The 2:00 Minute Warning

Often we focus on macro-trends happening in major modes such as truckload or ocean. Trends give you an idea of what to expect for your budget in coming months, both short and long-term. But it's also important to note the immediate and individual events that have the potential to increase your freight costs and supply chain risks.

With that thought in mind, here are three events or trends that you should be watching right now.
 
First, if your company is going to be moving truckload freight next week, you should be aware that on next Tuesday through Thursday (May 14-16), the Commercial Vehicle Safety Alliance (CVSA) is holding its annual International Roadcheck in Canada, Mexico, and the United States. Basically, the CVSA gets together with local law enforcement agencies and significantly increases the number of roadside inspections – and these inspections are often more thorough than the common roadside inspection. The focus of this year’s inspections will be on drugs and safety equipment – as they state, "tractor protection systems and alcohol and controlled substance possession."

Guess what? A lot of independent truckload carriers and drivers don’t like being pulled over for time consuming roadside inspections. And that is why historically, these carriers and drivers like scheduling their vacations and taking time off during “Roadcheck” week. So shippers, especially those shippers who rely on the spot market to move their freight, could have trouble finding capacity in the near term. Fortunately, TranzAct can help you here. If you need help finding a truck, get in touch.
 
Second, pay attention to what's happening with the volatility in the price of fuel. In the video I note that prices had increased in previous weeks. This week they have dropped by $0.05. In short, there is a lot of variability in the fuel markets. We're reading predictions from the “experts” that the price of oil will become more volatile as the conflict in the Middle East continues.

And as the summer season approaches, there's concern that rising demand will result in sizeable increases. While we just saw a short-term decrease in prices, the longer term price trend has been up and is expected to get much worse. We all know that fuel surcharges protect carriers from volatile prices, but they can also surprise you with additional costs. So why not be proactive and let TranzAct help you get the best possible fuel surcharge formulas included in your contracts. If you are interested in learning more about this and other best practices, we encourage you to reach out to us.
 
Third, the longest running freight recession in modern times is really starting to take its toll as many truckload carriers are in fragile financial condition and some have just decided to file for bankruptcy and shut their doors. Our friend Avery Vise at FTR Associates pointed out that while we haven't seen truckload bankruptcies skyrocket, we are seeing more than we did in 2019. Approximately 10% of all motor carriers went out of business in 2023, and the trend increased as the year progressed with the greatest number occurring in December. This increasing trend is expected to continue at least through the first half of this year.
 
Carriers don't need any additional financial burdens, and anything that exacerbates the market exits could cause truckload rates to rise significantly. And if this Administration continues to mandate the march towards electrification, watch out! As this morning’s Wall Street Journal reports, “the annual costs of operating battery-electric big rigs about twice as expensive as diesel trucks.” Once again, the government is finding a way to make a bad situation worse!
 
We can help – if you're wondering how to develop the best plans and adjust to changing conditions in the truckload market, contact us about our truckload assessment. We can give you strategies and best practices for managing your truckload spend.

To get in touch, simply give us a call, send us an email, or schedule a quick meeting.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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