Transportation News

3PLs & Freight Brokers Clambering to Offer Shippers Deals in Tight Capacity Truckload Spot Market

Facing the tightest spot truckload market in at least four years, the number of available loads on the spot truckload freight market jumped 5.4% during the week ending Sept. 30 and tight capacity sent the load-to-truck ratio for van freight into uncharted territory.

Tucker Company Worldwide Resources

Companies

  • C.H. Robinson helps companies simplify their global supply chains. Skilled logistics employees apply a deep knowledge of market conditions and proven processes to solve transportation problems. Integrated technology gathers data from all parts of the supply chain and provides full visibility to orders…

  • DAT operates the largest spot freight marketplace in North America. Transportation brokers, carriers, news organizations and industry analysts rely on DAT for market trends and data insights derived from 100M annual freight matches and a database of $28B of market transactions. Related services include…

  • J.B. Hunt Dedicated Contract Services® (DCS) specializes in the design, development, and execution of supply chain solutions that support virtually any transportation network. Our customers’ dedicated designs are customized with guaranteed capacity, industry-leading service levels, optimum…

  • Transplace is a non-asset, North America-based third party logistics (3PL) provider offering manufacturers, retailers, chemical and consumer packaged goods companies the optimal blend of logistics technology and transportation management services. From complete logistics management outsourcing to…

  • Tucker Company Worldwide’s logistics services increase the profitability and improve the efficiency of our customers by reducing costs and streamlining processes within supply chains. Tucker provides global freight transportation and logistics services using truck, rail, air and ocean.

  • Company Quicklook

Reacting to the tightest spot truckload market in at least four years, freight brokers and third-party logistics providers are working overtime to obtain truckload (TL) capacity for shippers during this peak freight season.

And experts are telling Logistics Management that the current tight capacity situation will continue well into 2018 partially because of the 4-to-6 percent productivity hit that is widely expected from the coming December implementation of the electronic logging device (ELD). 

Jeff Tucker, CEO of the Tucker Company Worldwide, said the ELD situation reminds him of the same impact on capacity that the one-hour reduction in hours of service (HOS) had in 2004.

“That was a shock to the (capacity) system, exactly the way ELDs will have today,” Tucker told Logistics Management. “Back in 2004, we had endured a tight market for about two years. But that change prolonged the shortage for another 18 months.”

Tucker said his company and other major freight brokers “have been preparing for the ELD process for two years” in trying to get recalcitrant shippers to plan for a much tighter freight market starting in 2018.

Jeff Tucker, CEO of the Tucker Company Worldwide

“If I’m wrong, we’ll all be heroes. But if I’m right, these are fairly predictable disruptions that we can plan for” Jeff Tucker, CEO of Tucker Company Worldwide

“We’re going to have the same if not impact as we had with HOS,” Tucker said.

“If you’re not preparing your executive leadership team that things will be different for the next 12-to-18 months, you’re doing yourself a disservice.”

“If I’m wrong, we’ll all be heroes. But if I’m right, these are fairly predictable disruptions that we can plan for,” Tucker said.

As a harbinger of 2018 rate increases, J.B. Hunt Transport Services recently sent a letter to customers warning of stiff contract rate increases.

J.B. Hunt told shippers to expect increases as high as “10 percent or more” as the ELD mandate exacerbates an already tight driver shortage.

“This is one of the highest periods of turbulence and volatility in supply we have ever experienced, and we don’t think it will abate any time soon,” John Roberts, J.B. Hunt president, and CEO, and Shelley Simpson EVP; Chief Commercial Officer; President, Highway Services at J.B. Hunt Transport, said in a letter to customers.

Tom Sanderson, CEO of Transplace, a non-asset based third-party logistics services provider, said TL capacity is very tight both in reefer and dry van.

“Shippers are seeing it in the form of much higher spot market rates,” Sanderson told Logistics Management. “Plus, there is a lot more freight turned down by carriers. That means more freight is being pulled into the market at higher spot rates.”

The number of available loads on the spot truckload freight market jumped 5.4% during the week ending Sept. 30 and tight capacity sent the load-to-truck ratio for van freight into uncharted territory, according to DAT Solutions, which operates the DAT network of load boards.

