The 2:00 Minute Warning

Recently, I received a call from a good friend and a loyal member of the Two Minute Warning audience that really got my attention. That is because as he was sharing how his company’s supply chain is being impacted by events in the freight markets, he quoted that legendary baseball player and classic philosopher Yogi Berra: "It's like déjà vu all over again."

I guess that "déjà vu" reference is appropriate when you’re seeing your container rates, in the span of two months, go up by $2500 - $3,000 per container. Or when you see your inventory allocation model go topsy turvy because shipments are now taking 20 – 25 days longer to reach your company. Add it all up and it’s the kind of supply chain disruption his company experienced in 2021.

With that thought in mind, he asked a very important question: "Is it time to reset my freight budget for 2024 so I can avoid the types of questions I will undoubtedly be receiving if my executives are ‘surprised’ by unfavorable freight variances?" It’s a great question and one that we think more shippers will be asking.  

Some of you might be thinking: "We’re barely through February, and you’re suggesting that our freight budgets might need to be revised?" Candidly, it’s your call but I have also talked to some smart shippers creating a provisional budget that alerts your CFO, CEO and COOs about the forecasted financial impact which would result if certain things happen in the freight markets. It’s not just the situation in the Red Sea. There are other things that should be on your radar screen. 

With that thought in mind, my friend asked me to pull out the TranzAct “Crystal Ball” (that normally gets used in August/September) to tell me what we see happening in the freight markets in 2024. I encouraged him to check out our Q1 Freight Market Update that addressed some of the uncertainties in the freight markets, but for now, here is a brief summary of what we see ahead in 2024.

In the truckload market, we continue to see softness in rates. Spot rates are still lower than contract rates as there continue to be excess supply and not enough demand. Most experts are saying that if increases occur, they will most likely start in the third quarter.

When it comes to LTL rates, we're seeing the LTL carriers continue to exercise great pricing discipline. If you haven’t already listened to our recent interview with Rob Estes, the CEO of Estes Express, we encourage you to do that now. Rob explained the unique factors impacting the LTL market and why LTL carriers will continue to seek rate increases. He also confirmed what TranzAct has highlighted in our Two Minute Warnings: Shippers can actually reduce their  LTL costs even when rates are going up. The secret is to use the right sourcing strategy when shippers go to market. Unfortunately, a bunch of shippers are going to ignore this fact and will see their LTL costs go up. But if you’d like to learn more about how to reduce your LTL costs, just let me know.
 
In the ocean market, with the events in the Red Sea region, we’re seeing rates rise sharply. Later today we're hosting a webinar called From Critical to Crisis: An Update on the Red Sea, and it's not too late to register. In case you can't attend live, we plan to send the recording to everyone who signs up.

One question that we addressed is: Will container rates soar to $20k or more as they did during the pandemic? Sneak preview, that’s not expected at this time according to our webinar panelists.
 
Once again, to learn more about what's happening with different modes, I encourage you to take a look at our Q1 Freight Market Update.
 
Overall, we want to help you manage costs and make sure your budget is as accurate as possible, and we’ve been doing this a long time. If you'd like to get in touch, simply send us an email or schedule a time to meet.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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