What will the forecast look like for transportation logistics and LTL shipping/carriers post-COVID-19? Keep reading to find out.
The effects of COVID-19 are being felt throughout the logistics industry, with the decrease in imports and economic activity generating an ongoing lull in freight pricing and demand. Sooner or later, however, international supply chains – China’s in particular – will resume normal operations and freight will begin flooding ports in the US.
A strong ripple effect from factories in China to US centers of manufacturing and distribution can be expected by the trucking market. Logistics experts have varying outlooks on at what point this effect will be seen, and many shippers, carriers, and brokers are predicting a shift in 2020 that will include tighter capacity and rebounding rates, continuing the roller coaster effect of 2018’s heights to the plunge in 2019.
One expert believes that while lowered rates offered by brokers to attract new business will probably be available a bit longer, shippers should prepare for much higher rates once the freight tsunami begins to slam US ports. They should also keep in mind that as it moves through supply chain networks, the ripple effect created will take more than a few months to subside.
While other experts acknowledge an inevitable shock to the truckload market, they don’t feel there’s enough information yet regarding just how much excess delayed freight volume can be expected and how much corresponding imbalance could occur. Though this makes planning more difficult, flexibility for shippers is recommended. The customers of some 3PL providers have been allocating additional trucks to distribution center routes, for potential increased volume of up to 35 percent.
Tightened capacity across the transportation industry will inevitably push up pricing until the waves of delayed freight have subsided. Issues such as glutted ports and displaced equipment are predicted. Domestic rates to California are expected to sharply jump, and empty containers and storage space will need to be considered.
Evaluation of current US truck capacity varies. Although many experts agree that it’s tightening they are divided on just how quickly. FTR Transportation Intelligence predicts capacity will decrease 1.4 percent in 2020. Although freight tonnage rose by 3 percent in 2019, there was also a 4.5 percent increase in active motor carriers of all sizes, so rates remained steady. Shippers frequently rebid their freight thanks to substantial available capacity for moving it.
In these exceptional times, the “recovery” from the COVID-19 impact will almost surely include a significant increase in freight demand that will allow for higher trucking rates. Capacity could tighten rapidly depending on what else is happening in the supply chain – such as increased manufacturing, retail sales, seasonal food production – with less-than-truckload (LTL) seeing an overflow effect on pricing and capacity.
To ride out the storm, shippers are advised to be in close communication with their providers regarding transportation and logistics, including 3PL providers like Amware. Its proprietary, web-based 3PL software platform, Amrate can find the lowest cost carrier for freight shipping needs, while consolidating all freight quoting. Click below for a free trial of Amrate and stay ahead of the game.