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2018 Outlook of the Capacity Crunch: Buckle Up…

Outlook of the Capacity Crunch

Many factors happening at the end of 2017 will aid in creating one of the strongest capacity crunches we’ve seen for 2018, explains Chris Brady of Logistics Viewpoints. The ongoing recovery efforts after this year’s major hurricanes, the upcoming electronic logging devices (ELD) mandate implementation date, and continuing tightening of labor markets, including truck drivers, pushing the boundaries of today’s trucking capacity. Prior to the onslaught of hurricane Harvey, 99.2 percent of all tracking availability and capacity, but that has since tightened. Rather than focusing on what has caused capacity crunch, let’s take a closer look at what to expect in 2018.

2018 May See the Worst Outlook of the Capacity Crunch in History

There is no other way to put it; 2018 may be the worst capacity crunch in history. Across the board, including UPS, FedEx, and USPS, carriers are planning to raise shipping rates. Starting December 24, UPS ground, air and international service, as well as FedEx services, will increase on average 4.9 percent, reflecting increased demand with less capacity. As we know, a 4.9% price hike to base rates doesn’t mean a 4.9% increase in your shipping spend. How much your specific prices go up for 2018 largely depends on surcharges. And as we’ve seen, FedEx and UPS have become increasingly inventive with their accessorial fees. The increase in rate is still higher than expected. Meanwhile, the truck driver shortage will grow worse in 2018.

More Drivers Will Retire in 2018

Trucking continues to have a little appeal due to wage and quality of life, reports Iris Kuo of Trucks.com, and this is expected to be a major factor in circumventing the staggering number of retiring truckers in 2018. For many small and mid-trucking companies, which are often owner-operated, even truckers who have not yet reached retirement age are expected to take early retirement. Instead of facing the potential setbacks from implementing the ELD mandate. Notably, the truck driver shortage is expected to continue to worsen, reflecting little hope in favor of overcoming this driving force behind the capacity crunch. However, that has not stopped carriers and shippers from looking for other ways to overcome this challenge.

Proactive Approaches to Reducing Driver Insurance Premiums May Improve the Capacity Crunch

Part of the problem with the driver shortage and its impact on the capacity crunch in  2018 rests upon sky-high insurance premiums. Your new truck drivers simply do not have enough experience to access affordable insurance premiums, but U.S. express, a Chattanooga-based trucking company, is looking to overcome this challenge by purchasing 1665 international LTL semi-tractors from Navistar international Corporation. These trucks have all the bells and whistles and come with the technology to improve driver safety, as well as the safety of drivers around. As explained by Clarissa Hawes of Trucks.com, ordering these trucks near the end of 2017 puts them on the road in 2018. In addition, other truckers are following suit, which could help prevent the capacity crunch from worsening.

Multi-Rate Hikes Could Be the New Normal

The outlook of the capacity crunch in 2018 seems to indicate a likely increase in rate hikes among national and international carriers, regardless of transportation mode. According to DC Velocity, carriers are also working to shrink overhead costs. In fact, Old Dominion has implemented in protocols and technologies to increase trailer density, resulting in more available space for trip.

Amazon Continues Its Path Toward Worldwide Last-Mile Logistics Domination

 

Amazon is also set to take center stage in impacting the capacity crunch 2018. In a recent Amazon press release, the e-commerce giant announced a new service for prime members of will revolutionize last-mile delivery. As seen in the past, such as when Amazon launched free two-day shipping for prime members, Amazon’s launch of a new service will bring new standards to the logistics industry.

Amazon Key will enable in-home delivery and secure home access for guests and service appointments. This means last-mile delivery will likely evolve across the 

country to include delivering packages within homes, including unpacking and set up of products. Obviously, the service is still in infancy, but it will put an added burden on existing last-mile logistics providers and carriers to go beyond today’s simple deliveries.

Regulations May Swing in 2018

Although the ELD mandate is not going away this year, shippers retain a glimmer of hope that implementation can be pushed back if Congress acts. However, recent political backlash from actions on the controlled side of the aisle is likely to serve as a continued suppressant for repealing regulations. Without getting into a heavily political question, mid-term elections often act as a counterweight to the outcome of presidential elections, so if the controlling party of the house or senate swings the other direction, regulations become even stricter guidelines by the end of 2018.

What Does It Mean for Shippers?

Shippers need to understand the capacity crunch of 2018 is on track to be one for the record books, and those that fail to recognize this game-changing catalyst will be doomed to fail. However, shippers can learn a few things by looking at how previous shippers and companies responded to the capacity purchase of the past.

Adam Robinson
Adam Robinson oversees the overall marketing strategy for Cerasis including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.
Adam Robinson
Adam Robinson
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