TLI STATE OF TRANSPORTATION UPDATE
Tight Freight Capacity Expected
to Continue in First Half of 2021
Heading into 2021, the transportation industry continues to face one of its greatest challenges to date; overcoming severe staffing issues as a result of the rising cases of COVID accompanied by a thriving economy.
LTL Weekly Summary:
LTL carriers continue to report strong demand and improved pricing power. Capacity constraints around labor force and network infrastructure are holding back carrier growth, as most carriers would haul more, if they could. UPS Ground and FedEx Ground are aggressively raising prices on the larger, harder to handle packages, pushing them back to the LTL networks from which they were taken 20 years ago.
COVID related staffing issues continue to be the number one challenge facing LTL carriers, as they struggle to keep healthy employees at work moving shipments. Carriers are reporting that on any given day, 10-15% of their staff is calling off due to illness or potential exposure to the virus. While working through these significant staffing issues, LTL carriers remain extremely busy as shipper demand has held steady. Carrier pricing departments are remaining conservative taking on new business, especially in areas of the country where they are already struggling to keep up with shipper demand, such as the LA Basin in California.
Truckload Weekly Summary:
Although dry van spot market truckload rates climbed to all-time highs of $2.46 per mile in December and tender rejections remained near all-time highs, the slowing rate of change of the spot versus contract dry van rate spread indicates that we may finally be seeing the peak for spot truckload rates.
On-time intermodal service nationwide continues to be an issue, as transit times are being extended. The most significant issue is limited drayage capacity to get equipment to and from the railyards in a timely manner.
International Ocean/Air Weekly Summary:
Port and international carrier capacity simply cannot expand fast enough to meet the growing demand from global shippers. Rates continue to rise just as fast as quotes can be given out. It is critical to quickly lock in international spot market capacity at quoted rates, since rates can change at the flip of a coin in the current unprecedented market environment. Many bookings are being pushed out and delayed, simply due to the lack of carrier capacity to move the goods.
TLI recommends building additional lead time into your international orders and ensuring you are setting proper customer expectations.
Other Key Weekly Updates:
Many LTL carriers continue to report severe challenges with capacity in Southern CA. The extreme shipper demand accompanied by the increase in international related shipments continues to overwhelm carrier terminals in this area. Carriers are telling TLI that they expect the LA Basin to be an issue for capacity and service through mid-2021.
It is critical that you provide your TLI team with as much notice and flexibility as possible on any freight you may need to move in order to allow us to book the best carrier option at the best rate.
Your team at Translogistics will continue providing you with weekly updates throughout the current unprecedented capacity crunch. Please be assured, poor carrier services levels and delayed shipments are not specific to your account rather an industry-wide problem we are all facing together right now. This tough market environment is expected to continue through the first two quarters of 2021.
We encourage you to continue to check our Translogistics Blog regularly, as we will be posting industry or carrier updates as we receive them.
Your Team at Translogistics