Polly, Christine, and Leah all work for PartnerShip. PartnerShip is a company that works with companies to help them with shipping and logistics. PartnerShip works with its companies to make shipping simple and affordable. Here is what they had to say about the increasing freight rates.
As you know, freight rates have increased significantly over the past six months. What changes, if any, should a company make to handle these increases?
Answer: Companies should start by evaluating their shipping needs. They need to be flexible with their delivery dates and warehouse hours. If shipments can be broken down into multiple loads companies can try shipping as LTL instead of FTL. Or sometimes companies should wait for a full truckload before shipping their products; companies need to evaluate options to see what is the most cost-effective to them.
In addition to price increases, there is a national shortage of available truck drivers. If the shortage impacts a company’s raw material, how should a company manage it? What should be done to combat this?
Answer: Companies should work with a quality freight broker in order to get quick access to capacity. Brokers typically work with a vast network of carriers and have the expertise needed to find a truck in a pinch. Inventory management is also extremely important right now. Companies should look at past raw materials orders and forecast what will be needed in the future. That way, they aren’t waiting until the last minute to order a new shipment.
What is causing the price of transportation to increase and the shortage of truckers? Is it because demand is high?
Answer: Many factors contribute to why transportation costs have been increasing. The shipping industry is experiencing a tight capacity market, which means there is strong freight demand, but a low supply of drivers and carriers.
An important factor is the driver shortage. Long haul truck driving is not an attractive job. A driver is alone for long periods of time, and they are away from their families, which can be hard. We are seeing that drivers who are currently working for these carriers are beginning to retire because baby boomers made up most of the industry. New drivers aren’t entering the market at the same rate to replace those that have retired. For those young adults who are not attending college, interstate truck driving is not an option for them until they are 21; by this time those young adults would have started work in a different field. Truck driving also struggles to recruit women, who make up a large portion of the workforce.
Powerful and damaging weather can also cause freight rates to spike. For example, the hurricanes this past fall took a toll on carriers’ networks due to massive road closures and hazardous conditions. In the aftermath, this weather tightened capacity further because trucks were being sent to the affected areas as part of the recovery efforts.
Lastly, the ELD (electronic logging device) mandate is affecting how long shipments are taking. If a shipment was taking one day now, it may be taking two days because drivers can only drive a certain amount of time and they can no longer manipulate their hours.