Rosalyn Wilson, Senior Business Analyst, Parsons

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Rosalyn Wilson

Two of the most important trends to look for in 2015 are sustained growth in freight volume and the capacity and cost problems this increase will bring.

2014 was the best year for the supply chain industry since the Great Recession. In the second half of the year, the missing element of the recovery — consumers — began to get back in the game. With the unemployment rate declining, household net worth inching up, and fuel prices plummeting, consumer confidence rose substantially. Spending on other than necessities continues to increase, spurring production and imports.

This is good news for carriers. However, the industry does not have the necessary capacity, infrastructure and systems to efficiently move the goods as freight volume rises in 2015. Bad weather; labor problems; fleet capacity issues for truck, rail and other equipment, especially chassis; and inadequate infrastructure will combine not only to create freight bottlenecks, but also to raise the cost of freight significantly in 2015.

Truck rate increases of 8 to 15 percent can be expected by mid-2015. The fleet capacity and infrastructure issues cannot be corrected in the short term despite aggressive investment plans already announced by carriers. The industry will experience growing congestion and delays at the ports that have deep enough drafts to handle the large capacity container ships because the systems, port infrastructure, chassis providers and drayage carriers are not yet equipped to handle the increased number of containers in a compressed time frame.

The solutions to those problems cannot be implemented overnight either. 2015 will be another noteworthy year for growth in freight and improved financial health for carriers, but will not be without service interruptions, scarce capacity at times, and much higher freight rates.

Rosalyn Wilson, Senior Business Analyst, Parsons