And the trucking trends will reflect both the hope for a return of normalcy and the reality of some new, permanent shifts in the industry. As explained by Transport Topics, “Alex Scott, assistant professor of supply chain management at Michigan State University, doesn’t foresee a return to normal for a while. He noted it will be at least six months until the transportation market is not being largely affected by the pandemic. He also noted that in some cases there may be a permanent shift.” With that in mind, it’s important to realize that carriers can use the top 10 trucking trends to find a long-term value-prop coming out of the most in-demand periods for carriers in history.
The real story with freight rates is that there will be a volume backlog that will persist through the first quarter of 2021, and while short-term corrections will occur, the overall trend will be a decline in rates. Of course, time sensitivity, warehouse capacity, and more factors will influence rates. In turn, that will compound with normal seasonality and pandemic-induced factors. Thus, a predictive freight rating tool will be critical to making the best decisions and lead all other trucking trends.
If the overall disruption of COVID-19 begins to decline, spending will ramp up at a faster rate, and the industrial sector may open up and replace demand. The strained trucking demand is also likely to continue through the first half of the year, but the second half will be more attuned to the traditional peak season demand. Moreover, small owner-operators are leaving big companies and will inevitably add capacity to the market. Despite these challenges, the overall trend is for fairly tight capacity throughout the remainder of the year.
With all the pressure to maximize load efficiency, it can be easy to accept any load. However, all loads are not necessarily created equal. That’s where leveraging a freight forecasting platform can add the most value for carriers by ensuring they are able to be more selective and choose freight strategically. Remember that in the last year, rates jumped from 5% to 15% in July, and while it’s excellent for profitability, it all hinges on having access to capacity. Thus, it comes down to seeing the fastest and most actionable transportation insights across trucking trends.
With all the uncertainty that occurred, trucking companies saved money and resources. But at the end of 2020, trucking companies moved to use that capital in the form of additional truck orders. As a result, current truck order rates will continue to increase. That will have a resounding effect in trucking, and eventually spot rates will hit a lull, resulting in fewer tender rejections and spot rate stability/plateau.
In the coming year, small owner-operators will leave big companies and will inevitably impact the balance of capacity in the market. The natural tendency for self-preservation is higher among truckers because they want to control their own futures. It goes back to the need to maintain control and maximize profitability. But again, these owner-operators may not know how to strategically plan loads or moves.
That will become an integral factor in making strategic decisions. After the exodus of drivers into the private sector, one factor becomes evident. They don’t know technology and analytics, and that’s why they don’t make a ton of money per load. But if they can achieve the same goals, aligning with the above trucking trends while maintaining that needed level of consistency, they will be able to become more proactive and strategic. That concept is further shown as the industry readies for reorganization too.
Most freight flow comes from the West Coast, and as the replenishment continues, it will actually create more imbalance and result in backhaul expectation deviations. For instance, some markets have become more aligned to backhauls versus typical head hauls. And an increase in reverse logistics increase could have a counter-effect in some areas, provided returns do indeed hit an all-time high. It all comes down to seeing what’s happening and acting on that near-real-time data. As a result, supply chain reorganization will return to the conversation as companies look to consolidate moves and maximize profitability per load.
While digital invoicing may become the standard, it’s still the exception and not the rule. There’s not a strong push yet for widespread adoption and implementation of digital freight invoicing/settlement processes. But there is a gradual push for doing more with less throughout the industry. And with the uncertainty of 2020, there’s not going to be an all-out, massive adoption effort. However, CEOs and leaders are starting to pay more attention to these capabilities and will soon look to experts like FreightWaves for guidance and the next best freight management action.
Any discussion of trucking trends is incomplete without touching on those pesky add-on charges-accessorials. Accessorials grow each year, and all the challenges of the past year, namely the sheer tension of the market, will cause accessorials to tighten. Think about it. Insurance underwriters are pushing premiums upward to recapture lost revenue from the past year’s lockdowns. And at the same time, driver school enrollment is falling. That will inevitably lead to a greater capacity crunch, but with driver availability declining, it will warrant higher rates. Together, it amounts to increased surcharges and accessorials through the rest of the year.
LTL has always enjoyed a degree of immunity to market disruptions. LTL is broadly considered to be a guaranteed form of capacity. But even still, the LTL carrier ends up in the position of finding available capacity and at a given rate. As the market loosens in the coming year, the effects of split shipments will begin to fall away. And that will help carriers to maintain profitability and stay proactive. Regardless, LTL will see more stability and opportunities to create long-term, strategic value as the market continues at its current pace.
The industry continues to push for a greater end-to-end degree of transparency. With the external pressures of the market, increased visibility will help carriers secure more lucrative business relationships. Think about it. Shippers want more visibility, and if a trucking company cannot provide insight and visibility to its shipper-customers, it is missing opportunities to create more value.
The top 10 trucking trends among carriers for 2021 are not necessarily new. But they are going to have a resounding impact on the industry as it recovers from peak season and what’s been described as “the new normal of logistics.” Now’s the time to act by putting the right processes and analytics solutions in place. Request a FreightWaves SONAR demo to get started, or click the button below.