North American Freight Market Insights

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Transportation Market Overview

TOP STORY: How U.S. regulatory, legislative, and trade policies impact supply chains

Today, supply chains aren’t just subjects for industry trade publications. They’re in the headlines of major media outlets as well. With a wide variety of topics at play, this month’s update will open with insights into ways the U.S. government has been involved in the supply chain space recently and how you might consider those efforts when adapting your supply chain strategy to current market conditions.

Insights to U.S. regulatory, legislative, and trade policies

Trade

Supply chains are often global, requiring overseas transportation, which is why tariff conversations are a hot topic. With the administration change in the White House, many anticipated there would be rollbacks to the previous administration’s tariffs on Chinese imports.

Businesses are waiting for signs that indicate which direction the trade conflict with China will go before deciding about the divestment of current Chinese sourcing locations or adding Southeast Asia, Mexico, and other sourcing locations for needed growth. Efforts by the Biden Administration to address trade disputes with China have been slow to develop, while several hard-won Section 301 tariff exclusions expired at the beginning of 2020.

The chassis market is a perfect example of the ongoing impact of tariff increases. Container chassis and their components are just one type of product subject to the high Chinese import tariffs—one that is directly affecting the backlog situation currently happening at the United States’ largest ports.

Chassis are key to port and intermodal velocity and were historically sourced both domestically and from China. Currently, there is a 200% tariff on imported Chinese chassis, and domestic chassis production requires components sourced from China. The chassis fleet has been declining since 2018, and domestic manufacturers have been unable to this point to produce at a level to offset the retirement of worn-out chassis, further exasperating the port and rail hub tension.

Each industry and business is impacted differently by the unresolved trade conflicts, but as these policies become the new normal—with little guidance from the U.S. Trade Representative on long-term goals or strategy—ripple effects are more pronounced across the supply chain.

Regulatory

The Biden Administration has struck a deal to improve port congestion by extending operations at both Los Angeles and Long Beach to 24/7. They have also proposed additional fines for importers who do not pick up their freight in a timely manner. The administration’s attention to these issues, and its subsequent efforts to remedy the problems, are widely seen as helpful, but it remains to be seen if the efforts will have a material impact on either situation.

Key to port congestion is the lack of chassis, and more specifically, how chassis pools today are not able to be used across all vessels and containers. A 24/7 port operation may be valuable, as it offers greater flexibility, but additional hours won’t likely create greater velocity in the chassis supply chain if chassis availability is limited. Additionally, the cascading logistics nodes, including dray providers, cross docks, railroads, trucking, and the final consignees, all need to amend their hours for the expanded port hours to have any real impact.

There has also been focus on the possibility of reducing the time it takes for approval of commercial driver's licenses (CDL). This has been cited as a concern and is worthy of note, as it could be helpful if the industry is successful in increasing interest in trucking jobs. The time it takes to acquire a CDL, however, has not been cited as a key bottle neck to addressing the driver shortage. According to the U.S. Census Bureau, the 45–65-year-old age group has been contracting since 2018, and will not turn upward in count until about 2030. This age group represents roughly 40% of trucking jobs and is a key demographic challenge for the industry.

While some hope that advancements in autonomous trucking may alleviate driver shortages, it seems the driver will be needed in long haul trucking for at least the medium term and certainly through the current tightened market cycle. The federal regulatory process to accommodate autonomous trucks appears to have stalled.

Vaccine Mandates: There are two vaccine mandates. President Biden's executive order for businesses with government contracts and their sub-contractors, which requires them to have 100% of employees vaccinated by January 4, 2022. The other mandate is an OSHA rule requiring businesses over 100 employees vaccinate their employees (with many exemptions and a test out option) by January 4, 2022. Most US-based trucking companies have fewer than 100 employees and don't have government contracts, so these mandates will have little impact on trucking. The one sector to monitor is the LTL market since most LTL carriers are over 100 employees and many have government contracts.

