Tag Archives: trucking

Can Shippers Beat This Year’s Capacity Crunch?

From 2015 to 2016, freight declined hurriedly, by as much as 15% in the dry van sector. In 2016, freight volume and rates began to rise and shippers had a consistent capacity. Freight demand was strong at the end of 2016; the DAT Freight Index revealed that spot market demand increased for 6 straight months, from June-December 2016. This year, analysts are predicting less capacity, steady freight volume, and rising rates.

According to Sean Monahan, logistics expert, economic and motor conditions are trusted to keep favoring a “shipper’s market” at the beginning of 2017 and a realignment of factors are projected to result in moderately higher transportation rates.

In an in-depth analysis, the State of Logistics report from CSCMP expects that supply chain professionals will be less concerned with paying higher trucking rates than being able to find trucking capacity to haul freight.

Progress in energy, restoring, in-sourcing, e-commerce, and automated manufacturing are expected to grow faster than the rate of GDP, which means more transportation needs in the parcel, last-mile delivery, LTL services, and contract logistics. Capacity is determined by the volume of freight that needs to be moved and the number of available trucks to move it, and in 2017 with the change in government administration and policies, additional regulatory influences and economic developments, the industry is expecting healthy freight volumes to continue but with less qualified capacity and higher rates.

Why?

The ELD mandate, requiring all heavy-duty trucks to use electronic logging devices to log hours of service, is effective this December. Even though many large fleets have installed the technology, smaller carriers and owner-operators haven’t made the switch from paper logs. By this summer, carriers that still lack ELDs will have a problem finding shippers willing to move freight with them. Industry predictions say that capacity will
shrink somewhere between 3-10% after the mandate.

A DAT Rate View report shows that since February 2016, diesel prices have climbed 59 cents per gallon and analysts believe fuel prices will continue to rise in 2017. Fuel is the second-highest expense for carriers. When fuel prices rose sharply in 2008, the number of carrier bankruptcies also skyrocketed.

Political, regulatory and economic factors should yield a rate increase for motor carriers, too. The improvements have already led to declining unemployment rates, increasing real wages for workers and economic growth.

Other Opportunities?

Truckload freight will spill over into less-than-truckload in a more noticeable way, and intermodal volumes will flourish as carriers and railroads build deeper collaborative relationships. Railroads are expected to handle more long-haul freight, which frees up compliant drivers to move freight. The ATA forecasts that intermodal transportation will grow at a rate of 5.5% each year until 2022. With intermodal transportation, shippers can benefit with predictable pricing, dependable capacity, and cargo safety.

Related PLS Logistics s: Shipper Strategy: What to Do as ELD Mandate Threatens Capacity

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Shipper Strategy: What to Do as ELD Mandate Threatens Capacity

The trucking industry is adjusting as fuel prices fluctuate, the driver shortage continues, and new regulations are authorized.

The ELD mandate is causing waves of concern among shippers and carriers. The rule could drastically change the trucking landscape.

Electronic logging devices (ELDs) are predicted to bring safety and proficiency to the industry. The DOT estimates the devices will save $1.7 billion and reduce the number of truck accidents by more than 1,800 a year.

Fleets that have already installed ELDs say they’re able to monitor drivers’ hours more closely and make strategic planning decisions to maximize productivity. The availability of data will increase exponentially because ELDs transmit information to and from trucks and operators.

About half of the trucking industry has installed ELDs – the half that has not is made up almost entirely of small carriers who don’t want to or can’t make the monetary, technological investment.

Even though the rule has positive implications, it affects about 3 million truck drivers. When the mandate is official law in December 2017, more drivers and carriers, particularly owner-operators and small carriers, are expected to leave the industry.

Most drivers or carriers will leave the industry because:

  • They’ve failed to adopt or understand the technology
  • Small- and mid-sized carriers can’t afford the initial investment and upkeep
  • They’ve ignored HOS rules in the past and are operating illegally
  • Drivers fear that time at loading docks, traffic congestion, and poor scheduling will chip away at earning time, leaving them with less than they had going into the mandate

ELDs Threaten Capacity

If more drivers and carriers leave the industry, it would result in a serious capacity issue. Capacity could be cut between 3-5% once ELDs are mandatory, and, considerable hikes in freight volumes are projected in the coming years. In 2015, trucks moved 64% of freight tonnage, and by 2045, tonnage is expected to increase to 69 million tons per day.

More freight and less capacity creates competition for trailer space, which leads to higher shipping rates.

With the threat of tight capacity, shippers should create a transportation management plan, accommodate drivers’ needs and schedules, invest in a TMS, and collaborate to create backhauls or other shipping options. Shippers have to consider rates, driver coercion, and pickup and delivery times.

Broader Effects of ELDs

For carriers who don’t leave the industry, once the initial challenges of ELD adoption are overcome, ELDs will offer carriers two serious benefits: 1) more effective asset utilization and 2) innovative routing solutions for freight moves. Then, shippers will benefit from these new carrier capabilities.

As the economy evolves and businesses grow, shipper-3PL relationships will broaden. Expand your relationship with a 3PL to identify solutions to ongoing pain points like capacity shortages and rate increases. 3PLs provide valuable expertise and enable more productivity, better customer experiences and transportation cost reductions.

A 3PL has long-standing agreements with carriers and shipping companies to help increase efficiency of all parties. As smaller carriers are adjusting to the implementation of ELDs, a 3PL will be a valuable partner to help keep shipping costs down.

In the long-run, ELDs will improve asset utilization for drivers and carriers, but in the meantime, it could create headaches for shippers by taking away needed capacity and increasing rates.

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Understanding Standard Pallet and Truck Dimensions in Freight Shipping

pallet and truck dimensionsUnderstanding the standard pallet and truck dimensions, namely trucks and vans, can make it easier when a customer has to select a transportation option to best fit their needs.

But with so many different options out there, it can get a little confusing from time to time. A better understanding of truck and pallet dimensions will better help you decide which service is right for you.

What are the types of trucks?

Dry Vans

Dry Van shipments are the most common form of freight transportation out there. Dry Vans typically move non-perishable food items, textiles and retail clothing, as well as various manufactured paper and plastic products.

Flatbeds

Flatbed Trucking has been a staple of PLS Logistics since the early ’90s. Typically used for transporting large amounts of industrial or oversized goods like sheet metal, construction equipment, and lumber, flatbed trucks come in several varieties, dependent on your needs.

Refrigerated (Reefers)

More commonly referred to as a reefer, refrigerated or climate-controlled shipping is the go-to option for the transportation of perishable food items like produce, meats, and dairy. Similar in appearance to standard dry vans, climate-controlled vans vary in capacity and size depending on the level of insulation and type of lining.

Need more info on Trailers? Check out our Trailer Equipment Guide. In it, you’ll find:

Why are pallets important? And how many pallets fit on a truck?

Truck capacity is usually determined by the number of pallets a truck can fit at once. Made up of wooden supports and three or four “stringers” or cross beams, shipping material by the pallet makes them easier to load and transport. A standard truck can handle around 40-45 pallets.

The two most common pallet sizes are:

  • 40 x 48
  • 42 x 42”

By breaking down large shipments into a standardized unit like a 40 x 48” pallet, it is much easier to keep tabs on large shipments all over the country.