Why Are Rates Going Up WHILE Service is Going Down?!!

July 30, 2020

Written By: Scott McDevitt

Demand has gone up quickly and supply has gone down quickly within LTL AND TL markets.

Facts to consider:

  • 26 states have destination rates 15%+ above historical rates.
  • Total loads, which were slightly above 2018 levels, were 41% above the same week (29) last year and 50% higher than the 5-year average.
  • Pandemic Issues affecting TL and LTL industries:
    • Labor shortages with drivers and dock workers trying to do more with less people
    • Labor shortages with Shippers trying to load and unload product with less people
    • Changing shipping patterns as some states close more than others leaving carriers’ equipment further away from a pickup point
    • Carriers trying to unload at a facility that suddenly shut down causing them to cancel a pickup they had already committed to after delivery.
    • Truckload carriers going out of business
      • Couldn’t withstand the drop in demand during the shutdown
      • Shippers going out of business leaving carriers unpaid and unable to sustain the losses
    • Civic unrest issues
      • At any given time, anywhere in the country could be faced with roadblocks
      • Drivers concerned for their safety staying home or refusing pickups to certain cities
    • Economy opening up again causing high demand
      • Building back inventory
      • Filling back orders
      • E-commerce retailers increasing sales exponentially
      • Home building and buying were strong in June- flatbeds involved in shipping materials for this industry
      • Spot load posts are up 22.5% compared to same month in 2019

We’ve all experienced a hurricane hitting one part of the US and causing disruption across the supply chain. Currently, as one person described it, “our current shipping environment as “a series of continuous hurricanes hitting the US from ever changing directions.”

To help us (TLI), help you:

  1. Give as much notice as possible when scheduling LTL, TL pickups - several days in advance if possible.
  2. Expect delays in transit times so order supplies as much in advance as possible
  3. Educate your customers on the state of the industry
  4. Carriers now have apps available where they rate Shippers on pickups and deliveries
    1. Provide accurate information- ready time so the carriers aren’t waiting around, consignee name and phone number, number of pallets, weight
    2. Don’t delay the drivers when loading and unloading
    3. Treat the drivers with respect, provide lavatory facilities, a bottle of water

 

Sources include Journal of Commerce (JOC), Freight Trends Research (FTR), Truckstop.com, Freightwaves, and DAT

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Categories: Awareness

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For the latest insights, tips and commentary surrounding the logistics industry, look no further.  Shippers will find thoughts from the award-winning team at Translogistics covering everything related to your transportation processes and plans.  If you have a question we are readily available at insidesales@tli.email 

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