Guidance from the U.S. Labor Secretary Marty Walsh suggested that truck drivers traveling alone in their cabs are exempt from the OSHA rule for companies over 100 employees, since they may fall under existing exemptions for remote and outdoor workers. We will monitor this as it evolves and is challenged in court, but at this point, the impact to trucking may be minimal longer term and will not impact 2021 freight services as these are not implemented until January 2022.

Legislative

For the first time since the Fixing America’s Surface Transportation (FAST) Act was signed into law in December of 2015, there is new additional investment in the nation’s infrastructure. This new bill is officially named the Infrastructure Investment and Jobs Act (IIJA).

Freight professionals should know that there will be $109 billion in new spending above the current baseline for roads, bridges, and major projects over the next five years. In addition, there will be $16 billion in new port and waterways infrastructure over the same time period. Note that any new highway throughput or increased port velocity from improved infrastructure is still many months or years away.

There are two important policy provisions in the IIJA. The Drive Safe Act will establish a 3-year pilot program for 18–21-year-old truck drivers to earn interstate authority. This program will require a minimum of 400 hours of supervised apprenticeship and specific safety equipment on the truck, such as automated emergency braking systems and speed governors set to 65 mph. There will also be a 3,000-participant cap nationwide at any one time. While this will result in more younger drivers, please note the throughput will be limited during the lifetime of this pilot program.

Another important inclusion in the IIJA is the Women in Trucking Act. The act establishes an industry advisory committee, convened through the Federal Motor Carrier Safety Administration, to recommend ways to recruit and retain more women in the truck driving workforce.

While there are many positive medium—and long-term improvements to the safety and efficiency of the freight transportation industry that will come from the passage of the IIJA, the improvements are unlikely to have any impact until well into 2022.

North American Freight Market Insights | C.H. Robinson

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Full Truckload Shipping

TOP STORY: Insights for year-end planning

Full warehouses and trapped trailers, containers, and chassis continue to pressure supply chains across North America. The importance of keeping assets unloaded and moving cannot be overstated.

Businesses continue to face warehouses full of inventory they don’t need immediately and have an immediate need for inventory that’s stuck at ports. Trailers, containers, and chassis are full of lower priority goods and consignees are not returning them to carriers. This means there isn’t enough velocity to get inventory out of the ports to meet inventory needs.

This tension may continue well into 2022 if carriers continue to struggle with hiring drivers and the forecast of 5% growth in truckload volumes is accurate. If volumes are lower than expected or carriers successfully recruit outside their traditional labor pool, tension could be lessened, allowing the trucking market to take on the increased volume effectively. Even if load volumes do not increase at the forecasted level, the existing (and slightly expanding) capacity market can more effectively keep up with demand. What follows are some considerations to think about as the industry finishes up 2021 and looks to 2022.

Trucking labor: Current outlook

Carriers continue to make slow progress in the long-haul trucking job segment. August analysis of BLS statistics are a good source for tracking trucking jobs and Jason Miller, associate professor at Michigan State University, states, “The more realistic number for over-the-road general freight, both truckload and less-than-truckload, is ~20,000 based on the most recent data from the Bureau of Labor Statistics. Key to the trucking labor situation is addressing the retirement curve displayed in Bureau of Labor Statistics data as presented by ACT research in January 2021 where the age group of 45–65 is contracting and won't turn up again until about 2030. This age group is roughly 40% of trucking jobs. Seating trucks will include continued focus on compensation, lifestyle improvement, and recruiting from non-traditional labor pools for some time.

Rise in demand for used tractors

Many trade publications and mainstream media sources are covering the constraints with new tractor production due to the semiconductor shortages. However, the real issue in 2021 is finding drivers for the trucks—since there are still carriers with unseated trucks. This will rectify itself slowly through trucking jobs being filled and tractors being retired.

As a result of the lower production of new trucks and the migration of driver talent from the largest carriers to the smallest, the used truck market is undersupplied to demand, with exceptional pricing increases in 2021. ACT Research recently shared statistics in an October webinar that showed used truck pricing is rapidly rising with the rapid expansion of owner-operators and small fleets. These escalated costs are contributing to higher operating costs and the market’s elevated rates per mile. Expect pricing to continue increasing quarter over quarter and year over year (Y/Y) through the first half of 2022.

