The State of Freight: And How It May Affect You
The first 7 months of 2018 have seen the most dynamic freight market in recent history. Freight rates have been at or above 5-year highs for both dry vans and flatbeds. In addition, the demands for freight have outpaced the market capacity, the volumes being at the highest level since 2007. In this post, we would like to explain what’s going on in the market and how it may affect you.
State of the Economy
- The economy is benefiting from tax cuts, increased investment in domestic production, and increased domestic output.
- Manufacturing is at the highest level since 2008. Retail Sales are at the highest level since 2012.
- The construction industry is seeing increases in both private and commercial development.
- Unemployment is at the lowest level since 2000.
Driver Recruitment and Shortage of CDL Drivers
- The market has been experiencing a shortage in the number of drivers for the last 5 years (currently around 51,000).
- Driver wages have increased significantly over the last 9 months, many believe it is still too low to attract new drivers to enter the over the road/long-haul market.
Hours of Service Laws/Electronic Logs
- Laws requiring the use of electronic logs went into effect in Quarter 4 in 2017 and enforcement began in April of this year.
- Electronic logs have reduced the productivity of smaller carriers leading them to pursue truckloads that maximize their daily.
- ELD’s have had a dramatic impact on the prices of flatbeds. Flatbeds require tarps and longer loading/unloading periods (less miles traveled per day). Flatbed rates have increased significantly to offset this decrease in productivity.
The Turf and Ornamental Impact: Planning is key!
- The largest impact to daily operations has been an increase in lead times.
- Planning future needs and ordering early has been the best way to offset increases in the cost of freight. Last minute/urgent freight requires paying more than other shippers who participate in the market. The “value” of a truckload of fertilizer cannot absorb the same rate premiums as more expensive retail/consumer goods ($15,000 vs. $150,000).
What This Means for Advanced Turf
Oftentimes, we see that the hours of service laws have incentivized drivers to pick up and deliver shipments on the same day. Requesting specific delivery time frames is no longer a service that most trucking companies will offer, and if they do offer this service, they will expect compensation for their loss in productivity.
However, we have become more flexible in receiving days and hours.
Supply Chain Manager
Regional Operations Manager