For the past couple of weeks we've been emphasizing the importance of our 3 E Strategy which stresses the value of being Educated, Equipped, and focused on Execution. This week I had a call with Brent Hutto of Truckstop, and it reinforced how essential it is to be educated about what is happening in the transportation marketplace.
Brent shared information with me that quite frankly left me stunned. Shippers and carriers are literally seeing things we've never seen before. Things like:
The Market Demand Index (MDI), which tracks the correlation between the number of loads that have to be moved and available capacity, topped 200 for the first time ever.
Carriers can, and are in essence, auctioning their capacity in the spot market, which is why spot rates have risen 27% from 2.41 per mile to 3.07 per mile since the beginning of the year and (brace yourself) are 46% higher than the historical average in the spot markets for the past five years. Since spot rates tell us where contract rates are headed, expect to pay more for your truckload moves.
The Colonial pipeline shut down could easily increase your fuel surcharges by 3% to 5%.
The Y/Y comps as well as the comparison to the historical five year average tell us that the worse is yet to come. Presently, shippers are moving (depending on the month) approximately 80% to 95% more freight though the system than the average. As we head into what is historically the heaviest time of the year for freight, there is tremendous concern that if the 80% to 95% increases (or more) continue to occur, there will be gridlock in the freight markets.
For some shippers, their concern is not over how much they're paying, but whether they're able to simply book freight. Too much freight is in the system and some freight is not going to get moved, so how do you make sure it’s not yours?
This is why we hosted a webinar yesterday called Grab a Seat at the Table and emphasized the fact that your C-Level executives need to know what's happening and be prepared to invest in the supply chain.
If you want to get educated about the LTL market we encourage you to listen to "LTL Answers for Shippers in 2021". In this conversation with Mitch MacDonald of Agile Publications' DC Velocity, Doug Culbertson of TranzAct and I addressed some important issues and topics that are affecting your LTL rates and the latest on what's happening in this market.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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