The demand for used Class 8 trucks is much higher than what’s available.

Age of truck Avg. price 2020 Avg. price 2021 Percent change
3 years old $66,000 $100,000 50%
7-8 years old $17,000–$20,000 $35,000–$40,000 100%
All ages $43,000 $65,000 50%


Impact of U.S. Thanksgiving holiday

With Thanksgiving quickly approaching for the United States, it is important to remember the impact of the national holiday on shipping. Often, shippers and carriers take the holiday and days around the holiday off. Using the past 11 years of DAT load to truck ratio (LTR) data offers insights into what to expect this year.

  • Wednesday before Thanksgiving: Truck and load postings decrease by approximately 50%.
  • Friday after Thanksgiving (Black Friday): Truck postings decrease by approximately half, and load postings drop even more—approximately 75%.
  • Monday, Tuesday, and Wednesday after Thanksgiving: Show ~25% surge in load postings and a ~12% decrease in truck postings as shippers and carriers return to work.

These insights follow a similar pattern to other events, like Roadcheck week. Thanksgiving is a plannable event that should be accounted for when creating load tenders both prior to and after the holiday.

Thanksgiving load to truck ratio impact | C.H. Robinson Market Insights November 2021

Source: DAT and C.H. Robinson (All days shown are weekdays)

Inland moves from ports

The ongoing backlog of vessels and containers in America's largest ports—namely Los Angeles and Long Beach—persists. In fact it was a large discussion point of our Q4 Market Insights Live! webinar on November 17, 2021.

Containers, chassis, and trucking updates for ocean to inland services include:

  • Rails have demonstrated better chassis and turn of inland ocean containers
    Steamship lines are now starting to allow more inland deliveries (vs. port area transfer to truck and intermodal). The increased inland moves on ocean containers may not be permanent. Work with your C.H. Robinson account manager to develop strategies that can evolve with this opportunity.
  • Returning empty containers can be problematic
    The congestion at port terminals is high, causing scheduled returns of empty containers being cancelled and rescheduled. These situations cause greater inefficiency in the dray community and additional charges to importers trying to return containers. C.H. Robinson continues to work with steamship lines to minimize these events and charges.
  • Dwell charges are being applied to loaded containers at the port
    According to the Wall Street Journal, "The charges will apply to containers that wait nine days or more to move by truck and six days or more to move by rail, and they rise sharply. Boxes will be assessed a charge of $100 on the first day over the limit and the fee would escalate if the container doesn’t move so that by day seven the charge would total $2,800." Implementation of the fees is not yet fully defined.
Dwell time: the percentage of imported containers at ports of LA and Long Beach waiting onshore longer than 5 days for handling soared since 2020

The port backlog situation is exacerbated by the contracting chassis pool in the United States, underutilization of the chassis pool due to loaded/trapped containers on chassis at consignees, and the general congestion at ports that has reduced the number of turns equipment and drivers can make in a day and week. Source: MarketWatch

For more insights on global ocean, air, and customs services, visit our Global Forwarding Insights.

Spot market, committed market, and capacity insights

Spot market under continued pressure

All three primary truckload segments continue to display unprecedented load to truck ratio (LTR) tension. The chart below shows that current truckload van tensions are most likely not able to address a super-regional or national disruption.

In addition to the forthcoming Thanksgiving holiday, active capacity tends to contract between Thanksgiving and the end of the year due to holidays and family gatherings. Year-end freight volumes have the likelihood to be strong, especially in the port markets, so tension is expected to be high through year end in the ports and likely across the broader markets.

Be proactive on shipping plans and capacity strategies. Inclement weather on a regional basis could be problematic as it was with late winter weather earlier this year.

