If you like change, the transportation industry is your sanctuary.
Just eight months ago, I wrote a blog about shippers being in the driver’s seat (“Rates are Down . . .”). Capacity was loose, carriers were competitive and rates were low. But now, all that has changed.
Shippers: Welcome to the passenger’s seat.
You’ll see I’m sharing some industry stats, but I don’t need numbers to tell the story. Outside my door I can hear the outgoing and incoming phone calls as our staff members work with carriers to secure trucks for shippers. Like any formidable 3PL, we’ve got a substantial database of qualified carrier partners, but market conditions have led us to a time of tightened capacity and not-so-competitive rates.
According TransCore Trendlines, April’s year-over-year spot market loads have increased by 191% – more than quadruple the freight availability in 2009. At the same time, there was a 9.6% increase in year-over-year tonnage (see graph). As TransCore Trendlines observes, this may mean more freight is shifting to the spot market, compared to 2009, or that capacity is becoming constrained. Based on my experiences, I assume the latter. In regards to specific modes, May year-over-year load-to-truck ratios have spiked, especially in dry van (up 248%), reefer (312%) and most significantly, flatbed (657%).
And as capacity decreases, rates increase. I know of a major shipper who is raising their rates and is not looking to negotiate. As it is, they have more business than they can handle. Other carriers are beginning to pick and choose their business by customer, by freight classification and by lane. The improved economy has afforded carriers the opportunity to do business on their terms. But can we blame them? We must remember that carriers are trying to make a recession recovery.
Take some time to check out these graphs and we’ll try to keep you informed of market conditions in the coming weeks and months. Stay tuned . . . in the transportation industry, the only constant is change.
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