told a similar story in Q3 and early Q4 2024. With steady demand and strong supply, outbound tender rejections sit just above 2%, almost double the levels observed in 2023. While outbound routing guide disruption is unlikely, we expect more outbound volatility than inbound.
As northbound cross-border rates decline meaningfully, carriers may raise southbound rates to compensate for lost revenue. If so, the likelihood of outbound routing guide disruption will increase as carriers reject contracted loads in favor of more lucrative spot loads. However, with demand still down, it is unlikely that carriers will risk losing existing contracts. As a result, current market conditions should remain steady well into 2025.
Outbound Tender Reject Index – Canada, SONAR
Fuel prices were relatively stable throughout 2024, with slight declines in late summer followed by similar increases in recent months. However, diesel prices are still down significantly year-over-year, a welcome relief for carriers dealing with declining revenue and increasing operating expenses.
However, if the Trump administration tariffs noted earlier come to fruition, diesel prices in early 2025 could resemble those of early 2022 following Russia’s invasion of Ukraine. In turn, carriers might be more motivated to maintain contractual commitments tied to fuel surcharge programs, and spot rates could rise as carriers without contract freight adjust pricing to cover fuel costs.
Diesel Price Per Liter – Canada, NrCan
Transportation employment remains relatively stable, with Q2 2024 numbers coming in 1.8% (13,600 jobs) higher than Q2 2023. The total number of truck drivers was relatively flat year-over-year, growing by only 200 in Q2 2024. Other occupations changed meaningfully, with delivery/courier driver and shipper/receiver jobs increasing by 11% and 4.4% year-over-year, respectively. Dispatchers had the largest decline, dropping by over 30% compared to Q2 2023. However, due to persistently soft freight market conditions, there does not appear to be any employment shortage in the trucking sector.
Total Trucking & Logistics Sector Employment, Trucking HR
Inflation remains at the target level, with the CPI (excluding gasoline) at 2.2% for the third consecutive month. Cooling inflation motivated the Bank of Canada to drop interest rates by 50 basis points to 3.75% during its October meeting. Deputy Governor Rhys Mendes also said additional rate reductions are likely if the economy continues to develop as forecasted, giving consumers and businesses more freedom to borrow and spend. This is a positive sign for Canada’s transportation sector and the broader economy.
RBC card data shows increasing consumer confidence and steady spending growth. The October index was just over 110, 10% higher than in November 2022. However, a significant portion of that growth is due to increased services spending, which has a limited impact on the freight market.
As economic indicators continue to benefit consumers, positive spending growth across the retail and service sectors throughout 2025 is likely. This would ultimately drive freight demand and create volatility. However, the current capacity surplus makes significant disruption unlikely in the near term.
Royal Bank of Canada Card Spending
Canada’s GDP also shows economic growth. Historically, Q2 2024 had the highest GDP reading, and this upward trend will likely continue as the population grows alongside easing economic conditions. While GDP growth reflects the country’s overall economy, it will almost certainly translate to increased freight demand over time.
A notable trend has been the Canadian dollar’s (CAD) value, which recently fell to a four year low before rebounding slightly. This negatively impacts Canadian businesses that primarily use CAD but have cross-border agreements with carriers in USD. The decline stems from strong USD performance since Donald Trump was elected and interest rate divergence between Canada and the United States. The current sentiment is that the exchange rate could remain low if the Trump administration implements tariffs on all U.S. imports as expected. However, a rebound is possible if Canada finds a way to negotiate around the proposed tariffs.
CAN-USD Currency Exchange Rate, Google Finance
As 2024 comes to a close, the Canadian freight market remains favorable for shippers, with steady demand and strong supply keeping rates persistently low. Economic and market indicators suggest these conditions will continue into 2025. While risks like proposed U.S. tariffs and seasonal disruptions could lead to some increased volatility, capacity remains resilient and the Canadian freight market is well-positioned to adapt.
The Arrive Canada Market Update, created by Arrive Insights, is a report that analyzes data from multiple sources, including but not limited to Statistics Canada, BMO Bank, Loadlink Technologies, American Trucking Associations, and Mordor Intelligence, from the past month as well as year-over-year. Please note that all dollar amounts are in CAD. We know market data is vital in making real-time business decisions. At Arrive Logistics, we are committed to giving you the data and insights you need to better manage your freight.