February 1, 2018 / By Erika / Logistic • Shipping • Transport / 0 Comments
We are all facing challenging times due to consecutive quarters of GDP growth which have impacted freight volume growth and pushed capacity to the limits. FTR’s Shippers Conditions Index (SCI) continued to fall in October to a reading of -9.6 which is a pessimistic outlook for shippers. The SCI tracks the changes representing four major conditions in the U.S. full-load freight market: freight demand, freight rates, fleet capacity, and fuel price. What will this mean as we move into 2018?
Survey Results & Facts
The freight volume increase in 2017 has left shippers and logistics providers with differing outlooks for the year ahead. According to a survey by IHS Markit, most shippers believe all modes of traffic volume growth will be flat except for truckload in 2018. The majority of logistics providers also expect truckload volumes to increase, but predict LTL will experience a boost as well. The reality is LTL traffic is indeed moving up. It appears truckload demand has been so intense, some is moving over to LTL and filling their capacity as well. FTR reported record-high trailer orders in 2017 in what they predict are fleets ordering thousands of dry vans to deal with exceptionally tight trucking capacity. According to the Cass Freight Index, trucking shipments increased 0.2% month-to-month and 6.3% YoY in November 2017, while expenditures increased 0.9% month-to-month and a whopping 14.3% YoY.
When surveyed on what would be the top challenges of 2018, shippers and logistics providers both agree capacity is their number one concern. After that, shippers see rates and costs being the number two challenge while service providers rank ELDs as the next in line for concern. The van, reefer and flatbed rates at the beginning of January were certainly higher than any rates in 2017. Spot Market Load rates in December 2017 were up 86% from December of 2017. We probably won’t see the true impact of ELDs until after April’s deadline.
What’s a shipper to do?
In this environment, it is more important than ever to partner with a trustworthy logistics service provider who has a track record of looking out for the shipper’s best interest. A logistics provider can offer you expanded resources to help meet your shipping needs. At Westgate, we are continually working to stabilize our resources to maintain capacity and fill our customers’ requests.
On the shipper’s end, lead times, flexible pickup dates /times, and not trying to time the market are keys to finding capacity in this landscape. One thing is certain, our industry is always changing. This can be a challenging time for shippers, but with the right team, it is not an impossible cycle to ride out.
Westgate has 35 years of consistently delivering expertise in handling specialty loads, maintaining a large network of resources, and exceptional personal service. Reach out to us and allow one of our Certified Transportation Brokers to provide you with a quote.