 

DAT dry van load to truck ratio | C.H. Robinson Market Insights November 2021

Source: DAT load to truck ratio. U.S. average

The national LTR continues at historical highs across the truckload modes. Note that a 3:1 LTR for dry van can be considered a reasonably balanced market, so today's levels that are consistently around 5:1, are remarkable. The table and maps below offer more perspective of the nature of spot truckload market in the United States. Source: DAT

Truckload service Balanced Market LTR National Average LTR Low Region High Region
Van ~3:1 ~5:1 1:1 77:1
Refrigerated ~6:1 ~14:1 1:1 100:1
Flatbed ~20:1 ~41:1 1:1 93:1

DRY VAN

L/T ratio - vans heatmap | C.H. Robinson Market Insights November 2021

REFRIGERATED

L/T ratio - Reefers heatmap | C.H. Robinson Market Insights November 2021

FLATBED

L/T ratio - flatbed heatmap | C.H. Robinson Market Insights November 2021

Contract truckload environment

Most of the U.S. for-hire truck market is managed through commitments most often managed via hierarchical route guides. What follows are some perspectives and notes on today’s contract truckload environment.

Route guide performance
Companies commonly use waterfall (or hierarchical) route guides to manage awarded freight on lanes with some level of demand pattern predictability. The following insights are derived from C.H. Robinson’s large portfolio of customers across diverse industries throughout the United States.

Two key metrics of route guide performance are first tender acceptance (FTA) and route guide depth (RGD). RGD refers to how far into a route guide a shipper must tender shipments before carriers accept loads, or the average number of tenders per load. FTA is a percentage of how often the awarded primary transportation provider accepts their shipment tenders.

TMC routing guide graph | C.H. Robinson Market Insights November 2021

The chart above from TMC, a division of C.H. Robinson, reflects weekly RGD regionally across the United States through the week of November 7-13, 2021.

During the week of November 7-13, 2021, the overall RGD across all regions is unchanged from month to month at 1.79, which presents some reasonable stability over the past few months with the exception of the spike from Hurricane Ida early in Sept for the Northeast.

Regional RGD shows a slowly and minimally improved Southern region from a month ago. Both the Midwest and Northeast have shown some slight improvement over the past four weeks also. The story is the West which has been increasing over the past month with a recent material jump to ~1.8 for RGD.

October's FTA was at 80%, which is within the 80–82% FTA we’ve seen since the reopening of the economy in 2020. For some additional context:

  • Week of March 3, 2019, FTA was 89% and RGD was 1.21
  • Week of Feb 23, 2020, FTA was 90% and RGD was 1.17

Essentially, when the first tender is accepted at the same rate and RGD increases, fewer loads are covered with the first backup and likely more loads are going deeper in the route guide and to the spot market.

For October, medium- and long-haul shipments showed slightly improved route guide depth with short-haul shipments seeing a slight uptick. For perspective:

  • Short haul (less than 400 miles) increased slightly from September’s RGD of about 1.4 to 1.5, which is still elevated from 2019 and the first half of 2020 levels, which were in the 1.1 to 1.2 range.
  • Middle distance (400–600 miles) slightly improved from a little over 2.0 in September to about 1.8, which is much elevated from 2019 and the first half of 2020 levels, which were in the 1.3 to 1.4 range.
  • Long distance (over 600 miles) improved from about 2.0 in September to about 1.75 in October and like the other distances, is well above 2019 and the first half of 2020 levels, which were in the 1.1 to 1.3 range.

Voice of the carrier from C.H. Robinson
C.H. Robinson has two customer communities, shipper customers and carrier customers. What follows are insights from business reviews with our carriers each quarter that help present the voice of the carrier to our shipper customers.

The prevailing theme this month continues to be the driver shortage brought on by the aging population and early retirement from COVID-19.

  • Pay continues to increase. Many carriers have raised pay multiple times this year to entice drivers.
    • Signing bonuses are approaching $15,000–$20,000 and often are the only way to get drivers in the door.
  • Drivers are opting to work less. This helps them maintain their personal life rather than working more and earning more.
    • Carriers are changing their historical lanes/routes to get drivers home weekly at a minimum, but often daily or multiple times a week.
    • Carriers are shifting to relay models for middle distance and longer hauls.
  • Driver experience during load and unload is a priority. Carriers are favoring shippers that offer better driver experiences—even if it means discontinuing service for long-standing relationships.
  • Some carriers are deciding to sell parked trucks. As carriers have been unable to seat trucks, they sell them and further shrink fleet sizes.

