March 2018 | News | Trends

Capacity Crunch? Carriers Weigh In

Tags: Trucking, Logistics, Supply Chain

Shippers express concern about finding capacity, but how do carriers see the situation? To find out, Transporeon Group, a cloud-based supply chain execution platform provider, surveyed its base of more than 3,000 North American logistics service providers.

Most carriers surveyed claim they are at capacity utilization rates of 95 percent and higher, both in the spot market and the contract market. Capacity seems to be scarce—about 68 percent of respondents say they can sell no more than 10 percent in additional capacity. Note that this capacity may not be located near demand points and could likely go unused.

More than half of the carriers surveyed report their spot rates have increased by at least 10 percent over the last quarter of 2017. Contract rates have also increased, and only about 20 percent of surveyed carriers say their rates have stayed the same.

Almost half of the carriers surveyed expect their rates to increase up to five percent in 2018, while the other half expect rate increases of greater than five percent. Only four percent of carriers expect rates to stay steady.

For that reason, carriers report almost 60 percent of their customers are planning to employ a combination of bid tactics: reduce or consolidate the number of bids throughout the year; bid out of only selected high-volume or dedicated fleet lanes; and pre-agree to price increases. About 14 percent of contract customers have already agreed on price increases without going out for a bid in 2018.

Demand for both outbound and inbound freight seems to be particularly high in the Upper Midwest, Southeast, Great Lakes and Mid-Atlantic regions, as well as Texas, according to carriers. As GDP continues to grow into 2018, there are no signs that demand will abate, especially in the Upper Midwest and Southeast regions. Driver and capacity shortages in these regions will undoubtedly result in increased prices.

While 2018 will remain a challenging market environment, shippers should resist remaining passive. A strategic, well-executed bid will add competitive advantage, especially when employing market-leading execution tools. Shippers who are not proactive in this market environment will ultimately be put under pressure to react rather than act deliberately.






Visit Our Sponsors