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Trucking Capacity in 2018 – Will you feel the Crunch?

A Look at Trucking Capacity in 2018 – Will you feel the Crunch?

How does 10.5 billion tons of freight move in the United States every year? According to the American Trucking Association (ATA), over 70% of all freight tonnage moves by truck and 2018 is gearing up to be good year for the industry. Factor in strong consumer growth, low unemployment figures and an upswing in manufacturing and you get increased demand for trucking capacity. However, greater demands on already tight inland truck capacity will mean that shippers will certainly feel the crunch. 2018 Truck Capacity Shortage

Let’s take a look some of the reasons why truck capacity will be tight in 2018.

  • New Regulation: The ELD Mandate represents a major regulatory change for the US trucking industry. The overall impact of the ELD mandate goes beyond a initial trickle-down effect as the costs to equip trucks are passed on to shippers. The use of electronic logging devices will make it difficult for drivers to work outside the hours of service allowed by the Federal Motor Carrier Safety Administration. This reduction in work hours translates to an additional estimated 3-5% reduction in available capacity within the industry.

  • Driver shortage: The industry has struggled for years with driver shortages and the severity of the problem has worsened or improved as the US economy has experienced ups and downs. In times of economic growth, when the overall unemployment rate drops, industry recruiters must scramble to fill available positions. Companies are struggling to retain existing drivers and attract new ones. Signing bonuses, raises and better vacation benefits are just some of the things trucking companies are doing to attract and keep drivers. The problem is compounded by the fact that many drivers are aging out of the industry. Others leave for reasons related to the rigors of the job, including long terminal wait times. 
 
  • Winter Weather: The winter of 2018 has roared in with a vengeance and one winter storm has already brought the bombogenesis effect to the US northeast. That’s not the only weather affect experienced this winter. You can add arctic blasts and thundersnow to that list. According to the National Weather Service, many parts of the US are expected to see colder than normal temperatures until March. 

  • Hurricanes: Markets were tight in the US Southeast prior to the storms, and according to industry analyst, FTR, the hurricanes of 2017 resulted in a spike in spot rates in the region. There is speculation that this increase in spot rates could lead to an increase in contract rates as well. 

  • Economic Growth: The US economy posted the fastest rate of growth in three years for the third quarter of 2017. Consumer confidence is reported to be at its highest level in 17 years. All that spending on consumer goods and capital improvement translates to more goods moving across all modes of your supply chain – including trucking.

 

What does this mean for shippers?

In short, expect trucking rates to go up in 2018 in the form of higher spot rates and contract prices. Many experienced shippers already know that inland trucking, including the final mile, can represent a significant portion of your total ocean import or export expense. As your logistics partner, Vantec Hitachi Transport can work with you to come up with Smart Solutions that maximize the use of alternate modes such as inland rail heads and ports to help mitigate capacity constraints.

For the time being, it is important to understand that the current situation will make on-time door deliveries a challenge in many markets. There is also an increased risk of additional surcharges such as demurrage, detention and storage, ELD surcharges, and accessorial fees.

There are some things you can do to alleviate costs

Minimize driver wait times at your facilities. Driver wait times are a part of your overall trucking expense. Some best practices you can implement include:

  • Make sure the load is ready at pickup time
  • Be flexible around drop and hooks
  • Maintain appropriate staff during shipping and receiving hours
  • Provide adequate parking and other facilities
  • Establish flexible receiving times

In addition, you may take other actions such as accepting your cargo at the destination rail ramp or clearing customs at the port of discharge instead of railing in-bond. Finally, understand the impact of new government regulations like the ELD Mandate and be flexible with delivery expectations.

A change in priorities

Any time capacity becomes an issue, whether ocean, air or inland trucking, the focus may shift away from just moving goods for the lowest price. Many importers and exporters begin to put a much higher priority on securing space for their shipments. When capacity shrinks across the supply chain, reliable service also becomes critical. Remember, when it's crunch time, the right logistics partner will work with you to deliver the highest standard of service.

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