The Canadian freight market was notably more volatile in Q4 2024 than in Q4 2023. Strong holiday consumer spending drove steady demand while capacity contracted as drivers took time off, leading to inbound and outbound rate increases. Inflation continued to normalize and the Bank of Canada lowered interest rates to 3%. We believe current trends will remain stable in the near term.
When the United States government announced it would apply 25% tariffs on many Canadian exports starting February 1, shippers in both countries rushed to pull freight forward before the deadline.
The tariffs were enacted as planned and then paused the very same day after the two nations agreed to terms delaying the tariffs until March 1. With the Canadian government currently prorogued (not in session), the new deadline presents a significant risk to the freight market. Though the outcome of this dynamic situation remains uncertain, the period following the first tariff announcement is a good indicator of how the market may respond over the next few weeks.
On a separate note, the Trump administration recently announced a 25% tariff on steel and aluminum. In the short term, this will temporarily reduce Canadian metal exports to the U.S. and prompt buyers in both countries to source and sell steel domestically in the near term. If the policy remains in place for some time, it may create new trade lanes on both sides of the border.
Q4 2024 was the most volatile period in several years, as increased demand and capacity contractions led rates to rise. December volumes were up 18% year-over-year, which is significant when accounting for holiday closures. Cross-border shipments accounted for nearly two-thirds of all loads, with inbound and outbound volumes increasing by 24% year-over-year.
The 2.24 load-to-truck ratio in December was down nearly 30% month-over-month and 40% year-over-year, likely due to demand increasing as drivers took holiday time off. Conditions should remain favorable for shippers as capacity softens through early 2025, but that could change later in the year.
Canada Freight Mix, LoadLink December 2024 Report
The United States Department of Transportation data shows that Q4 2024 outbound cross-border volumes fell by less than half a percent year-over-year, with increases in October and December and a slight decline in November. Year-end volatility was primarily driven by reduced supply rather than surging demand.
Conditions should remain relatively flat on a year-over-year basis through the first half of 2025. However, U.S. tariffs and any retaliatory Canadian tariffs are potential downside risks to inbound and outbound cross-border freight volumes.
Monthly Outbound Truck Crossings – Canada, U.S. Department of Transportation
Canada exported record truckload volume to the U.S. in 2024, continuing a two-decade-long growth trend. Only the 2008-09 housing crisis and the COVID-19 pandemic caused significant pullbacks in this otherwise consistent rise. 2025 is poised to set another record, but tariffs could jeopardize further growth. 
Yearly Outbound Truck Crossing – Canada, U.S. Department of Transportation
Recent data from the Nulogx Canadian General Freight Index (CGFI), which tracks truck transportation cost fluctuations for Canadian shippers, shows costs declined in the first two months of Q4. The base rate, excluding fuel and accessorial surcharges, fell by 0.78% month-over-month from October to November but was up 1.36% year-over-year. December data has not yet been released, but it will likely show higher costs due to increased demand and tighter capacity during that period.
Canadian General Freight Index, Nulogx
The LoadLink Canadian Spot Market Freight Index started 2024 down year-over-year but ended 18.1% above December 2023 levels. Interestingly, December 2023 and 2024 had identical growth rates of 13.6%. The index also stayed within a 110-point threshold throughout the year (max value of 364, min value of 254), the lowest since 2019 (90-point threshold) and a meaningful decline from the 610-point range in 2022. This trend indicates market stability throughout 2024, but conditions will likely become increasingly volatile as demand increases amid tightening capacity in 2025.
Canadian Spot Market Freight Index, LoadLink
Inbound Canada freight was stable in 2024 until increased demand and tightening supply drove tender rejection rates to 3% in December. Rejections then declined during the first half of January, spiked again in the final week of the month as shippers pulled freight forward ahead of tariffs, and declined once tariffs were delayed. Outbound tender reactions followed a similar trend, reaching 3.8%.
Inbound Tender Reject Index – Canada, SONAR
Outbound Tender Reject Index – Canada, SONAR
Fuel prices in 2024 were relatively stable until Q4. Prices then surged in January as demand grew, capacity tightened, and uncertainty about tariffs persisted, leading to all-in rate increases. Prices should soon stabilize but could be disrupted by tariff implementation or unforeseen events.
Diesel Price Per Liter – Canada, NrCan
Despite a slight decline in Q4, transportation sector employment continues to grow and remains well above pre-pandemic levels. However, persistently low rates and high operating expenses may force carriers out of the market, resulting in employment and supply contraction. This trend will lead to rate increases and, ultimately, an inflationary market flip that will make room for new carrier entrants. However, because this cycle takes at least two years, employment and capacity trends should remain stable for the first half of 2025.
Transportation & Warehousing Employment, StatCan
At 1.8%, inflation remained near target levels in January. It was the second-lowest CPI reading since early 2021, just behind 1.6% in September. The Bank of Canada expects inflation to remain around 2% for the next two years, and it also reduced interest rates to 3% at its most recent meeting. However, tariffs could negatively impact the GDP and drive up inflation.
CPI excl. Gasoline, Bank of Canada
Despite a slow start to the holiday shopping season, Royal Bank of Canada (RBC) card data showed relatively strong consumer spending in Q4. Holiday spending just outpaced 2023 levels, indicating economic stability and consumer optimism. Lower interest rates should support future spending and ultimately bolster intra-Canada and cross-border freight freight demand.
Royal Bank of Canada Card Spending
Canada’s GDP shows consistent economic growth, with Q3 2024 marking the highest GDP reading on record. This upward trend is expected to continue as the population grows and economic conditions ease. Over the past decade, GDP has grown in 9 of 10 years, with 2020 as the only exception due to the pandemic. Sustained population growth and improving conditions will likely support ongoing GDP increases, which should drive higher freight demand over time.
The Canadian Dollar (CAD) weakened in the second half of 2024, ending the year down roughly 5%. This decline has negatively impacted Canadian businesses that incur expenses in CAD but earn revenue in USD, devaluing their income amid elevated operating costs. Since mid-December, the USD-CAD conversion rate has stabilized, though the risk of tariffs poses a significant threat to the Canadian economy and the value of the CAD.
CAN-USD Currency Exchange Rate, Yahoo Finance
Steady holiday demand and tightening capacity led to rate spikes for inbound and outbound Canadian freight in Q4 2024. Inflation continued to normalize, and the Bank of Canada recently lowered interest rates to 3%, signaling economic stability as 2025 begins. Market conditions are expected to remain stable in the near term, but tariffs remain a significant risk.
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.