2021 Starts With High Volumes & Low Capacity Wreaking Havoc On Rates

Bloomberg reports that right now, all ships are on the water with every cargo container in use. While bottlenecks and insane rates abound, just what are shippers in for in 2021?

With the sharp increase in e-commerce over the past ten months, it is clear the pandemic's effects on shipping volumes and capacity are lingering. Couple COVID's influence with severe driver shortages plaguing the industry and processing bottlenecks due to social distancing at processing and warehouse facilities and shippers end up with incredibly high rates. We reached out to industry experts to gauge their predictions for the year.

Shipping Volumes

Retail and E-commerce Expert Meaghan Brophy offered her thoughts on expected volumes and what businesses should prepare for:

"Volumes and rates will still be high throughout Q1 as the pandemic continues to surge causing people to buy online instead of in-store...shippers like eCommerce and retail businesses should do everything they can to strengthen relationships with their carriers to negotiate steady prices and secure capacity—in other words, make sure carriers will be able to pick up all orders as they are fulfilled. Throughout the holiday season, carriers were consistently at capacity, leaving shippers with delayed orders and unhappy customers."

Mark Jones from 3PL Complete Packaging shared with us how his customers are adapting to high volumes:

"I think the (high volume) landscape we see now is likely to remain for the foreseeable future. (Shippers should) pick strong out-source partners. We get calls now every week and have done since lockdown first began last year. The common theme amongst our clients – both long-serving and new – is that they have a very clear picture on developing in the e-commerce marketplace."

Capacity

Capacity affects shipping costs and how shippers chose to move their goods around. The key factors that impact capacity include driver numbers, regulatory changes, domestic manufacturing growth, short-term factors like severe weather, and e-commerce growth.

The Commercial Carrier Journal predicts that:

"Capacity is expected to remain tight...at least for the foreseeable few quarters. That’s due to trucking industry employment still being about 50,000 jobs shy of its recent February peak, with carriers struggling to bring drivers back to the market for a myriad of reasons — slowdowns in issuances of new CDLs because of pandemic-caused disruptions at the state level, drivers retiring or moving to other careers and the Drug & Alcohol Clearinghouse weeding out tens of thousands of drivers already, to name a few."

COVID continues to test supply chain resiliency globally. When will we have a return to normal? ttnews.com reports:

"(expect) freight demand to be solid during the year, but there are risks to that outlook...there is a lot of uncertainty, and it cannot be assumed the truck freight market will return to any sort of normal until the pandemic is over...The lag in the industrial sector’s recovery means that total freight volume probably still will not match pre-pandemic levels until around the middle of (2021)."

2021 Snapshot Predictions

Logistics Brief advises that there are seven critical things freight shippers should keep in mind for Q1:

• There won't be a normal winter lull
• Port congestion on the west coast will inflate prices up to produce season
• Vaccination distribution will inflate reefer and cold-chain businesses
• Driver shortages will continue to impact the industry
• Contract rates are expected to increase, and spot rates should remain flat
• Logistics tech will continue to boom
• RIP RFP cycles, with shorter "dynamic" cycles taking over

FreightPOP's logistics team has a similar outlook for Q1, with some additional predictions for the rest of the year, including:

• There will be an uptick in zone skipping and pooling with the surge of online retail
• Last-mile LTL carriers will replace expensive accessorials more due to e-commerce growth
• Amazon will compete with UPS and FedEx on ground services
• TMS solutions are becoming fundamental as shippers search for stronger connections between vendors and partners
• Logistics data's popularity will continue to grow as shippers seek to save money

Shippers can situate themselves well during this time by taking advantage of tools that streamline shipping processes. If you regularly ship with at least two different transportation modes, using a system that combines data is powerful. Learn how FreightPOP can help by asking for a demo today!