C.H. Robinson's spot market dry van truckload rate per mile forecast

Our 2021 forecast continues its upward course through the end of the year amidst the pressures of supply and shipment volumes, with a forecasted 4% increase between now and the end of the year.

The 2022 forecast continues to present a net 3% Y/Y average rate per mile to 2021 with year-end 2022 rate expected to be near the 2021 year-end rate per mile.

As many model inputs continue experiencing variances, expect this model to evolve as inputs vary. Additionally, C.H. Robinson will continue to apply its broad market costs and market experience to the forecast and continue to present updates on a regular cadence.

DAT + CHR van forecast | C.H. Robinson Market Insights November 2021

Temperature controlled shipping

Expect regional produce markets to surge in Q4 2021. Regional pressures associated with seasonal harvest, production, and inventory stocking put additional strain on the broader truckload market. Expect increased pressure to pull dry and refrigerated capacity to support several commodities in the coming months.

  • Salinas Valley transition to Yuma
    The Salinas Valley transition to Yuma, AZ, begins mid-November and runs through April. Expect seasonal tightness in Arizona with a subsequent loosening in Salinas Valley because of this shift.
  • Fall, holiday, and peak retail season
    Fall harvest season continues to create high demand for commodities such as apples, cherries, frozen pies, turkeys, and Christmas trees in the Midwest, Great lakes, and Pacific Northwest. Holiday season, along with peak retail activities, historically result in increased demand through the end of Q4—and this year is proving no different. Increased demand with a limited carrier pool leads to an imbalance in supply and demand, requiring creativity and a flexible supply chain to secure the capacity you need.
  • Imbalance of refrigerated trucks
    Throughout the year, 2021 has brought a unique imbalance for refrigerated trucks. With the exceptional demand and pricing for van freight, there is enthusiasm in the refrigerated community to run some refrigerated trucks as dry vans to save on the fuel and the use of the refrigeration unit while making similar money. These moves effectively decrease the available temperature controlled capacity.

Connect with a temperature controlled expert to learn more about how seasonal imbalances affect your business and how our unique transportation procurement and capacity solutions can help your shipping strategy in the long run.

Flatbed

Flatbed continues to experience spot market LTR’s exceeding the five-year average. However, the plannable flatbed freight market has improved. Greater lead time and visibility to projects create an environment where route guides are performing well, and carriers are prioritizing awarded freight over the spot market.

  • Sizable increase in request for proposal (RFP) activity for plannable flatbed freight is in response to better performing route guides in the second half of the year.
  • Spot market tension for unplanned freight continues to be at 6-year highs with a DAT national LTR average of just over 40:1.
  • Freight volumes are like 2019 levels, with many companies projecting continued strength as delayed projects go live.
  • For flatbed shipments less than 40 feet in length and weighing less than 17,000 pounds, we offer excellent capacity and pricing options using hot shot services. Currently the hot shot market is more stable than earlier in the year, with market pricing holding due to steady demand.

Engage your C.H. Robinson account manager to discuss flatbed success strategies, such as flexible shipping windows and shipping on specific days of the week.

Cross-border shipping: Canada

The Canadian freight market is experiencing high levels of freight and record levels of load and truck postings for the spot market.

Canadian ELD Update
The Minister of Transport has certified and accredited six ELD vendors as offering viable electronic logging devices (ELDs). The phased enforcement plan for carriers is such that there will be no punitive penalties until at least June 12, 2022. Source: Transport Canada

Record setting September for truckload spot market volume
September spot market volumes climbed 27% Y/Y and up 7% from August on Loadlink's platform. Source: Trucknews.com

Vaccine mandate
Currently, ~80% of carriers that serve cross-border trucking between Canada and the United States are Canadian flagged. It is believed that Canadian truck drivers have a much higher incidence of COVID-19 vaccination than U.S. drivers. The Canadian Trucking Alliance (CTA) believes 1 in 5 truck drivers will abandon international work when the U.S. requires proof of double vaccination beginning in January 2022.

