As the dawn of the new year approaches, logistics experts maintain the fact that the current situation, especially in terms of truck rates will continue. The seller’s market that is prevalent due to current pandemic situation, expected increases in truck rates can be in the double digits.
Delays can be seen due to port congestions, but time wasted at docks can be avoided if supply chain management factors these issues and opts to reduce time wasting processed altogether. Should all shippers opt to adjust their supply chain to reduce these time-wasting procedures which cause carriers great delays, thus resorting to raise shipping rates. Thus, if a collective effort is made to reduce time wasted at docks with supply chain adjustments, there is hope that these rates can be maintained to reduce further increases that can be felt through to truck rates increasing.
There are other causes to the rising truck rates. These include the drivers’ shortages which logistics experts say is one of the main reasons but not the only one. This has led to capacity limitations with trucks., road transport and final mile deliveries. Further there are limitations in the trucking market for Class 8 heavy trucks (trucks with a gross vehicle weight rating exceeding 33000 lb). Another factor is the supply and demand ratio leaning more towards carriers, with carriers having the upper hand in rates and capacity decisions.
These rising truck rates are very evident in the Less-than-Container Load (LCL) market. This is due to the inability to adapt to the spot market after entering into contract with respective carriers/shippers. Further with diesel prices hiking, rail transport seemed to be an attractive alternate over truck. These rising costs have caused economic discord with inflation on the rise. Original equipment manufacturers have also found shortages in required materials and components/ parts to cause a domino effect that ends with rising inflation. Whilst logistics experts expect supply chain issues to decrease in 2022, the pandemic is still on alert with the OmniCron, but many expect the labour market will also suffer in the coming year.