It is hard to believe it has been almost two years since the onset of the pandemic. We still don't fully understand the extent of the disruption that has overwhelmed the global supply chain, nor do we know what to expect in the coming year. It is uncharted, unfamiliar territory. 

From short supplies and depleted inventories to delayed shipments and order backlogs, the movement of goods has never been so unpredictable and stress inducing. But the biggest issue for shipping managers, and dare I say, the elephant in the room,  is not so much the daily struggles that come with tight capacity, employment woes, and lack of raw materials, but the result of it all, which is soaring freight rates. 

Speculation about how much shipping costs will increase this year vary, but industry experts agree that rate hikes are inevitable, and soon.

The last year has tested the industry to its limits. Expecting the unexpected has become the norm because of COVID-19. It has stretched us like too little butter over too much bread, creating far-reaching consequences. Now that the pandemic threat may be winding down in many places, we are presented with one more thing to make us grind our teeth at night—more cost to our bottom line.

Our Team of Logistics Pros Offer Shippers Valuable Insights 

U.S. Shipping Volumes

The leaves are falling and so may be your profits this peak season. It is a wild and wooly freight market this year and the supply chain has dealt shippers a tough hand. We are fighting a pandemic that has far-reaching economic and personal ramifications. Shipping volumes are 50 percent higher than either of the last two years. High rates and lack of capacity keep gnawing away at profits, just like the virus keeps rearing its ugly head around the country. Relying on historical trends has become pointless with a market that is as unpredictable as this year’s presidential race (or as President Trump’s next tweet). 2018 dealt us a bull market, 2019 was flat, and well, we all know the story this year.

Weekly Market Brief 

63,200 individuals in the United States tested positive for COVID-19 in a single day just last Thursday. That is a record. Since the rise in infections are mostly in southern states such as Texas, Georgia, Arizona, and Florida, panic-buying is returning and capacity is tightening in these areas. Adding even more stress to the market is this week's arrival of the annual DOT road inspections. 

Like the famous words of Captain James T. Kirk, we are boldly going “where no man has gone before,” and I am not talking about the outermost regions of space. I am talking about right here on terra firma. Sure, we’ve had plagues and pandemics before, but never with the population, economy, and intricate network of transportation and travel that we have in the 21^st century. It is a brave new world, alright, and we are scrambling to adapt and adopt.

Luckily, adversity is the mother of invention, and it is evident in the way we as humans are adapting to the global pandemic. Shippers who are lucky enough to be manufacturing are facing serious challenges, such as working with reduced staff, dealing with volatility in order patterns, finding a need for alternate sourcing, and navigating around unclear government regulations that differ from state to state. Despite the chaos, freight keeps moving, and shippers are finding new and sometimes better ways to get the job done.

FREIGHT MARKET & THE PANDEMIC

Looking at the freight market in Q1 of 2020 is much like watching the new season of Ozark on Netflix; it first requires a brief look at what came before. My personal binge-watching policy dictates that before diving into a new season, I do a quick recap of the last two episodes to get the full impact of what is going on now.

So, let’s review what was happening at the close of 2019 in the freight industry. Everyone summed up the year by comparing it to the bull market of 2018, with slight resignation but hopefulness. The overriding sentiment was that even though the market in 2019 paled in comparison to the previous year, the industry was still experiencing growth, and we had 2020 to catch up. 

2019 was the year of the shipper. Truck rates were low, freight volumes were a shadow of their former selves, and capacity was high. Trucks were so plentiful that the term “capacity crunch,” a common phrase in 2018, was rarely heard. The market did not favor the carrier.     

2020, however, is positioned to be a year fraught with a whole new list of challenges for both carriers and shippers, including changes to hours of service, pending regulations like the Drug and Alcohol Clearinghouse, California’s AB5 legislation, and AOBRDs’ final gasp, all of which could result in higher truck rates and fewer trucks on the road.