The freight transportation industry has seen many challenges, particularly in the last decade. We provide a snapshot of the industry’s current trends by identifying these changes and challenges and how they affect freight charges today.
Related Freight charges
This is good news for heavy users of freight. With the increased purchases of trucks for freight transportation, there has been an excess in trucking capacity. This flow-on effect enables shippers to demand lower rates, in terms of truckload freight to remain more competitive. In addition, fuel costs have been down, although they are expected to rise in the coming year, directly affecting freight charges.
The supply of qualified drivers of trucks is diminishing. There is a real shortage and this is created by many small package shipments, improper packaging, inefficient routes, and the retirement of aging drivers. This shortage has seen it difficult to hire new qualified drivers, while hiring someone without a commercial trucking license is costly in terms of time and money. This therefore increases the average wage which in turn increases carrier costs and is expected to increase the cost of freight charges.
Focusing on safety
Many jurisdictions have seen a renewed focus on health and safety in the transportation and other high-risk industries. Health and safety compliance efforts are likely to result in small increases in transportation costs in the short term.
Strong US dollar
The United States Dollar has performed strongly against other world currencies, particularly in the wake of Brexit. This has resulted in a reduction in export activity, with an effect of an overall reduction in international shipping. As international shipping volumes have decreased, capacity has increased and prices have become more competitive.
Tighter in regulations
There have been revisions to the hours of service of how long truck drivers can work and drive in some markets. In some countries, there is an upcoming requirement for operators to use Electronic Logging Devices (ELDs). They affect productivity in the industry by managing the hours that truck drivers may work at a time when qualified driver availability is already an issue. Initially, as companies implement ELDs, this will create an increase in costs to carriers in the form of hardware, software and training. However, as with most automated processes, this cost will even out over time.
These are a snap shot of freight charges, and their current trends, changes and challenges that will continue to evolve in the coming months and years. Many of these changes will cause an increase in shipping rates due to increased costs and therefore freight charges. As a business using freight charges, you may be concerned with containing or controlling the potentially rising cost of these. It is important to note that these trends and challenges change periodically, so it is important to make freight charge planning a focus in your business.