Category: Urgent News – COVID-19 Updates

In last month’s newsletter, we resurrected the infamous philosophy of former heavyweight boxer Mike Tyson, as so many of us are feeling how he did in the ring. Since then, we’ve had both a holiday and a DOT week — oh, and two hurricanes. A remote workforce and decreased labor supply continue to compound the most recent disruptions by adding more friction. To continue with last month’s metaphor, we’re only in the middle rounds of this heavyweight fight. Now is the time to encourage everyone in the industry to adapt as necessary and to keep looking for ways to minimize the impact of disruptions. Read more to see our recommendations on navigating these tumultuous times.

Current Transportation Markets

Domestic

TL

Based on recent statistics published by FreightWaves SONAR, it’s safe to assume that you are paying at least $3/mile to move your TL freight. Last month, we reported an unheard of DHL Carrier Power Index of 80. This month? It’s at 85. Everyone is aware that trucks are tight and are likely to remain tight until the end of peak shipping season. The question is, what do you do?

Our Recommendation: Carriers and brokers are in business to service the customer. This month, it’s all about how you can help carriers and brokers do that even better. For shippers that want to save money, we recommend helping the carriers and brokers that you have established relationships with over the years. By giving them advanced shipment notice, more complete shipping details in fewer emails, favorable load and unload times, and more flexibility, you’re giving them the best chance to save you money; notice and flexibility allow them more time to find the right driver for your freight and reduces the number of costly last-minute shipments that other carriers are waiting patiently to exploit.

You can also seek ways to provide more visibility to your customers. Most likely, customers are anxiously awaiting your product so that they can get it on their shelves or to their customers. Reduce any anxiety by giving them visibility.

Take this time as an opportunity to make investments into your digitization efforts, or partner with someone that has. At a minimum, they should allow for carrier waterfall tendering for quick and complete communication to your carriers, access to a digital marketplace in order to expand your reach, quick onboarding apps with compliance monitoring that allows you to expand your carrier base, strong API capabilities for real-time tracking, rate and route optimization capabilities for lower freight rates, and a secure customer portal access that increases customer visibility. These tools make it easier and faster to communicate with your carriers, brokers, and customers. Use this opportunity to make your company both more efficient and transparent. Otherwise, you could lose ground to a competitor who capitalized on where you didn’t. See if a transportation portal can help your organization take a step towards digitization.

LTL

Many LTL carriers are experiencing higher than normal volumes, and they’re being crushed by a workforce that has been hit hard by COVID-19. As a result, we’re seeing issues that are unfamiliar to the LTL industry. Our once smooth flow of supply chains and networks are being disrupted with missed LTL pickups, later than usual delivery times, and more damages. Our recommendations are brought to you by our Barak Frydman who works for our key strategic partner, DLS Worldwide.

• Be Observant: Give the carriers that are doing a great job in your network more freight. If you see another carrier struggle, give them a chance to get out from under their backlog and wait to use them again until some time has passed.
• Reduce Multiple Carriers For Your Pickups: When possible, reduce the number of LTL carriers coming into your facility. If you ship long-distance, consider using one national or super-regional carrier. If you ship regionally, consider keeping all of your regional freight with one regional carrier; this will decrease the number of times your freight gets handled while making the carriers operate more efficiently. This will help improve your carrier of choice status.
• Use Direct Carrier Services: Instead of interlining your freight, use direct carrier services in order to reduce the number of times your freight is handled.

If your contact carriers are struggling, don’t be afraid to reach out to a transportation management company that has access to a large number of carriers with competitive rates. They can help by providing you with competitive rates and the knowledge of which carriers are struggling the most.

International

Ocean

Making sense of how we’re dealing with capacity issues in the middle of a pandemic is a little like trying to figure out what happens when an ocean line cancels a blank sailing. Easier to understand is how ocean spot rates continue to rise as carriers blank sailings in order to decrease supply and maximize profits. For once, it seems as if ocean lines are operating intentionally and effectively. As companies and U.S. importers struggle to find equipment, pay premiums in order to prevent getting bumped to the next sailing and for faster routes. Zim posted its strongest quarterly results in a decade; Evergreen, the strongest in three years. According to JOC, Wan Hia’s net profit is up over 139% when compared to the second quarter of last year. Many shippers have verbalized their displeasure as ocean lines schedule GRI’s that are expected to drive rates even further. Their voices have been heard by the FMC, and they have put TranspPac Carriers on notice that they are being monitored for potentially anti-competitive behavior. Whether or not TransPac Carriers are shaking in their boots, it’s at least a start.

