Shipping

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)[1] 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[2], 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[3] 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[4], 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.

 

 

About Us

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.

 


 

[1] https://ftrintel.com/news/latest-sci/index.php

[2] https://www.joc.com/sites/default/files/u45421/Whitepapers/JOC-Inland2017_Whitepaper-00983-v4.pdf

[3] https://ftrintel.com/news/ftr-reports-preliminary-december-trailer-orders-at-record-levels-reaching-47000-units

[4] https://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx

Nowadays being an efficient shipper has received a ton of buzz, simply because of how much of a difference it can make in the costs of running a business.

But did you know, even with all the new mandates, price compression, and industry changes, you could still help manage your shipping expenses by paying attention to overlooked ways to improving shipping efficiencies? Some freight budgets are being revised around the New Year, because it turns out many businesses are seeing losses of 8-10% due to inefficient shipping practices.

Three of the major areas impacting shipping inefficiencies are:

  • ELD Enforcement
    Understanding the ELD implementation can be critical to improving efficiencies in your business. We know that as we move past the April 1st deadline for ELD implementation, the already tight capacity landscape will be affected even more as some carriers will drop out of service. Being proactive with our network of carriers by confirming available hours of service and ELD compliance helps us to be prepared in meeting our customer’s desired timelines and in making sure all parties involved are on the same page.
  • Small Changes
    Benefiting from small changes such as proper packaging and maximizing the pallet placement in trucks can have a positive effect on your freight savings and can also limit damage claims. Using standard size pallets (when the product allows) that are in sound condition and properly securing the items to the skid can minimize the number or trucks, and avoid potential damage and/or mishandling. Both the pallet preparation phase and the truck loading phase, can present cost-saving opportunities.
  • Inefficient Processes
    Direct impacts from inefficiencies in your processes are going to be felt with higher rate increases in 2018. For example, labor intensive requests on the pickup or delivery end are going to result in even higher rates as these additional services are going to be factored into the quotes. Also, with the additional hours of service constraints resulting from the ELD mandate, prompt loading and unloading procedures will be as important as ever in limiting freight costs and securing capacity.

 

Don’t get left behind in 2018. Get control of your shipping costs now, and inform yourself on how to take the most advantage to help yourself and your business. Have a happy and healthy New Year!

You can also check out our article on Best Practices for Shipping and Receiving

 

About Us

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.