Freight delays, port congestion, and capacity shortages continue as renewed consumer demand overwhelms and disrupts supply chains impacting B2B and B2C markets around the world. The COVID-19 pandemic hit the entire freight shipping lifecycle hard. Despite transportation growth rate edging 5 percent, shippers are rethinking contracts, looking several quarters down the road, wondering how to hedge their bets against unpredictable demand.
It's tough to plan when the freight industry is super busy when booking transportation space is tough at best and when capacity's tight. Making matters worse is the severe driver shortage plaguing trucking companies, which in turn impacts intermodal transportation. Inland hubs like Chicago, Dallas, Kansas City, and Memphis are all feeling the heat this summer. It's the perfect storm where logistical options are playing out in unprecedented ways.
Freight isn't moving and the delays are understandably frustrating. So it's not business as usual. But options like expedited shipping, less-than-a-truckload transport, hotshotting, and air freight are alternatives that can help keep supply chain disruptions at bay. But even LTL is running a couple of days behind. Having a logistical partner that understands the challenges is half the battle. As the pandemic continues to wind down, consumers are spending less on services and more on hard goods which means a surge in manufacturing production and shipping worldwide.
Cargo Saturation and the Driver Shortage
Cargo is being shipped at record volumes with unprecedented backlogs, according to the Journal of Commerce Online. Acres of containers sit unloaded. You can't transport if containers are being used for storage, so getting to the right place at the right time has been a logistical nightmare at many hubs and ports. And with the current drayage and chassis shortages, many customers are paying surcharges for circumstances beyond their control. The supply chain has a major kink in its armor--a decided lack of qualified drivers--and drivers are the glue that keeps supply chains moving and customers happy.
Truck Drivers are Aging Out.
Driver shortages continue as many CDL schools have closed due to the pandemic and as drivers near retirement age. In fact, the average age of truck drivers is 55. Unfortunately, there are precious few young people willing to take up the reins, even amid unheard-of incentives like double the typical entry-level salary for first-year drivers who will unload their cargo and the uber-flexible hours which today's young new hires demand. Until there's an uptick in hiring and retaining drivers, time-sensitive loads may have to resort to air freight and expedited shipping.
The Air Freight Alternative
With the shipping delays, drayage shortage, and the unrelenting capacity crunch, sending freight by air may the most viable option for shippers on tight schedules but aren't unduly hampered by budget constraints.
Ocean Freight Delays
The ports are inundated, and rollover rates have been staggering. The West Coast ports of Los Angeles and Long Beach queues have an average of 20 to 25 ships anchored in the bay, waiting an average of eight days to unload. The problem is that once they are unloaded there is not always a place for the freight to go. So, do you skip the port or weigh anchor?
Keeping Schedule Integrity
Planned blank sailing rates are up at various ports due to congestion. Since 2021 began, there have been 121 sailings to the West Coast canceled compared to just 21 East Coast sailings, according to Sea-Intelligence Maritime Analysis in a May article by the JOC. Unplanned blank sailings due to unforeseen circumstances like weather can be wholly necessary in order to maintain deadlines. Those are expected to happen now and again. This is where a lean-agile methodology plays a significant role--i.e. it's better to be proactive than reactive. Planned or unplanned, voids tend to leave shippers scrambling to find other shipping modes to get their freight from point A to point B on schedule and adjusting already constrained budgets. The problem remains that companies are having a tough time scheduling in the first place. Space is scarce. The average time it takes to book freight on a vessel can be over a month.
Featured Planning Tool
One cool tool to help companies keep the integrity of freight schedules on track is project44's free port visibility service, Port Intel™, which tracks and traces "functionality across 55 shipping lines, 700 seaports, and more than 5,000 vessels, processing over five million sailing schedule changes per day." Knowing what lanes are open, where the delays are and how to circumvent them can help facilitate planning for freight issues.
Getting Rid of the Bottlenecks
What used to take two to three days to unload now takes over a week. There's a global container shortage. There are not enough dockworkers. There are not enough trucks or drivers. Railcars and warehouse space are at a premium.
"It can take 8,000 trucks to haul the cargo away from a ship," Kip Louttit, executive director of the Marine Exchange of Southern California said in an interview with KTLA5 last March.
It is a catch-22, trickle-down situation. Use the trucks to haul the cargo away but leave the next ship without enough trucks to unload their freight. Another issue is that ships take longer to unload because capacity has doubled, even tripled, over the past couple of decades, some with a 10,000 TEU capacity. Even when drayage is available, there is no guarantee that intermodal cargo carriers can mount containers since chassis are in short supply. Storage fees are eating away at the budgets of smaller companies and frustration over the mounting volume of undelivered cargo remains as high as the stacked containers.
Many companies are considering shorter contracts instead of longer-term contracts, multi-year ocean contracts, and capacity alternatives geared toward mitigating equipment shortages and keeping rising rates down. The bottom line is that cargo demand has far exceeded available capacity and will for the foreseeable future. Aries Worldwide Logistics, your partner in transportation solutions since 1984, handles the details of your mission-critical freight whether by ground, air, or sea. Call us at 888-50-ARIES or connect with us online for a customized solution that will keep your supply chain moving in the right direction.