Our Recommendation: Route containers with a final destination to the eastern U.S. to an eastern seaport, where delays are less likely. When you consider the unreliable and unpredictable costs of shipping to west coast ports, in addition to chassis shortages, booked dock schedules, overcommitted drayage companies and transload facilities, rail capacity issues, and high truck rates, shipping to east coast ports remains a better option. If purposefully taking on a “longer” transit time to the east coast has you biting your nails, consider splitting your freight between the east and west coast ports until we are through peak shipping season. And if you were wondering — plan on peak season lasting longer than last year.

Additionally, seek assistance in finding the right forwarder. Be adaptable. What worked last year may not work this year. Be sure to consider all the costs associated with getting your freight delivered to its destination, including your time. If managing your freight has become a bigger part of your day than you planned for, consider teaming up with an international freight specialist. Determine what it is costing you to focus on freight instead of other key areas of your business. If you want some relief, reach out to an objective transportation management company that can be your advocate.

Air

Tight container capacities appear to be spilling over into the air freight market as decreased passenger flights are still impacting capacity for airfreight. Freighters are simply maxed out. According to Eric Kullish, Air Cargo Editor, while more charters are being scheduled and more passenger planes are hauling freight as freight-only flights, overall capacity is still 30 to 40 percent below last year. Many are expecting air rates to continue to increase well into December.

It’s clear by now that our supply chains are more fragile than we care to admit. Seeing delays or higher freight costs is enough to make anyone frustrated. While we will see the impact of the past two hurricanes pass, there is more to come. We can be sure the timing will be horrible during the next DOT week. And while we know this peak season won’t last past December, we will have another one next year. A lot of what we are feeling is a result of a “more efficient” supply chain that is serviced by fewer providers. However, the capacity of service providers is so tight that even the smallest bump in the road can feel like a huge pothole. We need to adapt and be able to do more with what we have. We have to be faster and more agile than ever. Taking even a single step towards a digitization effort can make a huge difference. From there, you will gain both the experience and confidence to continue to move forward. Learn more about ShipTransportal’s services by giving us a call at (704) 892-0531. We can help you navigate these murky waters.

The current pandemic has affected the entire world, including both domestic and international global transportation services. In our July freight management update, we discuss what changes have occurred and where the industry may be heading.

Domestic Freight Management:

TL Freight Management: 
Many shippers are seeing and feeling a tighter domestic carrier market. Currently, carriers are showing a strong pricing position. As of July, the DHL Carrier Power Rating is at 65 — its highest level since its inception 10 months ago. Likewise, the outbound tender volume index is continuing to explode. Currently, the volume index is 20% higher than it was during the infamous summer of 2018. Additionally, carriers are rejecting more tenders than they were at any point since 2018; current numbers are over 16% and only trending upwards.

When put together, these data points prove that the domestic TL market is truly tighter. Using the DHL Carrier Power example, where the pricing power index can range from 0 (shipper) to 100 (carrier), we can truly begin to grasp how much has changed. Before COVID-19, the index was as low as 10; currently, we are at 65.

What Caused the Shift
In January, the index was averaging about 40, and the following month, it dropped to about 25. In March, we began to see the effects of the pandemic. Because of panic buying, the index averaged at 40 but, at points, was as high as 65. While it began to level out again at 10 during April, we have seen a steady increase of about five points per week through the first week of July. The July 4^th holiday saw the index hit 55 — a number that has only continued to increase.

What to Expect
Based on conversations with trucking companies, this trend is expected to continue for several more weeks before settling down again. If we continue on this current trend, carrier rates will escalate at a level not yet seen this year. In order to keep rates in check, it is crucial for shippers to continue working on their preferred shipper status with carriers; carriers are currently making pricing decisions based on their past experiences at shipper locations. Other ideas to consider include giving at least one day notice with tenders and shifting your TL to Intermodal.

LTL Freight Management:
To put it lightly, LTL carriers are simply swamped. Some, such as UPS, have experienced significant disruption to their normal service times into New York and other locations that have been hit hard by COVID-19.  In fact, many LTL carriers have modified services, such as inside delivery and guaranteed delivery, with an asterisk (*). When using these services before, the carrier would honor them, But with every carrier network being impacted differently, it is important to do what works for you in this current environment, removing any known risks based on prior poor performance. We recommend doubling down on both communication and shipment monitoring.  Schedule your pickups with local terminals as early in the day as possible.   Start confirming their capacity before you finalize your selection and tender to the carrier.

International Freight Management:

Ocean
There is still a high demand for faster transit services, such as 12-day transit, from Shanghai to Long Beach. Ocean carriers continue to do a great job perpetuating higher ocean rates from China with lower volumes.

Air
The air rate from China is currently down 60% from peak for PPP products. With many charters in place, it has become easier to get capacity for even large cargo moves.