In February, Cold Carriers Logistics, shuttered its business, taking 350 trucks out of the market.
The trucking industry losses continued in April when FreightWaves reported that two small carriers filed for bankruptcy.
Comcar Industries, which owns four trucking firms, filed for bankruptcy in May.
Chattanooga, Tennessee-based Covenant Transportation Group recently announced that it will pare down its tractor fleet by 14 percent by the end of the year.
These trucking bankruptcies are only part of the picture.
Truckload and LTL carriers have gone through significant cost-cutting measures due to the economic constraints brought on by the coronavirus pandemic.
Today, there is substantially less capacity in the market. But cautious optimism now seems to be the prevailing mood among the carriers. Volumes are increasing. Rates are going up.
With the prospect of continued reductions in capacity, supply chain managers should consider going to bid with a wide variety of carriers in the next few weeks.
Volumes are still negative for carriers compared to last year, but in the current volatile marketplace, that could change quickly.
Capacity still exists in the truckload and LTL markets. Looking at the LTL side of things, pricing, both spot, and contract, has stayed rational, but pricing will increase as truckload capacity continues to tighten.
Volumes are down year over year, for the entire LTL industry. Demand for truckload services will help volumes improve since the LTL and truckload markets tend to mirror one another.
When capacity tightens in both sectors due to pent-up demand from temporarily closed businesses, a strong holiday season fueled by e-commerce - UPS is already seeing a huge demand increase due in part to stay-at-home orders - will only make it harder for shippers to find trucks. (Assuming, of course, there’s not a second wave that causes us to slow the reopening of the economy.)
Policies to limit the spread of COVID-19 will leave a lasting impact.
People are certainly scaling back how often they put themselves at risk, and that will no doubt have some influence on the domestic supply chain.
Nobody knows what an environment with double-digit unemployment and a significant reduction in large purchases, such as cars and planes, means for the long-term health of the freight transportation industry.
With capacity scarce, however, shippers and 3PLs might soon be fighting to find capacity amid a dwindling number of trucks as the economy continues to re-open and recover.
In this market, bid timing is extremely important. Attractive windows to bid can close quickly. When carriers are proposing contract rates, they typically forecast out economic conditions anywhere between 6 and 24 months when deriving these longer-term rates.
Combine the re-opening of the economy with back-to-school buying and the holiday season, and the freight environment may look drastically different in a few short months.
At SMC³, we’ve witnessed a sizable number of bids in 2020 and have seen favorable rates in recent weeks, particularly for shippers with desirable freight characteristics: dense, palletized, dock-to-dock moves.
The pandemic shutdowns and factory closures have even caused carriers to consider new businesses in traditionally outbound heavy locations.
It’s nearly impossible to predict the health of the transportation market in the coming months, so shippers need to be prepared. Shippers planning a bid in 2020 may see more carrier options and more competitive rates by launching bids soon. Applications like Bid$ense® can help shippers bring their bids to market faster and engage a wider carrier set than conventional methods.
Ready to see SMC³’s Bid$ense in action? Take the demo, then contact us at [email protected] to get started on your bid.
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