With port cargo surges and continued restocking, peak season estimates for shippers are high. Do what you can to prepare now.
Capacity is tight – that’s no secret – and there’s three things that are driving tight capacity and will likely lead to an increase in capacity tightness throughout the summer and throughout the course of the year.
Two of those things are impacting the southeast specifically, one of them is the Colonial Pipeline shutdown. “It’s creating a tighter markets because driver’s are unable to get gas,” says Jimmy Paton of SwanLeap. “It’s causing delays, and of course, while it happened earlier [in the month], there’s a little bit of a ripple effect because it’s a supply chain.”
Something else that’s causing capacity tightness is a crack in the Hernando Desoto bridge on I-40 between Tennessee and Arkansas, it crosses over the Mississippi river. The bridge has been closed and the state has issued no timeline of when it will be fixed, so drivers have to take a more expensive detour on I-55.
There are cargo surges happening at major ports all over both the west coast, east coast, and in the Gulf of Mexico. The Port of Los Angeles reported a 29% increase in imports, Port of Charleston reported a 28% increase in imports, 48% increase in Long Beach and 25% increase in Houston.
“This is a strong indication there are going to continue to be port delays and backups for the remainder of the summer, possibly into the end of the year and into the beginning 2022,” says Paton. “As goods move from the ports inland, that tightens up capacity for shipping across all modes.”
Amazon has pledged to hire 75,000 logistics and fulfillment workers. They haven’t established a timeline as to when they want these workers hired, but it’s a good reminder to start preparing for peak season this early in the year. Jimmy Paton cautions, “What we saw last year was an overwhelming surge so now is the time to get things ready; shore up what you can internally for your own operations because there will be a little bit of unpredictability once you transfer your goods to the carriers.”
In terms of freight, demand for goods is holding steady. You’re still going to be seeing the impact of restocking as industries are running low on the goods that they need to produce the items they send out.
There has been a steady amount of high tender volume as a result of this demand. “We’re still seeing around that 40% mark for loads that are being electronically tendered. Rejections are holding just about the same: right around 1 in every 4 loads are being rejected.” says Paton.
It is produce season and there have been some high numbers in terms of rejections with 40-50% of reefer loads being rejected. The story is tight capacity and it’s only going to get tighter.
Spot rates are hovering right around $3.11, sometimes getting as high as $3.20, over the course of the month of May so far.
Truck orders are in relatively the same space that they have been: there are not enough trucks for everything that needs to be sent right now and not enough parts to make those trucks. In fact, semiconductor shortages are starting to impact other industries, not just vehicle productions, but getting into things like video games and electronics. “When it comes to new capacity hitting the market, a hopeful estimate would be Q4 of 2021,” shares Paton. “However, the likelihood of it reaching into 2022 is very high.
“If there’s any advice that we would give to you: be prepared for surges in pricing, volume, and make sure that you’re able to match your goods with somebody who can take them,” says Jimmy Paton. “Chances are somebody out there wants to take your freight. The question is, are you able to contact them? Do you have access to a carrier network? Do you have technology you’re able to put to work to make sure that you’re able to execute the shipments that you need to execute.”