In looking forward to 2018, three themes will dominate the transportation landscape.
The first theme is the “Revenge of the Elephant.” They say that an elephant never forgets, and neither do motor carriers who now have the upper hand in a market where there is very tight capacity in the truckload and less-than-truckload sectors.
Shippers who have worked collaboratively with their carriers over the years should expect to see rate increases of 3 to 5 percent. However, shippers who have had a commoditized view of transportation, focused on getting the lowest possible rates, can expect to see rate increases of 12 to 15 percent. And for those shippers who don’t want to pay those types of increases, well, good luck getting your freight moved. As these trucking CEOs point out, they can be much more selective in choosing whom they want to do business with.
The second theme will be the “Weaponization of Freight.” In 2018, you can expect more and more retailers to tighten their delivery windows, and you can also expect them to be more aggressive in using chargebacks as a way of penalizing their suppliers for failing to meet these strict requirements. As one shipper pointed out, with freight costs going higher, companies will use chargebacks and other tactics to shift more costs onto their suppliers.
The third theme is what we refer to as a “Defend the Castle” strategy. Smart shippers understand that since capacity will continue to be a dominant story in 2018 as the full impact of the ELD mandate, driver shortage, and other key issues affect carrier costs and service capabilities, they will need to make some changes and evaluate their inventory or customer service strategies to reflect freight that used to move in one day is now moving in a two-day lane.