Carriers and 3PLs breathed a sigh of relief the morning after election day. Finally, the period of uncertainty was over. While some are concerned that trade might be restricted, most carriers and 3PLs are looking forward to four, and perhaps eight, years, of fewer, less onerous regulations and a simplified tax code, perhaps including a reduced corporate tax rate. Against the backdrop of more transportation friendly leadership in Washington, the big two changes we expect for 2017 are:
- Supply and demand will tighten in the truckload sector throughout the year as carriers continue to downsize, as shippers and insurance companies accelerate the adoption of productivity sapping electronic logging devices, and as demand continues to recover, now that long bloated inventories are finally drawing down to targeted levels. Tight supply and demand in the truckload sector will benefit other sectors as well. Overflow freight will find its way into the less-than-truckload and intermodal sectors. And shippers will increasingly reach out for 3PLs to assist in the procurement of tough to find capacity and to update customer’s logistics strategies to reflect changing freight market conditions.
- Those not staying within striking distance of technology leaders will find themselves falling further behind those pacesetters. It is no longer necessary to be big to be technologically competitive, as recent advances by software vendors and data services enable even the small companies to optimize their customer’s supply chains, while offering a comprehensive suite of services encompassing all modes and many other complimentary logistics services.
2017 should be the first year of the next up-cycle for freight transportation and logistics services providers. With more capacity-reducing regulations on the way in late 2017 and beyond, and with improved optimism on the part of many shippers, we could well see an extended period of tight supply and demand driving outsized rate increases over a multiyear timeframe.