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    ATS Transportation Blog

    What is Happening to the Trucking Industry? [And How to Overcome the Next “Perfect Storm”]

    Perfect-Storm

    If you’re a shipper or a transportation provider, the past several weeks have probably added a few gray hairs to your head.

    In a freight market that’s already proving difficult to find capacity for a reasonable price — or even find capacity at all — the recent weather across the U.S. created the “perfect storm” for the freight market.

    As a transportation provider that’s been dealing with the ups and downs of the freight market for more than 65 years, we’ve been there through many “perfect storms” over the decades.

    In this article, we’ll get into what’s led to the current state of the market and how you can be ready if  — more likely, when — this type of weather event happens again.

    Why Are Freight Rates So High Right Now?

    As we’re reaching the one-year mark of the initial lockdowns across the U.S. following the COVID-19 outbreak, the freight market is still in recovery mode.

    Many shippers are still playing catch-up following the shutdown of their facilities. Or, in some cases, the demand for their products skyrocketed (see home improvement products), so they’re doing as much as they can to keep up.

    Consumer spending is still high — up roughly 5 percent from this time last year — which means the demand for trucks is still high. Typically, Q1 is one of the quieter times of the year for freight demand, but it’s currently 30-40 percent higher than this time last year.

    What’s piling on to this problem is the truck driver shortage. The supply of drivers isn’t able to keep up with the freight demand. From early retirements to fewer drivers entering the workforce — both of which can be attributed to the pandemic — the number of drivers on the road is shrinking.

    The Literal Perfect Storm

    As if the freight market wasn’t tough enough for shippers already, we literally got the perfect storm in February 2021 to create one of the most challenging two-week spans I’ve seen in my 15-year career.

    Like most everyone who lives in the southern U.S., many truck drivers choose to only move freight in the southern part of the U.S. in the winter. Those drivers don’t have much experience driving in the weather that hit the South — ice, sleet and snow — and made the decision that it was better to park.

    However, even many experienced drivers made the decision to park their trucks until the weather passed and the roads were safer — especially those who work for companies that focus on safety.

    Another scenario involves drivers who either continued driving through the weather or had arrived at their destination right before the weather hit. In those cases, many of the facilities were shut down for various reasons, including power outages, so drivers were stuck waiting until the facilities were ready to unload their trailers. In some cases, drivers waited days to get unloaded. 

    If they were lucky, they could leave the trailer at the facility and get a new one nearby to keep moving along, but that was often not the case.

    The Lingering Effects in the Trucking Industry Following Bad Weather

    The trouble with this situation is the problems didn’t go away when the weather subsided. Much like the COVID shutdowns, the facilities had a lot of catching up to do once they could open again. 

    You may be thinking, “Well yeah, but this was only a few days, not a few weeks,” and you’d be right. But what makes this as bad or worse than the shutdowns due to the pandemic in early 2020 is virtually every business shut down at the same time, and virtually every business opened up again at the same time — much like a light switch. 

    On the other hand, the pandemic turned off like a light switch across the country, depending on the industry the business served. But when things started opening up again, it was more like turning up the lights with a dimmer switch. That allowed carriers to catch up at a more even rate. Not that it was easy, but it was more manageable.

    Things are quite backlogged right now, so don't be surprised if the “hangover effect” from this lasts a few weeks longer.

    That’s why we’re currently seeing freight rates at crazy highs, along with tender rejections — which is when a carrier rejects a load sent to them by the shipper, usually meaning they have better options or no coverage options.

    How to Prepare for Freight Costs During Unexpected or Bad Weather

    Chances are pretty good something like this will happen again, although hopefully not for a long time. Either way, we’re hoping everyone will be better prepared to handle it next time. Here are a few ways to reduce the impact on your business:

    Be Flexible with Time

    If your freight doesn’t need to be delivered on a specific date or at a specific time, let your carrier know that. That will allow them to manage other “burning priorities” and plan ahead to ensure your freight still gets delivered at a time that works for you.

    Be Flexible with Equipment

    While proper securement and safety should always be a top priority for your transportation provider, certain freight can be flexible about what trailer it uses. Instead of requiring one specific type of trailer, especially if it’s hard to come by under normal circumstances, allow the carrier to get creative with what they haul it on. Again, don’t sacrifice proper securement and safety to get this done.

    Prioritize

    This can work in advance of a weather situation (like the recent snowstorm or in the case of a hurricane, etc.) or following it. While it’s hard to predict exactly what to expect when the weather system arrives, we do typically know a week or so in advance that something is coming.

    Especially if you know weather is coming, get in touch with your transportation provider right away and let them know if you have any planned loads during the estimated window of impact. That way, you and your carrier can work together to get loads moved before the storm hits and push back ones that don’t need to be moved as quickly.

    Even if you can’t deliver to the consignee right away because they’re not ready for it, maybe there’s a nearby warehouse outside the area of impact it can sit at until the consignee is ready.

    The same goes for after the storm hits. Prioritize what needs to be moved as soon as it can be done safely and what can wait. That will ease the burden on your carrier while still delivering your freight on time.

    Find a Proactive Partner

    While we mentioned you can get in touch with your transportation partner as soon as you know weather is coming, it’s even better to have a proactive partner that will get in touch with you when they know weather is coming.

    A good partner will educate you on what the weather will mean for you and how you can better prepare. That way, you can focus on your other priorities and they can help come up with a game plan for you.

    How to Manage the Perfect Storm in the Trucking Industry

    So while the weather system we saw recently — along with the lingering affects of the global pandemic and the truck driver shortage — is abnormal, it doesn’t hurt to be prepared for something like this to happen again.

    You can do this by being flexible with your shipping time, being flexible with the equipment you ask your carrier to use to move your freight, prioritize what needs to go immediately versus what can wait and finding a proactive transportation partner.

    Like many things in the transportation industry, clear communication and proper planning will almost always lead to better results.

    Tags: COVID-19, Coronavirus, Truck Driver Shortage, Spot Rate Pricing

    Mark Andres

    Written by Mark Andres

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