Logistics Industry Update - January 2021

As we move into the new year some of the logistics challenges, we had hoped to leave in 2020 continue to impact the trucking industry. To start, The United States Postal Service is still working through excessive delays at some facilities which is causing the carrier base to refuse to deliver loads in these areas. ALG Direct is working with the USPS to communicate the excessive delays through a daily MTAC FAST User Group 3 call. While there has not been an “end” date set where we might see these delays die down; we will keep our clients updated.

In addition to the USPS delays we are also challenged with continued truck availability issues. The ongoing impact of the COVID 19 Pandemic has slowed efforts to bring on new drivers during a time where the industry has a massive driver shortage. The number of packages the country is ordering during the continued “stay at home” time frame has also pushed the available trucks to the limit.

According to shipping broker DAT Freight & Analytics in November, there were 4.5 truckloads needing to be shipped for every truck out there.  According to an article in Marketplace freight rates are still in a surge, “Yeah, freight rates are experiencing a surge like they have never experienced before right now,” said Tim Denoyer, a senior analyst at ACT Research. “Rates for the truckload spot market are currently up 40%-50% over a year ago.” Rates have been skyrocketing for months and they have been setting ongoing records since July. 

Part of the explanation for what is going on is that many businesses have had to rebuild inventories. “There was a big destocking of inventory at the beginning of the pandemic, and so there’s been this significant need for restocking at the retail level,” said Denoyer.

The production of new trucks was interrupted as well, so as old trucks have left the nation’s freight fleet, new ones have not replaced them at rates they normally would, said Denoyer. 

There were fewer truck drivers available, as well. “Truck drivers have been very resilient and have kept the economy running. But well over 100,000 lost their jobs during the shutdown in Q2, so we have a very tight job market,” Denoyer said. The average age of a truck driver is around 55, he added, and many may have been fearful to return to work.  “There are a few other unusual factors - extended unemployment benefits and social distancing at driver schools, which has reduced ability to produce drivers,” he said. The pandemic has thrown the entire shipping system out of whack. 

What does this mean to the mail freight transportation network? In short, it means that there will be potential freight delays, so we urge our clients to plan ahead and to add transit days to schedules when possible or book into earlier pools. ALG Direct strives to provide consistently a high on time delivery percentage and works to mitigate as many delays as possible utilizing our vast network of carriers. We will continue to keep our clients updated on logistics news so that in turn, you can help educate your internal teams.