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Trucking’s Perfect Storm: Where we are in March, 2018

Without question, shippers are feeling the dual pinch of rapidly-inflating trucking rates and rapidly deflating capacity. These two things are also causing unpleasant side effects of increased congestion and record delays. This four-for-four is the wrong perfect score to have. RIM is doing everything within our power to mitigate and alleviate all of these things to the best of our ability. While we are working with our carrier partners to inform, educate and provide additional transparency at forecasting demand, we want to ensure that our shippers understand fully understand what is driving these factors as well and what they can do to help.

Five factors impacting the current driver status:

 #1: Panama Canal expansion.

Depending upon the location of your distribution center, origin or delivery point, you may or may not have noticed the impact of the opening of the third set of locks on the Panama Canal. Larger vessels are now able to make their way on an all-water service into the USEC and these larger vessels filled with imported cargo from Asia take longer to unload and are causing congestion and longer gate waiting times. Because of this increased congestion, drivers who could make multiple roundtrips per day are making only one. Limited free time for chassis and import containers play a key role in an increased decline in productivity.

#2: Consumption in the USA is on the rise.

Across a variety of industries, the overall rate of consumption in the USA is on the rise. Housing is rebounding as is general construction and waste, fuel and agricultural drivers are in demand. Imports are outstripping exports which means that the supply of export containers becomes constrained. Finally, look to the skies where a decline in air freight capacity is creating choking points at airlines to recover and deliver cargo.

#3: Available wheels are in short supply.

 The issue of containers and wheels has always been one of supply and demand. Right now there are surpluses at ports and acute deficiencies at inland rail depots. ELD requirements are a factor here because deliveries that used to be done in a day, say from Chicago to Davenport, are now becoming multi-day deliveries. This translates into chassis being out longer and not being available in pools.

#4: Regulatory environment impacting driver numbers.

 Of all the things that will potentially take the longest to remediate and solve, the acute shortage of drivers will be the worst. For shippers, this won’t be solved overnight and will likely lead to higher costs because people aren’t willing to work as truck drivers.

The reality for drivers is:

  • In 2016, the industry lost 36,500 drivers and in 2017, another 50,000.
  • The demand is for 98,000 new drivers annually.
  • Today’s average driver is 55 years old and in 2000, drivers were retiring at 56. The pay for drivers today is equivalent to 2006 wages with higher costs of living and fuel.
  • There are environmental demands for newer equipment that drivers do not have the money to buy and drivers are choosing to leave rather than update.

 #5: What’s a perfect storm without weather?

 Think of the weather we’ve had in the past several years. Last year not one, but two major hurricanes struck the US mainland. The Gulf Coast was hit on either side of the water leading to FEMA and other companies taking available trucking capacity out of the market to move first relief supplies and then construction materials and needed commodities into affected areas. We have also seen storms strike from Texas through the Southeast and Mid-Atlantic – places not equipped to treat roads for severe winter storms. And those who are equipped – the snowfall totals from storms required days of plowing to reopen highways and local roads.

Conclusion: At RIM, we have been discussing a number of ways internally to mitigate these external factors that are beyond your control and ours. We are choosing routings more carefully and ask all our customers for the greatest amount of flexibility for the receipt of inbound cargo and the greatest amount of notice for the loading of outbound cargo.

For more information, contact your RIM representative for solutions that can work for your company.