Freight Demand Recovery Under Threat from Rising Oil Prices and New Tariffs
Freight demand is showing signs of recovery in North America as rail carriers report strong second-quarter results. Canadian National Railway and Norfolk Southern, two of the largest railroads, have lifted their full-year volume outlooks due to firmer freight demand.
Norfolk Southern's result reinforced the picture, posting higher revenue in Q2 with adjusted earnings of $3.52 per share. The underlying demand improvement is a crucial figure for operators who use NS for intermodal or bulk moves.
However, the logistics sector faces challenges from rising oil prices and changes in Section 301 tariffs. The price of Brent crude surged 7.2% to $100.88 a barrel on July 23, its highest level since early June. This is material for any operation with meaningful diesel exposure: trucking fleets, intermodal operators, last-mile carriers, and fuel-heavy distribution networks.
The new tariff framework will also add complexity to the logistics market. The Trump administration imposed Section 301 tariffs on dozens of trading partners, framed around forced-labor findings. This requires fresh review for procurement directors and import compliance teams, who need to ensure goods currently flowing from affected origins carry documentation sufficient to withstand a forced-labor audit.