With the growth of e-Commerce, the transportation industry continues on its meteoric rise as suppliers try to keep up with ever-increasing demand. As the truck driver shortage forges on, shippers are looking for new ways to meet demand with an increasingly shrinking supply of transportation options that continue to get more and more costly. Here are a few of the top trends we’ve noticed in the industry this year that can help companies ease their transportation woes.

 

Rising Rates Leads to Change of Transport

As freight demand continues to soar, spot rates rise with it. Let’s unpack that. There are classically two kinds of rates in transportation: spot market rates and contract rates. Contract rates are exactly how they sound—locked in rates between a carrier and a shipper for the period of a contract and usually based on volume. Spot rates, however, are quoted on the spot for freight that’s ready to move ASAP. Spot rates have increased 28% this year in the trucking industry.

The recent shortage in truck drivers, which raised truck transport rates, has many companies moving from highway transport to intermodal or rail transport. They are generally less expensive than trucks simply because of the nature of the mode of transport. Rates will stabilize eventually, but most trend-watchers expect them to continue to rise as capacity remains limited.

 

Disruptors Take the Field

Disruptors are changing the game and have been for some time. New technologies like Uber Freight, which operates similarly to their ride-share service, are making waves in the industry. Convoy and Amazon also have apps that focus on on-demand freight. The attitude around town is quickly changing from one of loyalty to partnering with anyone who has a truck and a solution that will preserve profit and get goods where they need to be on time.

Looming in the background of the transportation melee is the autonomous vehicle (AV). Tesla has already introduced its electric semi-truck which boast 500 miles per one charge. The AV not only removes diesel costs from the equation but also no combustion engine (and costly repairs) to maintain. While tons of preorders are in from the industry titans, AV fleets may be a few years off due to lack of charging stations and the 500-mile cap.

 

Flexibility

Carrier and shippers will both need to be flexible in this new environment. Change, while not always desirable, will need to be made when less-than-ideal circumstances start affecting client satisfaction and profit margin. Companies will need to assess their supply chains and see what can be made more flexible to keep costs low and continue to deliver an excellent customer experience.

With what can only be described as a “Brave New World” in logistics, companies need experts that have a finger on the pulse of what’s next in the industry. From sophisticated technology to intuitive service capabilities, 3PLs can take the guesswork out of distribution. Contact us at Merchandise Warehouse today to talk about how we can help you strengthen your best practices and take the burden out of keeping up with the ever-evolving logistics environment.