Mat: Welcome to the July edition of the Robinson Roundup. My name is Mat Leo, and I'm joined, as always, by my colleague, Ryan Hammett, to talk about the latest developments in the transportation markets. Ryan, today we're going to cover a few topics, including the latest in tariffs, the end of the produce season in the U.S., a quick reminder of the NMFC class changes that just went into effect, and discuss the impacts of the English language proficiency requirements in the U.S. truckload market.

So let's begin with what has become our most regular monthly update. That, of course, is trade policy and tariffs. As August approaches, there's plenty of buzz around what could be happening with the tariffs in the weeks ahead. So let's remind everyone that the administration prefers to work through their negotiations in a public forum. And what you might see or hear in the news may not directly translate to policy. As example, trade frameworks that were announced many weeks ago still haven't had any details released yet, let alone be implemented.

Now, as we approach August 1st, which is the currently planned deadline for wider reciprocal tariff reductions, as well as August 12th, which is the current deadline for the temporary China reductions, remember to follow official government sources and consult the C.H. Robinson customer advisory page to know what is official. Now, at this time, any country that has not announced a framework of a trade deal with the United States before August 1st is scheduled to revert to the tariff levels announced on April 2nd. And this list includes countries like South Korea, Japan, and Thailand.

Ryan: Meanwhile, as we look ahead to the August 12th deadline for China, we have seen ocean bookings and rates stabilize heading into late summer. There was an artificial demand creation event earlier in the summer when the tariffs from China and other Asian countries were originally lowered, but that slowdown in inventory front loading from Asia has created space availability for ocean shippers. That being said, importers definitely took advantage of the period of tariff certainty, as we saw the Port of Los Angeles experience a record June for TEUs handled, which was an 8% increase from last year.

These June import numbers are likely an early import peak season as the National Retail Federation recently projected a double-digit decline in cargo volume across all ports between August and November as holiday imports will have been brought in before the current tariff deadline. Although we're approaching traditional retail peak season for ocean, it's not likely the industry will see traditional peak volumes as many of our 7,500 retail customers are working through current inventories and being highly selective and strategic, bringing in only the essential products they must for import.

Shippers should be mindful of potential for blank sailings in the weeks ahead as steamship lines manage trans-Pacific capacity leading up to August 12th.

Mat: And while we're on the topic of deadlines that impact the industry in the domestic over-the-road markets, we just passed by the July 19th date for the changes to the NNFC density-based classification systems for LTL shipments. Now, we highlighted this last month, so if you want more detail, feel free to go back to the June video. But we just wanted to remind LTL shippers that these changes are now in effect. And if you haven't updated your data or systems, it could result in delays or additional fees.

Now, on the LTL page of the C.H. Robinson website, you can find multiple tools and information to help guide you through these changes, even if you are not a current C.H. Robinson customer.

Ryan: The U.S. has had a strong produce season in the Southeast, particularly in Georgia. Well, Mat, did you know that in June, C.H. Robinson's produce sourcing business, Robinson Fresh, was moving about 450 loads of watermelons out of that area each week. It's like 19 million pounds of watermelons a week, so... I mean, were you and your family a contributor to that boom in watermelon freight this year?

Mat: Yeah, I actually did know about that stat and it blew my mind. So I looked it up and it's actually enough watermelons to cover an entire football field 6 feet deep in watermelons in just one week. Personally, our family only had about two watermelons during the holiday.

Ryan: All right, well, good. Well, produce sales were strong this year, and with good harvest, the freight market was healthy in that region, particularly for temp-controlled truckload. But produce season in the Southeast has seen its peak, so market conditions are expected to shift quickly in the weeks ahead.

And as produce and beverage inventory for Labor Day begins to arrive at some of the warehouses they're destined for, temp-controlled demand will likely shift toward the Carolinas next, where harvest will continue for another month or so. On the dry van side, well, it's more of the same. Not much noticeable change in the supply-demand dynamic, continuing us through this elongated trough.

If you consult our dry van spot market forecast in our July report, you'll see that we're expecting dry van spot rates to come down from the early July peak season increases and look pretty similar to what we were experiencing prior to the seasonal increases occurring.

Mat: As shippers and carriers have continued to look for signs for when or if the truckload market might change from that extended trough pattern, many have directed their attention to a few regulatory adjustments that the government is making towards highway safety.

Now, some have wondered if these increased safety enforcements might make enough difference in the trucking supply to tip the market cycle into the next phase. But based on our experience and view of the market, we're not certain that this will have a significant impact in the short term. Let's talk about why. Well, first, these actions by the government are part of a larger initiative by the administration focused on trucking and highway safety. And it includes topics like commercial driver's licenses, truck parking, and B1 driver visa enforcement.

But the one action that's really getting the most attention is the reintroduction of a long-standing English language proficiency requirement for drivers. Now, at a roadside stop or an inspection, drivers are expected to demonstrate a level of aptitude in English to understand road signs and respond to the work and safety-related inquiries of the officer. Things like, where are you going today? How long have you been driving? What are you hauling? And if the driver deems them out of compliance, it may result in an out of service violation, leaving the shipment stranded until a new driver is available to come pick it up and continue that delivery.

Ryan: Yeah, and I think Mat, the word may that you just said is important as it's one of the factors that influence our team in thinking that it's not a market shifting event. And I just threw a page full of numbers up here, but here's what all of these stats are trying to demonstrate. We know that there's over a million and a half drivers on the road of large freight moving trucks, and there are only so many enforcement resources. Enforcement of any type of safety violation occurs one stop at a time across the whole country.

So should an officer make a stop, and should the driver not be a native English speaker, and then should the officer decide to perform an English language test, it then becomes the judgment of that officer to give or not give a violation. And then also their judgment of whether that violation is worthy of immediately putting that driver out of service. So even during peak enforcement in 2013, only 0.3% of drivers received out of service violations in the whole year. Now, though some conditions have changed since that time, enforcement is too sporadic to significantly impact the overall market in a short enough time to create a shock.

We've already heard that large and medium carriers are starting English training programs and owner-operators are beginning to use online education programs. So as quickly as some drivers may be forced out from this, we're also going to have new drivers that enter.

Mat: Yeah, exactly. And safety enforcement is crucial for maintaining quality standards across the industry, as some of the other stats on this page show, but we shouldn't assume that one regulation of the ELP enforcement will cause a market shift.

The transportation market is complex, and while some communities or lanes may feel localized effects, individual disruptions don't equate to a broader trend. ELP issues are more likely to affect isolated shipments rather than moving the entire market.

Ryan: Exactly. As folks are continually trying to understand market dynamics ahead, we want everyone to know that next month we'll be back with our full year 2026 dry van forecast. So you can watch for our August report to drop on August 7th with that outlook.

Until then, thank you for joining us this month. Remember, Robinson goes further than anyone else in providing you with the edge you need to manage your complex global transportation strategy, especially during complex times like this. For more details and additional insights, please reference our freight market insights page.