Expectations are that U.S. based carriers will be required to prove vaccination by Canada if the United States moves ahead with its mandate. Current estimates are that this could affect 38,000 truck drivers, both in Canada and the United States. Source: Trucknews.com

Flatbed shipping in Canada
Canadian flatbed capacity constraints mirror those of other truckload modes. Rates are increasing as outbound (Canada into the United States) volumes are outpacing inbound shipments. Port traffic on the West Coast puts additional strain on this mode with high volumes of container moves.

Intermodal service across Canada
The market in western Canada is experiencing extreme tension. Both Canadian Pacific and Canadian National railways do not have empty container inventories to offer for intermodal service from the greater Vancouver market into the United States or for intra-Canada.

Sporadically, a limited number of units may become available at a premium—currently $2,000 (CAD). Calgary and Edmonton markets are also experiencing a container deficit. Waitlists exist in both markets, but the premium program has not yet been implemented. Lack of intermodal equipment continues to cause spot market rates to spike for over the road capacity.

Explore your Canada capacity options
C.H. Robinson's decades long presence in Canada and offering cross border trucking provides our clients the most capacity available and the professionals that service your business will work with you for your planned and unplanned cross border needs during the current ELD and COVID situation.

Cross-border shipping: Mexico

Regulatory updates
The SAT (Mexico’s equivalent of the United States’ IRS) has delayed the Complemento Carta Porte legislation until January 1, 2022. The month of December 2021 is the formal adaptation period, but many companies already started trials to allow more time to prepare and implement the required process changes. Source: SAT

Mexico’s ports continue to implement PITA, the customs technology integration project designed to clear trucks in a paperless environment. All crossings are now integrated with PITA, including the World Trade Bridge, but it will be the last port to make PITA mandatory.

The trade community anticipates a Q1 2022 roll out there, which will require all border transfer carriers to utilize the single badge system that incorporates all customs, carriers, and trade partner information within an RFID-chip embedded in their badges.

Imbalance for cross-border trade is growing
Northbound demand for both crossdock and direct truckload services continues to exceed southbound demand by bouncing between 2:1 and 3:1 for both intra-Mexico and Laredo into the United States. At this sustained level of imbalance, carriers are repositioning empty equipment to meet demand, and this is the reason for higher costs.

Spot market for northbound shipments exiting Laredo increases the LTR to 13:1 from the 10:1 experienced in Q3 2021. This level of spot market imbalance requires flexibility in schedules, lead and transit times, and pricing on northbound freight. Source: DAT

Improving the driver experience
Carriers are increasingly declining loads within Mexico that have a history of long dwell times and prioritizing shipping locations with quick turn times.

Carriers are asking shippers and third party logistics providers (3PLs) to have customs clearance documentation ready in advance to streamline the border-crossing experience and enable the return of equipment to Mexico faster.

Growing demand for refrigerated capacity
Western U.S.-Mexico borders are experiencing increased freight volumes with winter produce season in full swing, creating higher demand of refrigerated units. Tomatoes, squash, cucumbers, peppers, and other winter-harvest vegetables grown in Sinaloa and Sonora are crossing through Nogales, placing increased pressure on capacity northbound.

B1 Visa migration
Mexican drivers with B1 Visas continue migrating from cross-border transfer services to direct service, delivering deeper into the United States. Work with your C.H. Robinson representative to determine if a crossdock or through service is best suited for your needs.

Vaccine mandate
Truck drivers crossing the U.S./Mexico border, those providing transfer services, and those offering direct through services must be vaccinated in early January 2022. It is not clear yet how impactful this will be to cross-border capacity, but due to the level of sharing vaccines from the United States to Mexico’s border states, it is possible the impact of the mandate will be less material.

Leverage our 30+ years’ experience in Mexico to help secure the best service available in today’s market and help you proactively navigate changes as the mandate is enforced.

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Intermodal Shipping

TOP STORY: Capacity is available but trapped in a loaded status

Intermodal volumes remain relatively steady during the mid-point of Q4 2021, with some localized challenges to capacity. Service volatility remains a primary reason for modal shifts away from rail service.

