Trucking capacity is expected to remain tight throughout the rest of the year and high shipping costs are expected to follow. There are not enough trucks or drivers to keep up with demand and efforts such as raising driver pay have not been sufficient in catching up to demand.
As class 8 truck orders begin to trend lower with tight capacity, we see a similar trend that happened in 2017-18 where carriers overextend their supply. This time carriers have been more hesitant but still say they expect an increase in demand in the next year and are taking a slower approach.
Not only is there a shortage in container production but many of them are stuck in congested ports. Container manufacturers have not hinted at increasing production in effort to keep the newbuild prices high. This could nullify the chance of flooding the market with new containers which in return could decrease freight rates.
The report explained that imports hit a new record this spring, with volume over the first half of 2021 pegged to be up by one-third annually, or 33.9%, driven by the economy continuing to recover from the COVID-19 pandemic.
WHAT CAN WE CONCLUDE FROM THIS?
The shortage of drivers and trucks combined with increasing demand over the summer could cause backlogs and delivery times to increase even more than they already have. With carriers recording major profits during these times they are still hesitant to purchase additional equipment to handle demand. Container manufacturers in China are not expected to increase their container production so tight capacity may persist until 2022. During these times of great uncertainty shippers should look carefully at their supply chain and anticipate for continued tight capacity and longer delivery times. A supply chain analysis plans every step of your process to ensure you’re using the right services for your business.
MVP Logistics is here to answer all your questions about your supply chain and what steps to take to plan for and address the expected challenges. For an analysis of your supply chain, contact us virtually or give us a call at 1-888-390-5320.
MVP Logistics is your 3PL logistics partner for supply chain project management, logistics, warehousing and fulfillment, LTL, and other supply chain needs. Our Minneapolis, Houston, and Los Angeles area warehouses provides local, national, and international shipping services. Find your solution today.