Capacity Continues to Decline in the US

Truck shortage and availability within the continental US is continuing to be a major problem:

Shippers, suppliers and brokers have enjoyed a rough equilibrium between trucking demand and supply during the last two years and unfortunately those days are long gone. Several factors have created this issue, an unusually harsh winter, fewer truck drivers, and a rising cost of running a fleet.

A battery of storms in the east and midwest this past winter drover truck capacity below normal levels, leaving shippers without capacity and a general stockpile of freight. That alone saw spikes in pricing in areas like Philadelphia and Chicago, areas that normally benefited from an abundance of truck availability.

According to JOC.com “those weaknesses include truck capacity levels at least 20 percent below a pre-recession peak reached in 2006. Spot market truckload rates soared in the first quarter, and contract truckload rates are still climbing.”

In addition to weather and capacity concerns, trucking companies have been battling rising fuel costs, HOS restrictions and other operational costs.

A perfect storm for rising costs in shipping,  shippers need to prepare to pay more for transportation this year, “They’ll have to pass the higher costs on to the consumer or bear them, or ask how do I redesign my supply chain and practices to be more efficient in using transportation?” according to Jindel at JOC. If a supply-demand equilibrium is returned it will not be at the levels seen in previous years.

For more information: http://www.joc.com/trucking-logistics/truckload-freight/capacity-squeeze-may-spark-supply-chain-changes_20140429.html?destination=node/2752466