Freight Trends to Watch with the Busy Holiday Season Looming

Posted by Land Link on Jul 25, 2018 3:08:58 PM

The transportation industry is enjoying a strong year that has the potential to be even stronger than the previous one. DAT reports a particularly robust year in shipping in 2017, especially in the second half. Based on what we have seen in the industry during that time, here are a few trends to watch for in the freight transportation industry for the remainder of 2018 as we approach the busy holiday shipping season.

The Capacity Crunch Will Continue

There is little reason to expect any relief in the ongoing equipment availability issue. Particularly when approaching the 3rd and 4th quarter holiday shipping demands. A significant contributor to the capacity crunch continues to be the driver shortage. Interest in a truck driving career by the younger generation is just not keeping up with the retiring rate of older drivers. The work is difficult. It involves working long hours, driving long distances, being away from family for long periods of time and less-than-ideal pay. Fewer drivers mean fewer trucks on the road to haul this increase in freight, which, in turn, drives up the rates because of the premium placed on securing a truck.

Another major factor is government regulation. The ELD mandate went into effect December 18. It essentially requires all motor carriers to install electronic devices in their trucks that will automatically track drivers’ hours of service. By law, drivers are only allowed to drive for 11 hours with a mandatory, continuous rest period of 10 hours, daily. This regulation is expensive for carriers to implement, particularly on large fleets. Training drivers to use it can be extremely time consuming and compliance is slow to reach 100%. The reduced driver hours, cost of implementation and general driver acceptance all affect the cost of operation. Which, of course, will be absorbed in the carrier rate structure.

Rates Remain Strong

Given the good health of the economy, specifically the freight economy, it comes as no surprise to see the LTL market having a healthy 2018. Basking in what one trucking executive called a “robust, bright” market, LTL carriers are planning expansion in 2018, coupled with continuing increases in LTL trucking rates. Several publicly owned LTL carriers will add terminals, trucks, trailers, and employees to their operations this year, as industrial and e-commerce freight demand fills more pallets. Higher rates will certainly bolster bottom lines at trucking companies with historically tight profit margins. And as freight demand increases, LTL carriers have stuck to the pricing discipline that helped them improve those margins and begin to expand operations or reinvest in their businesses in 2018, adding new equipment and hiring employees.

Shippers and Carriers Need to Adjust to the New Normal

Both shippers and carriers will have to be flexible in this new shipping environment. Most individuals generally only change behaviors if they can no longer deal with less-than-ideal situations. With that, it will be interesting to see how shippers, especially the ones that have a reputation for not being driver friendly, change their behaviors. Carriers will be looking to do business with "Preferred Shippers." Read our previous post on how to become just that in the eyes of your carriers. On the carrier side, if supply and demand stay relatively status quo, you will see carriers act more selectively with the business they handle. Carriers are taking significant increases for a specific business or flat-out refusing to work with shippers that are no longer a strategic choice for them. The days of taking your carrier and their drivers for granted may be over for good.

Technology May Disrupt The Status Quo

The freight industry is in the middle of a storm, with technology giving conventional processes a makeover and making it more efficient and transparent to the players in the market. Cutting-edge technological ideas have been mushrooming in the freight hauling space, with major corporations and startups tussling for a share of the market.

The freight economy is one of the largest markets in the United States, with over $700 billion in revenue every year and employing 8.7 million people in the industry. This provides an incentive for companies to cash in and it was inevitable that technology would be adapted to fit the market needs. And here we stand at the crossroads of innovation, with the impact of technology looking to change the facade of freight hauling forever. With the current market growth and capacity issues, it’s highly probable that more shippers will become willing to embrace any new technology or app that provides them with a truck. And carriers will be more than willing to embrace it if they feel those platforms can offer them higher and faster paying the freight. Having the experience and industry expertise to disseminate the dependability of the new approach and the integrity of the service provider can spell the difference between a successful experience and utter disaster. 

So, as we approach some of the busiest shipping months of the year in a market that can be challenging during high demand, it is useful to do some proactive contingency planning. Perhaps a combination of several discipline changes may be in order. In markets like this one, the counsel of a qualified Logistics professional can be a wise investment. Contact one of our Logistics experts today for a no-obligation review of your current supply chain protocols. Be prepared for what may be a tumultuous freight market ahead.

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Topics: Reducing Freight Rates, Shipping News, Industry Trends

Freight Rates in 2018; What to Expect

Posted by Land Link on Feb 21, 2018 3:59:43 PM

Coming off a strong 4th quarter in 2017 and riding a firm economic wave, demand for transportation services are expected to be strong in 2018. Preliminary estimates released by the government last week showed that the nation’s output increased at an annual rate of 2.6 percent in the final quarter of 2017. Although that performance amounts to less than the optimistic 4 percent annual growth that President Trump has promised, it is further evidence along with a sinking jobless rate and surging consumer confidence, of the economy’s resilience. All these positive trends along with tax breaks and incentives are expected to increase investment and production levels in the U.S. and increase the demand for transportation services. 

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Topics: Reducing Freight Rates, Shipping News, Industry Trends

LTL Rates Expected to Rise More Than 5% This Year

Posted by Land Link on Jan 24, 2018 3:18:07 PM

Well, it is finally here. The day truckers will be able to get the rates they need without the haggling, so shippers need to be prepared. The trifecta of tightening capacity, increased demand and the ongoing surge on e-commerce deliveries has come in and it will pay big benefits for the trucking industry. Adding to the issue further is the increased cost of trucking equipment. Tractor costs are up sharply due to emission and safety standards. Trailer costs are up due to increased material and labor costs. So, buckle up if you’re an LTL shipper. Truckload shippers won’t fare much better.  If that’s not enough, mandatory logging devices are costing large carriers millions of dollars to install and manage. 

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Topics: Transportation News, Reducing Freight Rates, Logistics Business, Logistics News

Some Tips on Saving Money on Transportation Services in 2016

Posted by admin on Feb 9, 2016 8:00:00 AM

It is expected that 2016 will be the year the freight transportation industry will implement dimensional pricing in favor of the NMFC classification system. Fed Ex and UPS implemented dimensional pricing last year. It's just a matter of time before the freight carriers follow suit. In anticipation of this move we want to offer some suggestions on how to mitigate the affects of this pricing change for your company. 

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Topics: Reducing Freight Rates

Finding Cost Savings In Your Routing Program

Posted by admin on Sep 2, 2015 11:13:00 AM

People, process, and technology; these are three elements that leaders focus on when looking to make impactful changes in their organization.  Regardless of what department you are looking to improve, it is vital to hire the logistics firm with the appropriate leadership and industry experience and record of success.

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Topics: Supply Chain Management, Reducing Freight Rates, Logistics Business

What to Look Out For When Analyzing Freight Quotes

Posted by admin on Jul 22, 2015 2:01:00 PM

A familiar (and painful) scenario we all surely endured at some point involves the shipment of product to someone’s receiving dock only to find out later that the bill is about double what was expected because the initial estimate was way off.

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Topics: Reducing Freight Rates, Logistics Business

How 3PL Logistics Companies Reduce Freight Rates

Posted by admin on Jul 8, 2015 10:44:00 AM

Reducing freight rates comes from understanding your business, your specific needs and the logistics business as a whole. Parts one and two of that formula won’t challenge most business owners, but the logistics part can lead to head scratching or worse — unnecessary costs.

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Topics: Supply Chain Management, Reducing Freight Rates, Logistics Business