The intermodal marketplace has adequate supply of containers with ongoing investment, but effective utilization remains critical to the mode’s ability to keep up with demand. Additionally, high levels of active truck utilization in the dray space (low elasticity to address surge and unplanned loads) will persist as the mode labors to keep up with the volumes available to it.

  • Dray capacity has pockets of limitations that can be addressed with flexibility and planning
  • Domestic 53ʹ chassis supply is constrained due to increased demand in the dray space coupled with container congestion at consignees
  • Service volatility may lead to additional network disruptions through lane metering and capacity allocations
  • Import volumes from the West Coast present challenges and are forecasted to persist through the holidays
  • Service pressures will increase once winter weather sets in

Intermodal is an opportunity for more capacity
Overall, intermodal is open and continues to participate in the broad freight flows and migration of loads in today's market. Use it as an opportunity to increase capacity, but be sure to accept goods when available and turn trailers/containers as fast as possible to return capacity to the network.

Engage your C.H. Robinson account manager for more insights and strategies to help integrate intermodal into your supply chain, minimize peak season and dwell surcharges, and manage this current environment.

Less Than Truckload (LTL) Shipping

TOP STORY: Yield growing quickly despite limited opportunity for growth

A lot has been happening with LTL carriers across North America:

  • LTL carriers have been contracting/rationalizing terminals since 2007.
  • 2022 will offer only limited investment for more doors at existing facilities or more terminals.
  • Carriers seek freight and relationships with lower operating costs.
  • Leveraging embargoes helps balance carrier networks.
  • Driver (and labor) shortages are challenging, while driver retention increases operating costs.
  • OSHA vaccine mandates could impact available capacity.
  • Aggressive pricing on undesirable freight (e.g., extra length charges) is becoming more common
  • Lack of new/available equipment (trucks, trailers, chips, etc.) impacts capacity availability and growth
  • “Dock door pressure” is stressed

Updates for Q3 2021 from the publicly traded LTL carriers offers insights into pricing and yield. Source: Stephens LTL Yield index Q3.

  • Yield grew faster in the last quarter than 2015–2019 collectively
  • Yield is up 6.3% sequentially and 10.4% Y/Y
  • Anticipate strong pricing and yield momentum into 2022

While LTL capacity continues to be stressed, C.H. Robinson has access to more capacity than anyone else. Offering routing guide options with over 150 carriers under contract and a diversified suite of services to create solutions that meet the needs of any market conditions.

Small Parcel

Both FedEx and UPS published general rate increases of 5.9%

These are average increases to base rates. These companies have also published that surcharges for some freight will be much greater than 5.9%. “If you’re a shipper that uses Ground Economy frequently, ships large packages, ships low weight ground or ground residential, or incurs a large number of accessorial charges (as a percentage of overall spend), it is likely that you will be subject to an increase much larger than the stated 5.9%.” Source: Parcel Magazine

Some of the surcharge types (in addition to fuel surcharge) that will see these additional increases from FedEx and UPS include:

Residential deliveries UPS 3-day select FedEx Ground Economy Services (formerly FedEx SmartPost)
Shipments over 50 lbs. Non-boxed shipments Overdimensional will incur zone-based charges
Signature required service Address corrections Hazardous materials

Sources: ParcelIndustry.com article one, article two

In today's market, it is increasingly important to optimize your small parcel shipping strategy

  • Utilize tools to analyze/model your historical shipment data vs. 2022 rates
  • Analyze your packaging profile—for example, discern if there are efficiencies to shipping with a bigger box or multiple small boxes
  • Consider alternate consignee deliveries, such as alternate designated drop-off locations or drop boxes that avoid residential fees
  • Reduce increasing surcharges based on zones. Consider fulfillment partners or freight consolidators to induct your packages into carrier networks for final mile delivery.

This could include warehousing or distribution providers geographically located closer to destination regions or using freight consolidators to zone skip to regions with high volumes.

Government and Regulations

TOP STORY: How U.S. regulatory, legislative, and trade policy impact supply chains

This month’s government and regulations update was discussed in the opening of the report. See the transportation market overview at the beginning of this report for high-level insights about how regulatory changes are impacting transportation across North America.

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