At the beginning of 2020, no one could have predicted the transportation market would be where it is today. With a pandemic that shut down the world for weeks, spot market rates reached the highest they have been in years and capacity has gotten tighter than a lid on a pickle a jar.
In this industry, more so than others, you have to be ready to change your course of action at any moment. Most days aren’t the same in the freight world. You come into various sized fires every day that need to be put out. Last year when people were being told to shutter their manufacturing operations unless they were “critical infrastructure,” we were left wondering what the heck that meant for our business.
No one could have predicted a closure of that scale when setting budgets and targets at the end of 2019: major customers forced to stop production, grocery customers doubling, tripling their volume. In classic logistics fashion, we pivot and see what we can do. Smaller-scale pivots on the day-to-day operations allow for that flexibility, but there isn’t a good forecasting model that can handle an immediate left turn down a winding road.
We know data is plentiful and we know that leveraging our existing data is the best way to forecast potential growth. Shoot, Zillow made an entire business model out of being the experts at valuation of homes. This week it had to end its house-flipping division as it couldn’t predict home prices skyrocketing this year and the cost of raw materials increasing the way it has. The “experts” have been left holding the bag trying to bounce back while laying off 25% of their workforce.
No one has the right crystal ball. You get the freshest and most granular data, both internally and externally, look at your past forecasts (successful or slightly off), get the brightest and best on your team, and continue to reevaluate your path as you go.
Since we’ve seen a lot of “unprecedented growth,” “historic rates” and “record-setting quarters” for the past year, the roller coaster has to stop climbing and take us back to that ride we know and love, the twists and turns and all. Most transportation providers are saying that we can expect current conditions to continue through Q2 of 2022 so buckle up and get ready for the drop.
Sing out, Louise! — Truckers are fed up with taking the blame for West Coast port congestion. There is no shortage of California drivers and trucking companies that are available and want to move goods in and out of the ports. Some trucking companies are having to lay off carriers due to lack of work. Customers are willing to pay any price carriers name to get their products moved, but carriers can’t guarantee when they’ll be able to retrieve the freight.
Drivers who get paid per load and are getting paid $0 to sit in long lines waiting to get into the port might only move one load a day when previously they could get three to four. Wait times at the ports to get in are anywhere from four to six hours. Appointments are hard to come by, and if missed due to delays, they vanish. Website failures don’t allow carriers visibility to see what’s on the vessel export receiving list, and terminal managers are being accused of mismanaging the workforce.
Ultimately the West Coast port congestion is going to get worse before it gets better, but some of the carriers are optimistic that giving drivers a seat at the table to express their grievances to terminal managers can help fix things in the long term.
Big congratulations to the Atlanta Braves for winning the World Series for the first time since 1995. The Atlanta market is remarkably consistent as it has been, and historically is, for this time of year. Let’s take a look at those who were not fortunate enough to win the World Series: Houston.
Volumes in Houston are high but nothing too out of the ordinary; however the outbound tender lead time is the highest it’s been since mid-August. Typically with high lead times outbound rejection rates take a jump as well, but compared to the peak in August, rejection rates are significantly lower.
The volume is consistent and carriers aren’t declining at high rates; a little over 11% shows some inflation in spot rates but nothing compared to early September when the data was showing an extremely tight market. If it means you need a few more days of lead time to get a better price going into the market, it seems worth the wait.
How’d the lemonade stand do?
Saia is absolutely crushing it this year. This quarter it reported a 28% increase in revenue over last year while dropping its OR from 88.5% to 83.5% per hundredweight. Revenue per shipment came in at $299. The company is striving to hit 176 terminals by the end of the year and add 10-15 terminals in 2022. According to this quarterly release, accessorial charges are about 20% of the revenue in each bill, with little to no charges getting waived. Gone are the days of corrected BOL charges and reweighs getting waived.
Despite dropping a HEFTY chunk of change on acquiring MoLo solutions, ArcBest reached more than $1 billion in revenue for Q3. Its asset-based side, including its LTL operations, hit $681 million, which is 21.2% growth over last year. The high demand for expedited and truckload services pushed asset-light revenue up over $372 million, a 38.8% increase from last year. Given how tight LTL capacity is and how desperate shippers are getting to get their products to market, expect those expedited numbers to only climb as we round out the year.
The more you know
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- Finding parcel strategy to fit your business — At Your Doorstep
- Fatal collision in Texas leads to $30M verdict against FedEx Freight