- With the national recovery in full swing, e-commerce sales growing and consumer spending all remaining steady through 2021, demand for trucking and land transport is extremely high right now. Concurrently, driver shortages, a lack of equipment and persistent supply chain shortages are impacting the smooth flow of commerce. These and other factors drove up freight rates and created capacity crunches that flowed right into 2022.
- Right now, the US is experiencing a shortage of more than 80,000 truck drivers, according to the American Trucking Associations, which estimates that about 72% of the nation’s freight transport moves by trucks. Vox says this proves just how dependent consumers are on the drivers who deliver turkeys to stores or gas to pumps or the Christmas presents you order to your doorsteps.
- “This is also not a new problem. Analysts and industry groups have warned of truck driver shortages for years, around the globe,” the publication adds. “But supply chain disruptions during the pandemic and surges in demand in places like the US have made this slow-rolling crisis much more acute.”
- The pandemic “opened up Pandora’s box on so many issues,” transportation expert Jean-Paul Rodrigue told Vox. “Because of this intense pressure, the capacity has been stretched thin and then you start having delays and you have a slowdown. All of this creates a domino effect, which makes the shortage of drivers even more salient than before.”
- “An Everything Shortage”
- As we move into 2022, shippers are bracing for higher land transport rates amid an “everything shortage,” according to Logistics Management. Those rates can run in the double-digit percentage increases and come on top of 2021’s increases. “Those increased freight rates tended to be upward of 10% for shippers whose freight did not match carriers’ needs in this sellers’ market,” the publication reports.
- Logistics Management sees “the need for speed” as being paramount for both shippers and carriers in 2022. “All shippers can avoid the majority of these rate increases if they committed themselves to eliminate time-wasting procedures in their supply chains,” SJ Consulting’s Satish Jindel told the publication. “Those delays are causing carriers to lose money. Which, in turn, is causing them to raise rates on shippers. But it doesn’t have to be that way.”
- The publication says that the rate increases are most visible in less-than-truckload (LTL), where truckload shippers unable to move all their freight under contract turned to the spot market. “That caused one-way truckload (TL) rates to be off slightly,” it reports. “As diesel prices rose over $3 a gallon, intermodal moves via rail became more attractive to some long-haul TL shippers.”
- High Demand
- With high shipping demand outweighing tight capacity across the freight sector, the Wall Street Journal says some trucking companies are projecting double-digit growth in contract rates for 2022. “Prices have been rising across the freight sector, including in parcel delivery, trucking, ocean shipping and warehousing,” it says. “Most freight-transportation contracts are negotiated annually, although many large shippers may have multiyear agreements with a variety of carriers.”
- Overall, WSJ says domestic shipping rates for moving goods by road and rail in the U.S. were up about 23% in 2021 over the prior year. And, overall logistics prices, reached a record high in November (up 3.4% over October and a 14% increase year-over-year). And, parcel shipping prices are rising “at the fastest pace in nearly a decade,” it adds, as pandemic-driven demand shifts pricing power to carriers that deliver packages to homes and businesses.
- Right now, WSJ says shippers are using various strategies to keep transportation inflation at bay, including consolidating more loads to minimize truck trips and renting truck trailers for storage (rather than paying rising warehousing rents).
- Positive Outlook
- Demand for land transportation will likely remain strong during the coming year. According to the Institute for Supply Management (ISM), manufacturing will see a 6.5% revenue gain in 2022, with 65% of companies indicating that 2022 revenues will top 2021 revenues. “Manufacturing continues to perform at a strong level, going back to March 2020,” SCMR reports, “with March 2021 being the high point over a 12-month period through November.”
- Despite high demand for land transport, JOC says shippers seeking relief from high freight rates and capacity crunches may get some relief in 2022. “Transportation capacity is expected to become more readily available next year but freight demand will remain high enough to keep pricing elevated,” economists said in a recent JOC webcast.
- “Companies will continue to face some headwinds on the trucking front in 2022, but those that have reliable logistics partners in place will be able to navigate the year ahead and begin to look forward to a more favorable environment,” said Joe Jaska, Head of Land Transport from DB Schenker, Region Americas. “Here at DB Schenker, we’re watching the market closely and taking all of the steps necessary to help keep the world’s supply chains and transportation networks. running smoothly.”
Top Trucking and Land Transport Trends to Watch in 2022
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