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Market Update

U.S. Trucking Market Update: Summer 2018

Read our U.S. Summer Trucking Update for the latest on the ELD mandate, driver shortage, increasing fuel prices and import volume, and more.

U.S. Trucking Market Update: Summer 2018

  • The United States trucking market is experiencing an acute driver shortage. The industry is failing to attract new drivers and is predicted to be short by more than 100,000 drivers by 2022. Port drayage, OTR, and LTL companies will be impacted the most.
  • Trucking rates are rising due to increasing fuel prices and increasing driver pay as companies compete for scarce drivers.
  • As of April 1, 2018, the federal ELD mandate is being fully enforced across the U.S. Many drivers and companies are refusing longer hauls of more than 100 miles to avoid ELD restrictions. Companies that do longer hauls (300+ miles one way from the port) must factor in layovers. Mid-range hauls (140+ mile range) are also affected, as now drivers may not be able to make two complete trips in a day.
  • U.S. import volume is up year over year. This means more containers to deliver in a market that is already stretched for capacity.

Impact to Flexport Clients

In certain markets, trucking capacity shortages may cause long delays for containers to be picked up and delivered. This will result in additional demurrage and per diem charges. Some ports and rail ramps will be more affected than others due to shifting volumes and varying efficiency of inland port operations. The Southeast and Midwest are predicted to be hit the hardest; we will focus on the Southeast in this update and the Midwest (specifically Kansas City, Chicago, and Minneapolis) next month.

The Southeast: Savannah, Charleston, Jacksonville, Atlanta, & Memphis

**Major Factors **

  • The Southeast is one of the fastest growing markets for logistics and distribution, and the carriers serving the Southeast can’t keep up with the growth due to driver shortages and turnover. The GPA (Georgia Port Authority) projects Savannah will bypass NY/NJ as the largest container port on the East Coast in the next few years.
  • Large BCOs are moving facilities and volume to the region due to tax incentives (GA and SC).
  • The Southeast is the hardest hit market for driver shortages. Due to increases in DCs and manufacturing, there are many competing industries and not enough new drivers moving into the market.
  • Larger vessels are now calling the ports after the widening of the Panama Canal and domestic port expansions.
  • A high volume of containers imported by large BCO's is putting a strain on chassis capacity, as these importers are reserving dedicated chassis pools with longer container dwell times on chassis once wheeled (often a lot of extended free time for both chassis and detention). In short, there are fewer chassis available for other importers as a result.
  • Increased container volume on rail means longer loading and unloading times at inland ramps, resulting in delays.

What’s Being Done

  • Georgia ports are trying to get the minimum driver age for commercial trucking lowered from 21 to 19.
  • Charleston and Savannah ports have opened port run inland ramps with extended free time. The new Chatsworth ramp in Georgia will have five days free. Both are investigating more options. The goal is to move volume closer to final door locations while keeping all-in rates comparable.
  • Pushing more container transload business at warehouses near the ports. Port of Savannah told our trucking team that they are trying to incentivize local transloads. This will keep drivers close to the port to improve container throughput, and tap an additional driver pool (FTL drivers) for door deliveries.

What to Expect

  • Delays, rate increases, and additional fees. As peak volume increases, so do the delays at the port due to the shortage of drivers and chassis. Containers dwell at port longer, causing congestion and further compounding the delays and associated fees.
  • Expect serious delays after any port closures due to public holidays, inclement weather, stop labor meetings, and winter storms. When the ports are closed for a day the same number of containers still must be moved that week.
  • Longer time for containers to get off vessels and trains.
  • Increased time to pick up freight from the port or rail. Truckers will get booked days out and containers will have to sit at port, incurring demurrage fees.
  • Truckers refusing new volume or quotes, servicing only their established clients. Truckers will prioritize good business, and likely decline more difficult freight such as out of gauge, heavy, and extreme long hauls.
  • We will likely see spot rates increase over the next few months, whether as an increase in FSC or as an increase in the general rate.
  • Wait time reductions: many companies have already moved to 1 hour free. We expect this trend to continue and become the new norm in the industry.

What You Can Do

  • Stay informed. We will keep you updated so you can keep everyone informed about conditions in advance. Early planning now will set up supply chains for success during peak season. Consider port closures and longer transit times; planning for these expected delays is the best way to keep things running.
  • Explore other less congested or expedited routing. Transloading on the West Coast may help to ensure your cargo arrives on time, and that it is not hit with delays at congested rails and ports. It’s more expensive, but is often more cost effective than your supply chain coming to a halt. This is a strategy that worked successfully for many Flexport clients last year.
  • Understand that there will potentially be a week or more until a trucker's first available commitment on certain lanes, and mitigate by pre-pulling and storing, or transloading and shipping over the road.

We are doing all we can to ensure the expected market conditions affect our clients as little as possible. If you have any questions about what steps you should take, please reach out to your dedicated account team.


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