When it comes to logistics over 72% of all freight tonnage in the country is moved via the nation's highways, according to the American Trucking Association; making inland transportation a crucial element of logistics for businesses in the US market.
But today the trucking industry is facing a capacity crisis. It's being driven by a shortage of drivers and made worse by the ripple effect of other pressures and disruption being seen across global supply chains and logistics.
Top 5 reasons for the current trucking shortage in the US
As mentioned, at its core, the trucking capacity crisis is due to a driver shortage that has seen the shortfall in drivers surpass 100,000 this year. And now, that leads to an average delay of 4 days waiting on trucking capacity. The reasons for the shortage are many, and there are other factors impacting capacity too:
Increased regulatory pressures – From day-to-day operations to overall strategy, regulations can have significant impacts on trucking capacity. While the UK is facing difficulties due to Brexit, in America, regulatory changes like stricter anti-drug enforcement and proposed changes to working hours for drivers have contributed to a shrink in driver capacity.
Ageing driver population – An issue that impacts trucking industries worldwide, the average age of truckers in the US is 55 years old. As drivers retire, there aren't enough young drivers to fill the gap – contributing significantly to the shortfall being experience today. In numbers, this means a driver turnover of 92%; this rate describes how many drivers a fleet has over a particular period and how many left during that same period, which shows there is clearly no surplus in drivers.
COVID-19 – The whole logistics industry has felt the effects of the pandemic, and in the US, trucking is no different. As a result of lockdowns, restrictions or simply personal choice – some truckers have stayed home, having been given financial support from stimulus payments. For those working, the fierce driver retention market has seen wages rise, increasing freight rates but not improving capacity.
Driver schools not operating – An added headache for the trucking industry is that even for those who do want to become drivers, COVID-19 lockdowns and restrictions have caused partial or complete closures of many driving schools and testing facilities – leading to a major backlog in getting new drivers qualified, in seats and on the road.
The effects of global disruption – The impacts on ports, container terminals and warehouses due to the pandemic and a surge in demand are causing a ripple effect that is being felt in inland capacity. In particular, backlogs in cargo processing at warehouses is delaying container turns, resulting in a shortage of the trailers required to transport shipping containers.
On top of these critical factors, it also can't be underestimated that unforeseen events can add to the lack of inland transportation capacity. At the end of August, the southern and north-eastern United States was struck by Hurricane Ida – which caused widespread flooding and disruption to supply chains. In the event of natural disasters, trucks become a crucial tool in delivering relief supplies, which, while being a significant cause, has naturally led to even tighter capacity. And with that, shipping to or from the US is even more challenging than ever before.
The 6 things you should do now to mitigate cargo delays
Kenny Kristensen, Head of Inland Transportation & Value Protect at Maersk, points out that we at Twill and Maersk know about the current challenges:
"We see a sort of ping-pong effect in transportation operations. Customers have been forced to increase their stock levels to meet their customers' demand due to transportation delays from lack of capacity, causing delays at the receiving warehouses/distribution centres. While there is a higher average time spent of containers at customer facilities and at ports, there is a shortage of containers and equipment at the terminal at origins."
While we work hard to make your cargo's journey as smooth as possible, there are some things you can do within your business to mitigate the impacts of delays and even avoid them together:
Do research – Before you start planning and booking, we recommend you inquire about your area's logistics situation well in advance. At Twill, we give you market updates before booking your freight with us via our Knowledge Hub. The current status of your delivery area is important to determine the availability of trucking. Trucking providers prefer to work with locations with a quick turn history, the ability to drop their trailer, and flexible drop off hours.
Plan and forecast your shipping – Understanding your logistics needs well before making your bookings will go a long way to helping you avoid disruption and delays. This is where good supply chain forecasting is invaluable. If you haven't taken this step, it's the best place to start to strengthen the resilience of your business when it comes to logistics.
Understand your costs – What is included in your rate offer can vary from provider to provider. With Twill, your rate is “all-in”. You can see what is included here. Be sure to check with your provider to find out what is included and what may be additional, to avoid any surprises.
Book timely – Once you have forecasted your logistics needs and picked your rate and schedule, make sure to book your cargo timely and well in advance. You should leave some slack in your schedule to avoid delays in your freight delivery which can cause further delays in your supply chain.
Manage expectations with your suppliers - At times of uncertainty, when things are moving fast, good, clear communication with your suppliers is important. By making sure everyone is clear on their responsibilities within the contract for your cargo and keeping on top of communication as it travels, you can put yourself in the best position to navigate delays or disruption efficiently and effectively.
Be flexible – Given the current challenges in logistics – especially when it comes to trucking in the US, you need to be flexible and open to other options. For example, you can select different discharge ports than you would typically choose – or you need to check rail transportation as another alternative to trucking. Utilizing an inland transportation option that includes a rail leg with a short truck to the final destination is actually preferred by many truckers and can be easier to secure.
What's the outlook for the trucking capacity in 2021 and 2022?
Given the current situation, it is expected that the challenges in trucking remain for the rest of the year. Even though the American economic recovery continues to proceed at an encouraging pace, factors such as Covid-19 and the lack of truck drivers still impact the market. According to forecasts, challenges such as the shortages of truck drivers, economic uncertainty, and higher freight rates will remain in 2021. In early 2022, the situation is expected to ease up again slightly.
Rather than working with many different vendors and service providers, many companies choose to engage with end-to-end logistics partners. An end-to-end logistics managed services model tends to be more robust and cost-effective with better efficiency, reliability, and customer services. Your logistics provider's long-term sustainability is critical to your company's success, and even more during disruption periods. Partnering with a company with a track record of long-term performance and sustainability will prevent you from potential emergencies, so immediate needs can be handled better. With an end-to-end logistics solution like Twill, you have everything in one place and get the expertise your business needs from origin to destination. Learn more now.
