Shippers and third-party logistics providers work hand in hand and they tend to agree on most things when it comes to the freight industry. However, what they agree on can have some degree of variance. While there usually isn’t a drastic swing one way or the other, it would seem that 3PLs have a slightly less optimistic view of the future, according to the Journal of Commerce. “Results from more than 200 shippers and third-party logistics service providers underscored a divide in how shippers and their logistics partners view the transportation landscape. In most cases, shippers took a more conservative view of how 2018 would unfold and that alarmed more than a few 3PLs. The survey reflected a market in rapid transition from a two-year downturn to more dynamic growth and tightening capacity,” The JOC said.
Tightening the Belt on Capacity
Capacity is one of the many differences in opinion that the JOC highlighted. Of course, more available capacity means better rates for shippers. The question is, does the conservative stance of shippers validate, or does it perhaps a make them a little naive?
In terms of statistics, the survey shows that 57 percent of shippers believe that capacity will tighten “considerably” over the course of the year. 3PLs, on the other hand, are at 71 percent. When it comes to the topic of already tightened capacity, the scores are a little closer with 44 percent of shippers and 51 percent of 3PLs believing that capacity is already tight.
Much of the capacity conversation has to do with the fact that the U.S. has suffered through a number of natural disasters over 2017. Back to back hurricanes drove up demand for freight as emergency supplies and construction materials were rushed to the sights where the storms hit the hardest. This is on top of an already nationwide surge in freight demand.
While the hurricanes might be over, that doesn’t mean that nature is done messing with the market.
While the hurricanes might be over, that doesn’t mean that nature is done messing with the market. Winter Storm Grayson helped kick off the new year with some extreme weather conditions. As a result, supply chains needed to respond quickly to deal with the oncoming rush of orders amidst the treacherous transit conditions.
3PL Insight on Rising Rates
The rise in rates is another point of debate between shippers and 3PLs. Logistics providers are more apt to see a rise in rates than shippers. Only 58 percent of the shippers surveyed believe that less-than-truckload rates are going to rise, as opposed to the 75 percent of 3PLs. For full truckload rates, the difference is even more drastic, with 66 percent of shippers and 86 percent of 3PLs believing there will be an increase in future rates.
The question is, are shippers being too conservative, or are 3PLs being paranoid?
Much of the rate increase is due to tightening capacity brought on by the additional need from the storms. The question is, are shippers being too conservative, or are 3PLs being paranoid?
The Effects of the ELD
The Electronic Logging Device mandate is now in effect and there are still a number of shippers who simply aren’t prepared to deal with it. The majority of 3PLs, 82 percent, believe that the ELD will have a negative impact on the industry. A third of that number believe that the impact will be moderate.
As for shippers, only 70 percent believe that the ELD will have a negative effect. Of that 70 percent, only 33 percent of those surveyed believe that the impact will only be a slight one. While optimism is usually a good thing, it can prove to be disastrous if shippers aren’t careful. With the ELD in effect and no chance of repeal on a federal level, the once potential punishments are now a very real risk that shippers will have to be ready to answer for if they’re operating outside the federal mandate.
Shippers who are going into this time of change alone have a lot more risks to face than those working with 3PLs as they could be caught off guard by the shift in the market.
The overall takeaway from the JOC survey is this: growth is more than just imminent, it’s already here. Demand is slowly beginning to climb and with it, the cost of operations. Shippers who are going into this time of change alone have a lot more risks to face than those working with 3PLs, as they could be caught off guard by the shift in the market. Between storms and national demand growth, it’s going to be a busy year for shippers and 3PLs alike.
Working with a 3PL like BlueGrace
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