Weather, changing markets, backlogs create a Volatile Transportation market.
The keyword in Logistics for 2021 seems to be “volatile”. For Freight Forwarders and 3PL’s there appears to be no return to stability in the freight market for all modes of transport.
Demand was at its normal pace until early 2020. Shipping followed suit. Companies were unable to rely on previous forecasting models. There was a major shift across industries, some slowed, and others boomed in response to the world events.
Early into Second quarter the freight demand began to skyrocket. E-commerce experienced a surge with the direct-to-consumer delivery option. This increased the demand for freight movement in non-traditional formats. The typical bulk shipment to retail turned to mass shipments to end user.]
The first quarter of 2020 created too much capacity, so much so that rates in many areas dropped to record lows. Third quarter on found an increasing shortage of capacity. Ocean lines had fewer sailing dates; airlines cut back on their flight schedules This created massive backlogs of imports.
The interconnected flow of goods starts with the ocean ports on both US coasts. The increased volume at one point left over 40 container ships waiting to be offloaded at one port. This led to a shortage of available ocean containers. Air cargo demand increased as importers chose an alternative to circumvent the extended ocean transit times.
Domestic transportation is the next phase in the flow of goods. The congestion as the ocean ports effected the rail system and over the road carriers. Trucking companies experience delays due to the unusual wait times to receive containers and shipments. Outside factors relating to weather around the country put an additional squeeze on capacity. Typical ground feeder freight companies no longer have independent drivers to provide additional resources, causing delays in freight transportation.
Forwarders and 3PL’s suffer from the freight market volatility. In the current environment, they are sending out rate and capacity requests to 10 or more companies and getting less than 50% response. Rising rates and decreased capacity make it difficult to honor contracted rates or participate in bid proposals. The whole supply chain suffers, and shippers may not get their carrier of choice. ALG Worldwide understands the current state of the freight industry and will work with you to meet your needs and match your priorities in the dynamic conditions.
Laurie Carlson – Sales Support Manager, Domestic and International Freight Forwarding Division