3 Ways the U.S. Elections May Impact the Shipping Industry

Given this year’s wild and polarizing political season in the United States, there are issues on the table that will have both direct and indirect effects on the shipping, transportation, and freight industry – both domestically and globally.

At a high level, one of the biggest impacts on our industry overall will be consumer spending, stemming as a direct result of a presidential election in conjunction with an international pandemic. In addition, we plan to see residual impacts to corporate taxes, interest rates and federal regulations. 

Free Trade

Many of the potential effects on the industry stem from the issues surrounding free trade. This focus on domestic purchasing could be a positive for companies whose main business is through last mile deliveries in the United States. However, increasing the tax on goods manufactured abroad may limit the selection of low-priced goods sold at stores such as Walmart, which would decrease consumer spending. These effects could lead to more volatile freight volumes and transportation rates long term, but that remains to be seen.

Changes to Tax Codes

There have been scattered conversations regarding the possibility of eliminating income taxes and imposing a flat tax on goods purchased, along the approximate range of 10% to 20%. While a change like this could give consumers more purchasing power, long term effects from the increased costs of various goods could scare away lower income families.

Additionally, increasing taxes, even for higher income earners, could impact the shipping industry negatively. Simply stated, higher taxes mean less consumer spending; less consumer spending means less items shipped, which would have a negative impact on the entire shipping industry. While this is a short-term gain for the economy and government, this would have lasting effects on spending.

One effect of higher income taxes would be consumers searching for less expensive goods, which could benefit online retailers such as Amazon. Given that online retailers such as Amazon are increasingly becoming the channel of choice for consumers, the impact on shipping and transportation may be milder than one might imagine.

College Debt

A hot topic in this election cycle, for all parties involved, is the problem of rising student loan debt. Many current and former students spend years trying to pay off large education loans, some lasting for decades after they have finished school, and at interest rates that are higher than the current interest rate. As a result, many young professionals are not as able to spend elsewhere, leading to decreased purchases. Cyclically, when there are less purchases in-store or on e-commerce, this will decrease freight, transportation and shipping.

 

As the electoral votes are still being tallied, the future of these issues and topics is still uncertain. The transportation industry has seen its fair share of struggles this year, but remains hopeful and optimistic for continued improvement. After all, as long as human need and consumption remains, transportation will remain.

Written by:
Tim Griffin
Director of Marketing & Media, C.L Services, Inc.

 

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