As many shippers can attest, procuring truckload capacity in the current marketplace is increasingly challenging. Freight rates continue to rise, with nearly half the lanes in the U.S. posting per-mile rates above three dollars. According to DAT Solutions, the load to truck ratio jumped to 132.5% YOY in August, with spot rates up 22.1% from 2019.
Heading into retail peak season, shippers are trying to get a handle on this volatile market and looking for ways to secure affordable truckload capacity.
What is Causing a Truckload Capacity Crunch?
During the first half of 2020, the truckload market experienced dramatic peaks and valleys due to the COVID-19 pandemic. Since July, Capacity began to tighten, leading to today’s challenging marketplace. Below are three factors contributing to the 2020 truckload capacity crunch:
Manufacturers And Retailers Are Working Overtime To Restock:
The 2020 retail peak season is predicted to be unusual due to COVID-19’s impact on physical stores and e-commerce. The “lean” inventories of U.S. manufacturers and retailers, driven by economic uncertainty and unpredictable consumer demand, further complicate the picture. The Wall Street Journal reported that businesses racing to replenish goods face surging transportation costs due to rising freight demands.
Retailers Have Increased On Time, In Full (OTIF) Requirements:
To meet changing consumer demands, replenish shelves, and prepare for an unprecedented e-commerce peak season, retailers like Walmart have tightened their OTIF requirements. FreightWaves reported that as of September 15th, all Walmart suppliers and carriers are required to deliver all goods by their Must Arrive By Date (MABD) 98% of the time (up from 87%), or be fined 3% of the cost of goods.
Large Truckload Carriers Cut Capacity Due To Economic Uncertainty:
Due to the economic impact of COVID-19 during the second quarter of 2020, many carriers took their trucks off the road. While consumer spending has increased in the second half of 2020, large carriers are not racing to add truckload capacity. The Journal of Commerce (JOC) Truckload Capacity Index (TCI) data shows that carriers cut their capacity 4.4% year over year, which is the deepest cut the TCI has documented since a 4.5% cut in the first quarter of 2010. Dean Croke, a Senior Analyst at DAT IQ, told the JOC, “Carriers aren’t necessarily adding more trucks and hiring more drivers because they don’t know what conditions are going to be like in a few months from now.”
As we edge into 2020’s fourth quarter, truckload capacity will continue to tighten as holiday peak shipping season ramps up. To ensure your freight arrives on-time and in-budget, leveraging agile supply chain solutions, like GlobalTranz’s pop-up fleets, can guarantee virtually unlimited capacity.
Pop-Up Fleets: The Answer to Truckload Capacity in a Volatile Market
GlobalTranz created its pop-up fleet solution to help high-volume shippers and shippers with private fleets in need of supplemental capacity to control rates and meet their end-customer delivery demands.
Recently, Ross Spanier, GlobalTranz’s Senior Vice President of Sales and Solutions, spoke with Jeff Berman, Logistics Group news Editor at Logistics Management, on how GlobalTranz’s pop-up fleets will help safeguard shippers from market volatility.
“The pop-up fleet solution offers dedicated capacity that allows shippers to meet customer demand while avoiding exposure to the spot market.” Spanier explained, “In a temperamental market, dedicated fleets ensure loads are covered quickly, providing a solution that controls costs and eliminates the need for managing multiple brokers to cover loads. By leveraging our network of over 34,000 truckload carriers, GlobalTranz is uniquely positioned to offer customers guaranteed capacity at locked-in rates.”
Secure Truckload Capacity in a Volatile Market with GlobalTranz’s Pop-Up Fleets Solution
While it is impossible to control the freight market’s ebbs and flows, shippers can manage how market fluctuations impact their transportation operations and budget. With GlobalTranz’s pop-up fleets solutions, you gain access to virtually unlimited dedicated truckload capacity to meet customer demands.
Contact us to get started with GlobalTranz’s pop-up fleets solution today.