Shippers will need to pay extra attention to capacity in 2018, as increased volumes could drive up rates, according to the results of a survey of over 1,600 companies involved in the global supply chain.
Nearly 76 percent of shippers surveyed expect their shipment volumes to increase in 2018, according to the results of a newly released industry study in which over 1,600 companies involved in the supply chain were surveyed by Tennessee-based freight transportation and supply chain management firm Averitt Express.
Meanwhile, about 33 percent of respondents had challenges with customs clearance in 2017, and the number that plan to use rail or air services in 2018 rose by more than 20 percent, according to the survey, the results of which were released Jan. 19.
Averitt Express said shippers will also need to pay extra attention to capacity in 2018, as increased volumes and tightening capacity could drive up rates.
“The economy looks healthy and shows no signs of slowing down over the course of the year,” the firm wrote in its analysis. “Still, supply chains will become an increasingly important factor that can encourage or limit business growth in hospitable times.”
Among the findings of the survey were that the prospects for freight transport volumes look strong even as capacity is shrinking. Despite the temporary impact of the multiple hurricanes that struck the U.S., 2017 turned out to be an otherwise healthy year for business growth, Averitt found.
Partly driven by strong business spending, GDP growth exceeded 3 percent in the second and third quarters after a lackluster beginning to the year at 1.4 percent. When shippers were asked if they felt shipping volumes would increase or decrease in 2018, 75.89 percent said they expect volumes to move upward, marking a 2.5 percentage point increase over the previous year’s results.
While shipments were up in 2017, particularly in the less-than-truckload sector, capacity challenges emerged. Nearly 1 in 5 respondents said they experienced issues with capacity last year, nearly double the amount that reported similar issues in 2016. Numerous factors contributed to tightening capacity in 2017, Averitt said, with the primary force being an ongoing professional driver shortage, which shows no signs of slowing down.
At the same time, manufacturing growth has put more pressure on truckload capacity throughout North America.
“The outlook for 2018 suggests that capacity will be the primary hurdle for shippers, particularly with full-load transportation,” Averitt projected. “With the electronic logging device (ELD) mandate now in effect, its impact on carriers and shippers will begin to play out over the year. Shippers and carriers will need to work very closely together this year to find mutual solutions to capacity issues.”
Although capacity challenges were ever-present in 2017, the survey’s results also noted several improvements in shipping processes.
Shippers who cited freight damages as a major challenge last year declined by nearly 10 percentage points, while on-time service issues also dropped by more than 4 percentage points. Other areas, including billing, customer service and rate increases, also improved, according to respondents.
The improvements, Averitt said, could be attributed to a variety of factors, primarily technology enhancements and better communication.
Increased use and interest in rail and air services signaled another potential impact of capacity constraints on the road, the survey found. Data showed a 22 percent increase in shippers that plan to use air services compared to the previous year, and a 28 percent increase in those that plan to use rail services in 2018.
Other survey results showed that international shippers cited U.S. Customs clearance as the biggest logistical roadblock for them last year. About 33 percent of respondents said they had challenges with clearance in 2017 – a 4.58 percentage point increase over the previous year.
Additionally, international shippers experiencing issues with using multiple service providers jumped from 11.33 percent in 2016 to 16.27 percent in 2017. At the same time, damage issues with international cargo declined slightly by 1.65 percentage points to 12.84 percent.
Shippers throughout North America participated in the third annual supply chain survey, with more than 1,600 of them telling Averitt Express about the supply chain challenges they faced in 2017 and which issues they foresee as being their biggest hurdles in 2018.
Averitt then developed an overview by analyzing the results and making comparisons with data collected from previous years. The data, Averitt Express says, illustrates the prevalent challenges and opportunities that shippers may need to consider as they make strategic decisions in the year ahead.
“The information taken from the survey will help us to be better able to address the needs of our shippers in 2018,” Averitt President and Chief Operating Officer Wayne Spain said. “We appreciate their participation and hope they will find key takeaways that will help them improve their supply chain strategies this year.”