3PLs offer shippers ‘untapped capacity’
As shippers continue to grapple with finding available trucking capacity across the nation, third-party logistics providers (3PL) say they can help ease these burdens in an increasingly challenging market.
The trucking industry’s driver shortage does not seem to be letting up, despite companies offering such incentives as higher pay to attract and retain drivers. Drivers are having to deal with the challenges of finding truck parking and added stress from the electronic logging device mandate.
Maggie Turner, a national account manager at AFN, a Niles, Ill.-based 3PL, said there has been increased demand for capacity due to the lower tax rate, which has fueled spending.
Carriers also have been “front-loading” cargo in the run-up to the effects from tariffs, meaning they are having goods shipped earlier than they normally would, Turner explained, adding that this trend is driving up costs.
“This is creating an additional carrier capacity crunch, because not only do you have the beginnings of holiday season shipping at this time of the year, but now we have additional capacity demand due to front-loading,” Turner said. “Container rates are climbing, and we anticipate that spot market rates will steadily increase through the end of the year.
“We believe that ports like Savannah and Los Angeles will continue to see increased action. We’re also seeing shippers add more volume and product to their containers with the goal of shipping smarter and getting the most value for their money,” she said.
Pursuant to USTR’s Section 301 investigation that was completed in March, the United States on July 6 implemented a 25 percent tariff on goods from China totalling $34 billion in annual import value. On Thursday the second tranche of Section 301 tariffs took effect, with the United States implementing 25 percent tariffs on goods from China with an annual import value of $16 billion.
The USTR is holding hearings, which started Monday and end this coming Monday, to get comments on the proposed third tranche of Section 301 tariffs on goods from China totalling $200 billion in annual import value. The Trump administration originally proposed a 10 percent tariff rate for the third tranche of Section 301 tariffs, but more recently, USTR has considered implementing a 25 percent rate.
Turner said 3PLs can help “soften the blow” for shippers, helping them find that available capacity and helping them to become a shipper of choice.
Founded in 2003, AFN last month opened a downtown Chicago office to serve the needs of its growing customer base. AFN has around 250 employees and plans to bring 85 jobs to the greater Chicagoland area in 2018, with its new office able to handle up to 70 team members, the company announced last month.
In regard to helping shippers, Turner said, “AFN’s role is to bridge the gap and connect our shipper customers with the untapped capacity that is available from the smaller carrier market.”
Overall, 60 percent of all carriers are owner-operated; 30 percent only own between two and five tractors, while larger carriers actually make up only about 1 percent of trailer capacity.
“In a market where capacity is tight, shippers need all the inside knowledge they can possibly get,” Turner explained.
With the driver shortage, shippers also are trying to become more enticing to secure capacity with carriers. Shippers are more appealing if they can provide easier parking solutions for carriers, especially since parking is an issue throughout the nation, not just in big cities, according to Turner. She said 3PLs use carrier knowledge to save shippers’ bottom lines amid shifting market conditions by advising on driver break locations to avoid incremental costs like parking tickets, implementing drop-trailer programs to save drivers time and working with shippers to reduce wait times at the dock, with tactics like preloading trailers and planning around peak loading hours and dock capacity.
“AFN is seeing a huge increase in truckload volumes and anticipates that will continue through the end of the year. Tariffs are creating some unique capacity challenges, not unlike those we’d see resulting from a hurricane. This earlier-than-usual increase in demand creates a ripple effect across the market,” Turner said. “Shippers that source directly from China are feeling these effects more acutely.
Many shippers already weathered a budget ‘crisis’ in Q1 of this year from the ripple effects of ELD implementation. We are focused on helping our shipper customers plan ahead for what we believe will be another challenging quarter.”
Todd Tranausky, senior transportation analyst at FTR, a freight transportation intelligence firm, said, “Shippers are in an extended period of difficult conditions because of a tight truck market and subpar rail service. While conditions are expected to stabilize, there is unlikely to be a significant improvement for shippers before the end of the year.”