As we do every year at this time, we look forward to the year ahead and share with clients and readers what they might be able to expect based on what we see within the transportation and logistics industry.
The start of 2021 came with the delivery of the COVID-19 vaccine, leading many in the transportation industry to believe that once vaccinated, consumers would get “back to normal,” resuming social activities, attending more events, and traveling. Had the prediction been accurate the shift in consumer behavior would have led to a decrease in demand for consumer goods, easing freight demand, deflating trucking and shipping prices, and loosening supply chain disruptions. As we now know, that didn’t happen. Instead, many Americans opted against the vaccine just as the COVID Delta variant began to spread, causing many to remain cautious and homebound. This led to the steady demand for consumer goods which had already been exceeding the transportation industry’s ability to deliver.
Retailers and manufacturers scrambled in 2021, seeking out alternatives to overseas shipping due to extreme port congestion and skyrocketing prices. Trans-Pacific shipments that cost $5k pre-pandemic are now $15-20k for the same service. Businesses that had traditionally ordered parts overseas throughout the year started stockpiling inventory to meet pent-up demand. This stockpiling has further exacerbated the problem, leading to intermodal (railway) congestion and even more delays in trucking.
This continued increase in demand across the board has led to price increases in every sector of the transportation industry. Despite rising costs, orders and demand don’t seem to be slowing.
What’s Ahead This Year?
Capacity in 2022 is expected to remain tight. With 2022 budgets and forecasts in, we’re expecting another year of elevated rates in the LTL and FTL space.
Trucking capacity remains stressed with carriers still struggling to find enough drivers to move freight.
Until consumer demand begins to wane, the supply chain will likely remain constrained. Even when that happens. A dramatic drop in LTL and FTL prices isn’t likely as carriers will still have to pay for fleet improvements, higher driver wages, and other trickle-down expenses like insurance and fuel.
We saw a huge increase in freight costs in 2021. We don’t believe we’ll experience another significant bump in 2022, but we do think current rates will continue. If they dip it won’t likely happen until later in the year.
Managing LTL/Truckload in 2022
One of the most significant issues in 2021 reported by shippers was simply getting a truck to show up. The industry is operating at full capacity without a forecasted decrease in demand this coming year.
One of the ways we’ve been able to ease some of the stress for our clients has been through the use of our expedited and guaranteed service. Because Amware has a fleet of asset-based trucks (trucks we own and don’t broker out), we’ve been able to move shipments other carriers couldn’t (or wouldn’t).
Additionally, our clients have been able to utilize our cloud (or premise-based) TMS, Amrate, to look for rates and availability from hundreds of carriers. This flexibility has allowed them to ship more freight than would have been possible to do through a single carrier.
Partnering with a 3PL like Amware can help ease the stress of shipping this year. Contact us today and discover how we’re helping LTL clients navigate these unpredictable times while continuing to save them money. Click below to request a free trial of Amrate and start comparing LTL rates today.