Stay Ahead of the Challenges in the USA Trucking Market with these Best Practices for Your Business
As shippers continue to adjust to drastic changes in the U.S. trucking market, Compass Forwarding would like to take this opportunity to explain the pressure points in the trucking market and to suggest best practices to clients seeking to navigate these issues.
What are the Challenges?
A combination of economic factors and new regulations on truckers is triggering a shortage of full truck load (FTL) and container drayage drivers and equipment in the United States, which is driving up inland rates. A federal law that went into enforcement April 1 now requires that electronic logs be used to ensure drivers not exceed 10 hours of operating time. This has restricted trucker productivity, causing backlogs, delays, and congestion at key logistical nodes – such as ports, rail ramps, and airports.
Shipping delays as a result of driver time restrictions is also triggering shortages of key equipment, such as chassis and gensets for refrigerated containers.
At the same time, improved U.S. economic performance and a rise in trade have driven up demand for trucking equipment. There is currently an insufficient supply of drivers and equipment nationwide to match this growth in demand.
How is the Industry Responding?
The logistics industry’s response to these market challenges has been varied. In the container drayage market, most major ocean carriers have announced inland rate increases, either through tariff adjustments or emergency surcharges. Some ocean carriers are refusing to accommodate door moves altogether.
Market forces are also triggering significant increases in FTL rates. According to an analysis by Bloomberg, year-over-year spot rates were up 28% as of late March. FTR Transportation Intelligence forecasts that contract trucking rates will jump 12% this year.
What are Some Best Practices for Navigating these Issues?
Stay Up to Date: The inland market is very fluid at the moment and will continue to be for some time. Make sure you are getting the most current information on rates, availability, and service restrictions. Keep in close contact with the Compass Forwarding customer service team for the most current information.
Be Proactive: Stay mindful of equipment shortages and congestion when navigating customs clearance, free time, and pickup/delivery scheduling. Shippers should anticipate a MINIMUM of 24-48 hours lead time in dispatching FTLs and drayage equipment. The clearance process should be started as early as possible, dispatch documents should be submitted as early as possible, and delay time should be budgeted into pickup/delivery schedules.
Budget Accordingly: Given the uncertainty of the market, shippers should be prepared for higher inland rates for the foreseeable future, as well as a growing incidence of detention or demurrage.
Image by Greg-Goebel-from-Loveland-CO-USA – adapted from Wikimedia Commons