Over the past few months, we’ve seen a major push of retailers trying to move as much inventory as possible before summer to match the stimulus-inspired consumer demand. This rush has been a serious challenge, considering the backup at many U.S. ports, particularly Southern California and other various industry delays. This has resulted in some shippers choosing to send freight to the east coast instead, primarily the ports of Savannah and Houston.
Though Savannah and Houston are currently rising to meet the challenge, wait times are inevitably increasing there as well, as they adjust to the sudden influx of traffic. As expected, when any part of the supply chain is impacted, it is likely to weigh on others. These delays and reroutes have inevitably trickled down to the trucking industry, as well.
Let’s take a look at how trucking is rising to meet the challenge and how they’re likely to perform as a result over the remainder of the year.
Altered Freight Patterns
The past few months have seen many carriers sending trucking fleets to the west coast in pursuit of high-paying freight opportunities, while some shipping has shifted to east coast ports. This creates a vast imbalance of trucks, leaving many markets with slim capacity. But with the increased import push, even that limited capacity has disappeared. Many carriers are struggling to take on increased business, resulting in high turndown and a spike in rates for freight. This hike in prices and lack of availability is likely to hold strong through the end of May due to Memorial Day and beyond.
States across the country have seen a drastic imbalance in supply chain demand. In many cases, there are several hundred—if not thousands—more trucks moving out of states than into them. This insanely increased demand is leading many carriers, owner-operators, and brokers to reserve any remaining capacity for the highest bidder in an attempt to maximize earnings. Many are even choosing to back out of previous agreements and dodging long-term contracted rates. Some are even avoiding shippers or consignees that may cause increased delays and charging for wait times instead of offering the typical free delay allowance.
Lack of Capacity
The container drayage world is also being heavily impacted by this recent overflow, with near-zero capacity and bookings almost a month out in advance of containers landing. This is also burdened by the recent shortage of CDL drivers, which is causing difficulties for drayage carriers that are attempting to increase their fleet numbers. Transload requests are increasing due to the sheer volume of incoming freight without the space to accommodate it. Many warehouses are largely struggling with storage issues, unable to take on more inventory without the ability to first move some back out.
There were hopes earlier in the year that June or July would bring a slowing in freight amounts, but due to the impact on the trucking industry, it is difficult to predict at this time. With seasonal supply chain swells for school shopping, winter holidays, and Black Friday on the horizon, it’s difficult to see when this influx may abate.
With all that in mind, we must take into consideration an increased vaccination rate, recent CDC guidelines being shifted, and the world moving slowly back to some sense of normal. Regardless of the outcome, your TOC Logistics International representatives are here to advise you through every sharp turn of the industry.