Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Truck freight demand across the nation may now be starting to spike, a situation that could add another layer of angst for shippers and freight brokers already confronting a capacity-constrained marketplace.
According to TransCore, a Portland, Ore.-based load-matching network that tracks freight activity in 64 U.S. traffic lanes, first-quarter online load postings by freight brokers hit records for each month in the quarter. Ken Harper, the firm's senior marketing and communications manager, said TransCore's load-posting data extends back at least 10 years and probably longer. Harper declined to disclose specific numbers, saying they were proprietary to the firm and its clients.
The flurry of posting activity by brokers indicates that shippers, who traditionally work through brokers to locate truck capacity, are experiencing a sharp acceleration in business that requires them to quickly secure space through the spot market instead of via the contract route.
At the same time, Harper said TransCore is seeing "very high load searches" by carriers mostly looking for loads to fill what might normally be empty return, or "backhaul," movements.
For shippers, opting for spot market pricing has, in recent years, often been a better deal than signing a one- or two-year contract, mostly because spot market rates have been depressed due to sluggish demand and overcapacity. However, spot rates have been climbing in the past year as a pick-up in demand intersects with significant capacity reductions from the four-year freight downturn and subsequent economic recession.
By contrast, contract rates have remained relatively static, due in part to the impact of so-called legacy contracts that have yet to come up for renewal.
According to TransCore, spot rates are now higher than contract rates on one-quarter of the lanes the firm tracks.
Meanwhile, carriers have both pricing and operating leverage, and don't seem hesitant to use it. Increasingly, they are working directly with large shippers and skirting the brokers they relied on to supply loads during the lean times.
A recently released first-quarter survey by M&A advisory firm Transport Capital Partners LLC found 87 percent of carriers said they had used fewer broker services during the past three months. "This is a dramatic turn-around since May of 2009, when two-thirds reported using more brokers," said Richard Mikes, a partner at the firm. "The freight supply-demand balance has shifted dramatically to the carriers, and they are using their capacity to serve the needs of their long-term customers."
Lana R. Batts, another TCP partner, added that carriers will "service their long-standing shippers first because of not only higher-paying freight, but also steadier volumes and the desire to assist these shippers as a priority." By working directly with shippers, carriers can also avoid the 15 to 20 percent broker mark-ups that cut into the profitability of each load they receive from brokers, said Batts.
The capacity situation remains fluid. According to Harper of Transcore, capacity for dry vans, on which most of the nation's truck freight moves, has stabilized. The situation was different several weeks ago, when dry vans were reported in very short supply notably from the East Coast into the Midwest, as carriers were spread thin and refused to move loads on lanes where they weren't receiving compensatory rates. By contrast, capacity of flatbed trucks remains extremely tight, with little change expected in the near future, Harper said.
Ben Cubitt, a former top shipper executive and now senior vice president of consulting and engineering for Transplace, a third-party logistics service provider based in Frisco, Texas, said Tuesday that the capacity crunch in the Midwest has "eased off significantly" in the past few weeks. However, Cubitt said he expects any slackness to be absorbed during the next few weeks and predicted an acute capacity situation in the Southeast as produce season approaches.
Charles W. Clowdis Jr., managing director, transportation and supply chain advisory services for consultancy IHS Global Insight, said he has advised shippers to "nail down rates for as long as the carrier is willing to do so." Clowdis said that shippers should be ready to contractually guarantee a specific number of loads for a defined time frame and be prepared to pay penalties if they fail to deliver.
Clowdis added that for the first time in years, company logistics chiefs will need to budget for more transportation spending, rather than assuring their CEOs and CFOs that they can hold spending to the same (or lower) levels in the upcoming year.
While the pendulum may swing away from the brokers for a while, some experts think they will do just fine. Evan Armstrong, president of Armstrong & Associates Inc., whose Milwaukee-based firm follows 3PLs and brokers more extensively than any other consultancy, said the proliferation of spot market transactions will offer "significant opportunities" to brokers skilled in handling those types of deals.
Armstrong also said companies will continue to outsource a non-core function like transportation to outside specialists, a secular trend that will continue to benefit 3PLs and brokers.
"Not many shippers are walking in to their CFOs and asking for millions of dollars to establish their own in-house transportation management operations," Armstrong said. "In addition, almost all truckload carriers have at least one 3PL customer on their top 20 account list."
According to Armstrong data, demand for 3PLs to perform U.S. transportation management services grew at an 11.8-percent compounded annual rate from 1995 to 2010. This year will show more of the same, Armstrong predicted.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.