Trucking Capacity Update
The interconnected nature of supply chains—hence the term including the word ‘chain’ overtly implying linkage—means that breaking one link has consequences for the integrity of the entire chain. Beginning with the problems created by container backlogs, shortages and port congestion, importers and exporters are looking for any means possible to expedite the overland component, and they’re turning primarily to trucks.
The most recent January figures for the Hackett Associates / NRF Global Port Tracker report tell the tale—reports for the major retail ports they track were down slightly from December but were still up 13% year on year. Los Angeles for February reported processing 799,315 Twenty-Foot Equivalent Units (TEUs) in February, a 47% jump compared to February 2020. It was the seventh consecutive month of year-over-year increases and the strongest February in the Port’s 114-year history.
For inland haulage, the exponential influx of non-traditional cargo due to the surrounding delays means that the normal ebb-and-flow we see surrounding seasonal shipping patterns for summer import peaks or early season produce moving eastwards from California are upended with consumer goods traditionally moved intermodally.
Add to the challenges last month’s polar vortex, which threw Texas into chaos as demand skyrocketed and weather conditions prevented trucks from getting on—or in some cases off—the road. Volumes increased by 15%, mirroring the typical transportation conditions around the holiday season. Availability, however, was reduced by 25% from the weather issues impacting driver safety. Entire sections of some fleets were stalled for a week because of the damage done in the aftermath.
TOC relies on two kinds of trucking capacity for our customers. First, power and equipment to move cargo through the country or cross-border between any combination of ports, suppliers, factories, assemblers, warehouses or ultimate consignees. The second is trucking by us and our forwarding partners for in-bond cargo that moves from a US port of arrival to inland or border locations for clearance or export without the need to make entry or pay duty.
Ultimately, what does this mean for now?
It means that the spike in pricing and capacity crunch we are seeing likely won’t abate until there is some relief from the backlogs at major ports of entry like Southern California. In what could be seen as a minor bit of good news, the number of vessels waiting to berth was halved this week from 40 to just over 20.
Our ongoing goal at TOC, which predates and continues through pandemic-related supply chain operations, is to continue to work diligently through our network of vendor partners to source the necessary road transportation our customers need. Much like the sudden and unexpected swings we have seen in ocean or intermodal costs, we are doing everything in our control to flatten these spikes through long-established relationships, but we continue to underscore the importance of flexibility and understanding as we try to meet the twin goals of cost containment and continuity of service across every mode of transportation utilized by our customers.
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