DAT: Freight Index hits all-time high in September
Tight capacity sends spot rates to their highest point since December 2014, according to DAT Solutions.

DAT: Freight Index hits all-time high in September

DAT said overall the number of available trucks dropped 3.2% during late September and pushed load-to-truck ratios higher for all three equipment types:

  • Van: 7.0 loads per truck, up 10%;
  •  Flatbed: 50.2 loads per truck, up 16%; and
  •  Refrigerated: 12.4 loads per truck, up 2%

DAT said national average spot TL rates continue to “simmer” at two-year highs.

Contract rates will soon follow the spot market increases in their normal annual bid cycle, Sanderson said. “There’s a lag,” he said. “But some of the biggest TL carriers, including Hunt, have been very aggressive as they say to expect double-digit rate increases in contract rates.”

Shelley Simpson EVP; Chief Commercial Officer; President, Highway Services at J.B. Hunt Transport

“This is one of the highest periods of turbulence and volatility in supply we have ever experienced, and we don’t think it will abate any time soon” Shelley Simpson EVP; CCO; President, Highway Services at J.B. Hunt Transport

Brokers like Tucker and 3PLs like Transplace say their in-house expertise and long-standing relationships with carriers really pay off in tight markets such as this.

That is paying off in lowered rates in contract carriage as opposed to the currently tight spot market, which DAT Services says is the tightest in over two years.

“What Transplace does is we’re very good at contract procurement and execution,” Sanderson said.

“When we award freight for a year, we are excellent at honoring commitments to carriers. When markets are soft, we still expect carriers to honor contract rates to our customers.”

Sanderson warned shippers against trying to cut corners with their carriers in markets such as this or risk being left out of the capacity equation. “Shippers have to be fair to carriers in both ways,” he said.

“Those shippers who took advantage of surplus capacity are paying the severe price right now.’

Sanderson said most of Transplace’s several billion dollars of managed freight moves under contract. “We’re not making money on the spread (between contract and spot markets),” he said.

“It’s a management fee model. When capacity is tight, the value proposition is better. So many customers are getting squeezed by higher prices and they’re under pressure from their CFOs. It tends to spur people to get help and that’s how we show how we buy and executive freight transportation.”

In a surplus capacity market, Sanderson quipped, “Anybody can manage freight.”

Sanderson said shippers should have anticipated the current tight TL market years ago and tried to move as much of their freight to contract carriage, which is less vulnerable to capacity shortages and spot market hikes.

“If you switch to contract rates today, it’s probably a little too late,” he said. “Unless the spot market gets worse.”

Tucker said brokers have been “moving toward” using more contract carriage as a way to protect shippers from the vagaries of the spot dry van and reefer markets.

“The industry has been moving toward that,” he said. “Some shippers consider brokers a vital part of their mix. We have kept rates steady in some cases the past four years by using contract rates. We use dedicated service, contract and spot markets. We play in all three areas.”

Related: Keep Looking Up to Follow Path of Truckload Rates


Article Topics
Trends   Transportation   Transportation Management   Rates   Truckload   All topics


Comments
Be the first to post a comment.
You must be logged in to post a comment. Login.

About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
 
Latest Transportation News
Landstar System Joins Blockchain in Transport Alliance
Landstar System, Inc., a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services, today announced it has joined the Blockchain…

XPO Logistics Expects 750,000 European “Last Mile” Home Deliveries in 2018
XPO Logistics has used rapid-fire acquisitions to grow from a $175 million truck brokerage company in 2012 to a $15.38 billion freight and logistics behemoth, but its European expansion, for now, is being…

Speed and Service is Driving Ecommerce Growth to Asia Pacific
Omni-channel disruptor SEKO Logistics says retailers and etailers that react fastest to the shift in consumer behavior and meet customers’ expectations for speed of delivery and returns earn the highest…

Attaining Supply Chain Visibility Doesn’t Have To Be an Overwhelming Task
Supply chain visibility will be a weighty topic in 2018, as the industry acclimatizes itself to new levels of supply chain control, however, the question is no longer whether visibility is essential for…


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles