Domestic Expedited Shipment Industry Trends Shippers Should Prepare For in 2021
For 2021, expect the Domestic Expedited freight market to remain volatile due to the impact of COVID-19. Many Expedited industry trends, such as capacity constraints, rising rates, and changing consumer buying patterns, will continue through 2021.
The fourth quarter of 2020 gave us a glimpse into the freight market forecast for 2021. E-commerce sales boomed and Expedited Ground, LTL, Truckload Networks and airline capacity tightened; which lead to record rates in some lanes. Expedited shippers should start 2021 prepared for higher freight rates due to capacity constraints. Let’s look at top Domestic Expedited industry trends for 2021.
Increase in Expedited Shipping Rates
Shippers should expect the price increases from Q4 2020 to continue into Q1 2021. You can expect to see industry wide increases in the 5-8% range.
Driver Shortage Will Impact Capacity
Regulations require when a carrier driver gets a positive COVID-19 test, the carrier’s terminal is shut down at least 7 days for safety. This removes their available capacity from an already tight market. Carriers anticipate this will continue to impact overall industry capacity until a vaccine is widely available.
Reduction in Domestic Airline Cargo Capacity
COVID-19 has greatly impacted the travel industry. Domestic airlines have significantly reduced the number of daily flights. Conversion of aircraft to cargo flights have been mainly focused on international lanes leaving a void in the domestic market.
Freight Volumes Will Remain Dynamic
Carriers faced extreme shifts during 2020 as they first struggled due to low volumes during the height of COVID-19 shutdowns; then extremely high volumes with many carriers struggling to keep up. Volumes are expected to remain dynamic and elevated through at least during Q1 2021. If strict shutdowns return, volumes could drop as many shippers are forced to close. Conversely, in response to higher consumer demand, needed volumes could spike again.
Imbalance of Imports from China continues to create inland backlog in 2021
The demands on equipment to move goods inland has created an imbalance of equipment and significantly higher rates across the entire US. Capacity is being shifted to the West Coast to obtain the higher paying loads.
Tips for Expedited Domestic Shipping Success in 2021
Plan for rate increases
Carriers will be cautious about raising rates. Many carriers are walking a fine line of balancing rates and their operating ratio. In general, shippers should prepare by understanding the reasoning behind transportation rate increases in 2021. Current standard tariffs don’t fit the current dynamic market situations.
Set customer expectations
Due to capacity constraints, shippers should adjust their expectations from the past usual operations. Being realistic and factoring in potential delays or late deliveries into your transit time planning.
Communicate with your Domestic Freight Forwarder
For time-critical shipments, consult with your Domestic Freight Forwarder (DFF) for the best options to ensure on-time deliveries. A good DFF will provide different options and present the various costs associated. Communicate with your DFF in order to obtain the best cost/risk balance.
Partnering with a Domestic Freight Forwarding Expert will be critical for 2021 Expedited Shipping Success in 2021
Shippers should be prepared for more the same dynamic market fluctuations seen and experienced in 2020. Success comes from making full use of the partnerships with your transportation experts that can ensure your shipments deliver on time will be critical.
ALG Worldwide Logistics provides direct access to our expert problem solvers and market-leading technology. Our logistics experts will assist in optimizing your Domestic Expedited shipments with our unmatched network.
Brenda Ross – Sr. Project Manager, Domestic and International Freight Forwarding Division