Transportation & Logistics Industry Update
Key Trends in the Industry
U.S. truckload contract rates are rising rapidly by high single-digit or low double-digit percentages as freight demand remains high and trucking capacity constrained. As a result, shippers will likely look to adjust and lock in capacity to reduce costs where possible.
•Rate increases are tied to high demand, the impact of the electronic logging device (“ELD”) mandate, inflationary pressures, and the truck driver shortage.
•While the ELD mandate has generated initial headwinds, the industry believes it will lead to improved productivity over time.
•Dedicated trucking services allow shippers to alleviate rising transportation costs and reduce volatility compared to the volatile spot markets. Utilizing intermodal rail for less time sensitive loads is another option for shippers to reduce freight spend.
What We're Reading
Logistics | Ongoing E-Commerce Strength Provides an Opportunity for U.S. Warehouses (Logistics Management)
The warehousing market currently has various favorable tailwinds – tight vacancy rates, strong absorption rates, and rent levels – but the rising demand of e-commerce activity presents new development opportunities for warehouses to meet the needs of logistics tenants.
First-quarter orders for big rigs more than doubled from a year ago as truckers added capacity to meet surging freight demand. The growing gap between demand and capacity coupled with the tax law enacted in January has enabled trucking companies to invest in new vehicles and given them greater confidence in future demand.
Rail | Better Railroading through Big Data (Railway Age)
Given the enormous amount of data being generated and collected within the rail industry, railroads are beginning to take advantage of Big Data / predictive analytics tools to obtain useful insights into track infrastructure and equipment degradation as well as safety and maintenance optimization.
Marine | Container Rates Trending Up After Lengthy Decline (American Shipper)
The Shanghai Containerized Freight Index and Drewry’s World Container Index both gained positive momentum and surged in the last week, leading to conversations around whether carriers can continue to maintain or increase rates.
Air | Trucking Woes May Be a Window of Opportunity for Airfreight (Air Cargo World)
Supply chain constraints and tight trucking capacity combined with growing e-commerce activity is creating opportunities for passenger and domestic air cargo carriers to capture market share.