It’s no secret that trucks are more difficult to find and more expensive than ever before. Rates that would once be considered unreasonable are commonplace, and options are limited: freight expeditors are often booked, and truckload carriers are allocating their trucks differently.
Several factors are influencing the state of capacity. The market has experienced a state of equilibrium for the last several years, which made it more susceptible to disruption. Massive hurricanes in the Caribbean, Texas, and Florida, and fires out west disrupted supply chains throughout the third quarter of 2017, and then came the fourth-quarter holiday shipping frenzy.
Regulation is also playing a role. The Food and Drug Administration’s Food Safety Modernization Act (FSMA) has pushed temp-control shippers into a capacity grab to meet the Act’s demands. FSMA trucks must have more sophisticated technology, which has reduced the use of many owner-operators. The larger fleets are overburdened, and can’t attract or retain drivers to handle the increased demand. This caused a ripple effect across not just food, but health care shippers, who had been pre-emptively using more temp control.
To make matters worse, the ELD mandate is upon us. Conservative estimates place the loss of productivity that the marketplace will experience at 3 to 7 percent. Simultaneously, major big-box retailers are attempting to improve efficiency by imposing major compliance fees on vendors, rendering shipment timeliness more important than ever.
To weather the storm, we’re advising our shippers to re-examine their budgets organization-wide, and encouraging them to be flexible. To handle the excess demand, shippers should think differently. They must incorporate their most reliable brokers as “shoulder to shoulder” peers to core carriers. Shippers that budget accordingly, incorporate flexibility, and strengthen partnerships with their loyal carrier and broker friends will be much better equipped to beat their competitors to the trucks and to the shelves.