Transportation Management – July Freight Management From Shiptransportal

Written by Michael Osborne on . Posted in management-transportations, Pro Tips, Urgent News - COVID-19 Updates

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 4th 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.