TOC Logistics International, Inc. regrets to inform that the truck capacity situation in the United States is creating a severe problem to the supply chain community.
Our team received a letter from the 3rd largest vessel operator stating, “The US trucking industry is facing a growing shortage of qualified drivers in both the international and domestic markets. The shortage is having a dramatic effect on our ability to deliver freight in a timely and effective manner.” The vessel operator is experiencing a significant increase in service delays as a direct result of the current trucking situation in the United States.
This letter that we received in evidence of what the rest of the vessel operators and the NVOCC industry is facing.
This same vessel operator that sent us the above letter had also reached out to our team asking if we could handle dray moves for containers that were not TOC’s. This is proof that the situation is not just affecting long-haul FTL providers, but also port dray carriers. While there are many factors at play, the eLog regulations are playing a huge role.
The new US eLog requirements, which were enforced beginning December 18, 2017, have truly caused capacity reduction. In regards to the container dray carriers, the simple facts are:
- Before December 18, 2017, dray drivers could handle up to five “turns” per day using manipulative log practices.
- Since December 18, 2017, dray drivers who stick to strict hours of operation (11 hours per day), can now only do a maximum of three turns per day (based on average of 3 hours per turn).
- Without reducing the number of drivers or equipment, the above results in a 40% reduction in capacity.
- For longer dray runs, if a driver could previously do 2 turns per day, he might only now be able to do one. This alone will significantly drive up the price of the jobs, as it represents a 50% pay cut to the dray company/driver that must somehow be recouped.
Some of the impacts to NVOCC operations are:
- A last-minute lack of drivers available to bring “empties” to a loading site
- Lack of drivers available to deliver containers to ports to meet cut-offs
- Drivers cancelling on one job in order to take a higher-paying job
TOC Logistics is committed to finding and having alternative options in place in order to keep our programs running on-time. However, should the capacity situation become a regular detriment to operations at current rate levels, all supply chain users must be prepared for expected rate increases.
Also, please note this article which details the troubles that some of the largest companies in the U.S. are facing when it comes to keeping their supply chains going, some of which includes paying DOUBLE the contracted rates for certain critical lanes.
The impact for 2018 supply chains is not yet fully realized or understood, but costs are sure to increase rather than stay static. Contracting long-rate validities does not guarantee capacity, which means “out of gauge” services will become more prevalent in order to keep supply chains moving.
We offer this market update for your information and benefit.