STORM ALERT! Truckload Capacity Likely to Get Very Tight in the Next Couple Months
Mar 11, 2020
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
A couple of weeks ago Ravi Shankar from Morgan Stanley gave a presentation at the RILA Conference which confirmed what Derek Leathers discussed in our recent interview with him: Shippers are looking at a horrendous capacity crunch in the next couple of months!
As both Ravi and Derek pointed out, here are some factors that will cause the capacity crunch and a heavy demand for truckload capacity in the next couple of months.
- The coronavirus has significantly disrupted supply chains causing companies to drain down their inventories. As production in China comes back on line, retailers will be scrambling to meet their Spring orders and get products on their shelfs, a lot of companies will be looking to replenish their inventories, and you will have the Spring Produce Season in full bloom.
The Commercial Vehicle Safety Alliance’s (CVSA) Roadcheck will be occurring on May 5-7 instead of its normal time in June. Historically, a lot of drivers take a three day “vacation” during Roadcheck. This year, we could see a record number of vacations because in 2020, the focus is on “driver requirements” with a special emphasis being put on driver-related violations such as the:
- Driver’s age
- Commercial driver’s license
- Driver medical/physical requirements
- Sickness or fatigue
- Intoxicating beverages and drugs and other substances
- Driver’s record of duty status – U.S., Canada or Mexico
Add it all up, and shippers could be looking at an environment in May that looks eerily like 2018.
If you didn’t catch our interview with Derek Leathers in our recent Two Minute Warning, do yourself a favor: when you get a chance listen to what Derek has to say.
Derek clearly knows the marketplace. One other factor that both Derek and Ravi pointed out is in 2020, capacity could also decrease because of “nuclear verdicts” resulting from litigation associated with accidents. Many carriers are just one wreck away from going out of business, which is exactly what happened this week with one Wisconsin carrier.
Don’t be surprised by the tight capacity that shippers will likely be experiencing later in the year. If you are interested in some strategies on how you can manage this as a shipper, give us a call or send us an email.