With a nationwide shortage of trucks, the volume of freight loads far outweighs the availability of carriers, making 2018 the year of Less Than Truckload (LTL) shipments.
Many companies are faced with extremely long delivery times and high costs, and shippers are being forced to pay high premiums to ensure delivery, or they must sacrifice customer service and shipping times.
In accordance with DAT Solutions, in 2018, during the third week of January, 10 loads had been waiting to be moved for every 1 truck available. Expecting to rise to 8% this year, spot market prices for dry vans are also up to 30% year-to-year.
What is the cause of the truck shortage, and what can you do about it?
What Caused the Truck Shortage?
E-commerce had exploded with business at the end of 2017 with online sales growing at 18.5% in December 2017 alone. With total online sales at $452.99 billion, the entirety of 2017 saw a boom of e-commerce, increasing 16.2% from 2016.
With an increase in online sales brings an increase in transport in tandem. And because there weren’t enough trucks to meet retail orders, several carriers were overwhelmed by the influx of holiday season orders.
An ongoing freight management calamity was caused by this backup bleeding over into 2018. Even if there weren’t other factors involved in this severe shortage, the increase in freight alone would cause a shortage that could take months to overcome. With other variables involved, this backup will only deepen.
The closure of roads and ports that lasted several days was caused by the “bomb cyclone.” A significant backup that can last for months in the trucking industry can be created in just one day by unpredictable weather patterns which can cause port, loading, and traffic delays. Add together the increase in freight and the wild weather, and you have a “perfect storm.”
Post-holiday is the season for returns. Online shoppers will head to the local carrier to return their items back to retailers via truck. These returns are an expensive process with transporters still working to figure out streamlined reverse logistics, especially for the last mile. This process, in turn, holds up trucks without financial return.
Reduced Truck Volume
Due to heavy traffic jams in ports and loading docks, fewer trucks are making it to the roads.
Although low in supply due to cost and production, temperature-controlled trucks are especially high in demand. Shippers are severely struggling to ship perishable items in a timely manner due to a shortage of refrigerated trucks coupled with reefer organizations and scheduling concerns. There simply are just not enough trucks on the road to meet the nationwide freight needs.
What Does the Future Hold?
The rise in increased freight that came with 2017 is not predicted to back down in 2018. In fact, experts predict that e-commerce will only continue to explode this year.
Retailers are expecting a rise in orders as the spring approaches, However, adding an influx of orders could result in even greater holdups as shippers are already struggling to meet the demands of backups and post-holiday orders.
In addition, it is also expected that the ELD mandate will be heavily reinforced in April and any vehicles without an ELD may be removed from the road. This will be the cause of an even deeper shortage of trucks paired with a substantial increase in orders.
The big question is, what does this mean for shipping? How can businesses make sure their goods are getting to their destination without breaking the bank?
In our next article, we will take a look at how shippers may be able to make it through the nationwide truck shortage.
Southeastern Freight Lines is your LTL freight shipping solution. Find out how we can help you.