Trucking rates out of the Northeast have been steadily rising resulting from a spike in demand from shippers using the Port of New York, Philadelphia, and New Jersey as an alternative to the congestion in the California ports of Los Angeles, Long Beach, and Savannah.
Marine terminals at Los Angeles and Long Beach have struggled to provide enough equipment to return port operations to any sense of normalcy. The staggering backlog of ships in the California harbors has forced shippers to explore other options. Container prices are all over the place in this market. Clearly the shipping and time costs to New Jersey in leu of California is significant. More shippers are using New Jersey as the origin to feed their distribution networks. These higher costs, in both dollars and time, will surely affect the price and availability of product.
As a result of increased imports, the Northeast has seen an increase in demand from the tri-state area for truckload service to increase supply chain velocity and move the goods inland closer to the point of consumption. Prices will almost certainly rise, and availability will surely suffer. It may be a wise time to consider enhancing your relationship with current carriers. In a recent blog, we stressed the importance of making the effort to become a "preferred shipper” to ensure equipment availability in a shrinking equipment market. If you are a shipper relying on for-hire carriers, you certainly should be aware of the looming issues conspiring to make it more expensive and more difficult to get your goods delivered. The potential challenges for moving your product in a timely and cost-effective manner are significant risks in today's driver marketplace. Your risks can be managed and mitigated by doing anything possible within your organization to become a customer that carriers prefer to do business with. Some ways this can be achieved are by ensuring the comfort of visiting drivers and implementing aggressive, carrier favorable, accounts payable policies just to name a few.
Increased Demand Pressuring The Driver Shortage
Demand in the Northeast has disrupted the normal port and over the road operations. Normally, truck drivers are going to the West Coast by this time of year for the big shift in retail goods being transported across the US. In the northeast, we’re more a consumption than manufacturing area of the country. Therefore, demand for inbound freight is very high, and, of course expensive; the backhaul, not so much. Those days are gone. Outbound freight from the northeast is going to get very expensive in possibly not just the short term.
We Must Look To Technology
The solution to the driver shortage is complicated. It is going to take a combination of resources to manage demand. Interest in a truck driving career for young people is dwindling so that is likely a dying vine. We’re going to have to rely on technology and experienced freight management professionals to bridge the gap. Those professionals who have the asset relationships and a proven track record of logistics management.
I’m a big fan of driverless technology. It’s very cool to see a car park itself. There have been many successful pilot projects in the sparsely populated areas of the southeast United States. I wonder if the computer system driving the truck could handle the New Jersey Turnpike. That’s my concern. What does it take to overwhelm the system? Maybe Manhattan.
The closest we are to driverless rigs is driver assist. The truck drives in auto mode once on the interstates. There still needs to be a driver in the cab for surface streets. At the very best we can now turn a single driver into a team with automation.
Some of the press regarding self-driving technology failures has slowed public acceptance, understandably. An out-of-control passenger car, like some Tesla issues, can do a limited amount of damage. An 80,000-pound rig, on the other hand, can cause catastrophic damage depending upon its cargo.
In The Long Term
We may very well see a re-shoring of manufacturing in the coming decade and the resurrection of the private fleet. Some high-tech manufacturing could move back to the U.S., including computers and electronics, electrical equipment and components, and transportation equipment. From 2010 to 2019 reshoring and foreign direct investment data, these were the top three industry categories for reshoring, according to the Reshoring Initiative. Several worldwide events have brought a great deal of uncertainty to the global supply chain. The guidance and council of a 3PL may be advantageous right about now. Please feel free to reach out to us.
Stay Safe Everyone.
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