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capacity crunch

Roadcheck Week is Coming: May 4-6

Roadcheck week is a program created by the Commercial Vehicle Safety Alliance (CVSA) which will deploy inspectors across the country to ensure that commercial vehicles and their drivers are upholding the set safety standards. Every year, the CVSA chooses a focus for their inspections, typically based on the past year’s violations. Last year, in 2020, it was driver violations. This year, they will be focusing on the top vehicle maintenance issues and driver violations from 2020 which were vehicle lighting and hours-of-service compliance.  

CVSA President Sgt. John Samis, who is also with the Delaware State Police, said in a CVSA statement that there is an element of business as usual during Roadcheck Week. “The inspections conducted during the three days of International Roadcheck are no different from the inspections conducted any other day of the year,” he said. “Other than data collection, the inspection process is the same.

Shippers will need to take Roadcheck week into account when planning their freight movement.  

While Roadcheck week is an important safety measure to ensure unfit vehicles and drivers aren’t in operation (and a risk to the public) it does pose a serious issue in terms of how it affects the available capacity and market spot rates. Shippers will need to take Roadcheck week into account when planning their freight movement.  

2021 Inspection Criteria  

Inoperable lamps were the top vehicle violation in 2020, accounting for 12.24 percent of all vehicle inspection failures discovered for the entire year, according to the Federal Motor Carrier Safety Administration.  

Inspectors will also be checking the vehicle’s brake systems, cargo securement, coupling devices, driveline/driveshaft components, driver’s seat, exhaust systems, frames, fuel systems, lighting devices, steering mechanisms, suspensions, tires, van and open-top trailer bodies, wheels, rims, hubs and windshield wipers to ensure all meet the necessary specifications. 

For drivers, hours-of-service violations reached nearly 34.7 percent of all driver-related concerns. During the inspection, inspectors will check the driver’s operating credentials, hours-of-service documentation, seat belt usage and for alcohol and/or drug impairment. A driver will be placed out of service if an inspector discovers driver-related out-of-service conditions. 

Any vehicle found with a “critical vehicle inspection item violation” will be considered out-of-service, meaning the vehicle cannot be operated until the condition has been corrected and re-inspected.  

In light of the importance of COVID-19 vaccine transportation, any vehicle caring vaccines will not be held up for inspection, unless there is an obvious and serious violation that could be considered an imminent hazard.  

Successfully passing the inspection will earn the vehicle and driver a CVSA decal. During the three-month period that the decal is valid, both driver and vehicle will not be subjected to subsequent inspections. In light of the importance of COVID-19 vaccine transportation, any vehicle caring vaccines will not be held up for inspection, unless there is an obvious and serious violation that could be considered an imminent hazard.  

“CVSA shares the dates of International Roadcheck in advance to remind motor carriers and drivers of the importance of proactive vehicle maintenance and driver readiness,” Samis said. “International Roadcheck also aims to raise awareness of the North American Standard Inspection Program and the essential highway safety rules and regulations in place to keep our roadways safe.” 

Roadcheck Week Causes Volume Drop and Capacity Fluctuation 

While the program is designed to keep both truck drivers and other motorists safe, it also comes with an unintended consequence. During Roadcheck week, the Outbound Tender Volume Index (OTVI) drops precipitously, causing a shortage in both transportation volume as well as fluctuations in available capacity.  

In 2020, during the inspection blitz, OTVI fell from over 16,125 down to 13,628. The only other times during the course of the year it has been lower was over the Thanksgiving and Christmas holidays.  

Typically speaking as OTVI climbs, capacity gets tighter as it suggests that more loads are being tendered on a daily basis. That being said, a drop in OTVI would suggest more available capacity, but that may not be the case. As drivers and vehicles are flagged as out-of-service, the overall operational capacity, nationwide, could be affected. Given the immediate needs of the COVID-19 vaccine rollout, capacity is already stretched thin, especially for dry van and reefer units given the storage requirements of the vaccines. 

Many drivers prefer to avoid Roadcheck week altogether and opt to take vacation during this time which causes a temporary disruption in capacity and thins out the already shallow pool of available drivers.

Additionally, many drivers prefer to avoid Roadcheck week altogether and opt to take vacation during this time which causes a temporary disruption in capacity and thins out the already shallow pool of available drivers. With fewer available drivers and more shippers turning to the spot market to find available capacity, rates could increase 

Shippers, in particular, will need to keep a close eye on the OTVI during the beginning of May as it could affect both spot rates as well as overall transportation time. It is important that shippers begin considering their options now as Roadcheck week will soon be upon us. 

Shipping Challenges For The 2021 Produce Season

Volume increases in shipping can drive up rates and create challenging conditions in freight capacity. Under normal conditions, the strain on CPG shippers occurs tidally. Produce season causes disruptions, but occurs with a fair degree of regularity. Even if a carrier does not transport agricultural goods, the influx of produce to shipping can affect operations, capacity and costs. COVID-19 is a new factor in shipping volume. Therefore it is challenging to prepare already tight margins for additional freight volume.

Driver Shortages

LTL is estimated to be experiencing a shortage near 20,000 drivers. A lack of qualified drivers is one theory. Prospective employees deciding their pay is inadequate for the working conditions is another. HOS regulations, meant to keep drivers safe, have also eaten up revenue opportunities for the young and ambitious.

arriers, shippers and 3PLs will all have to work together to entice drivers back towards the industry.

Due to COVID-related closures, supply chain disruptions have increased driver detention, which costs both drivers and shareholders significant amounts of both time and money. The threat of infection has slowed enrollment for in-person training programs and made travel less appealing. Older workers may decide to retire rather than risk exposure as high-risk individuals. Currently, there is no standardized hazard pay for drivers working through the pandemic. Carriers, shippers and 3PLs will all have to work together to entice drivers back towards the industry.

Social Distancing And E-Commerce Sales

According to Zipline Logistics, “when carriers devote trucks to moving high crop volumes, the available capacity diminishes. This yearly phenomenon drives up rates and can affect your ability to book shipments in or out of affected and nearby states.” LTL freight has already entered 2021 with significantly higher demands. Quarantine has driven consumers to fill their carts online. Amazon remained ideally situated to support consumers during the pandemic with an efficient last-mile shipping model and obsession with customer service. Unfortunately, most other major carriers got caught in a capacity crunch. Border closures resulted in a bottle-neck of supply chains and forced some on-the-fly spot rate decisions. The shift from retail stores to individual homes for house-hold purchases put added emphasis on timeliness.

To stay ahead of the many challenges this produce season, freighters will avoid unnecessary losses by turning to 3PL providers for capacity foresight.

Carriers found themselves choosing between paying FTL rates for trailers that were not full and waiting on further LTL shipments. Companies that remain competitive with Amazon will have to change their operations to meet customer expectations amid the rising demands of e-commerce. Shoppers unable to go to a retail shop cannot absorb lengthy delays the same way as a box store can, and with Amazon offering same-day shipping in much of the country, they don’t have to. COVID-19 has exponentially accelerated a generational industry change that was already on its way. Amendments to a business model while running operations are a tall order for any company. To stay ahead of the many challenges this produce season, freighters will avoid unnecessary losses by turning to 3PL providers for capacity foresight.

COVID-19 Vaccine Distribution

We’ve seen that COVID has put pressure on carriers due to its effect on e-commerce trends. Labeled “Operation Warp Speed” by the United States Government, vaccine distribution adds another layer of urgency to shipping logistics. Vials from all approved sources currently require handling without any breaks in the cold chain. Vaccines are a part of the solution to COVID-related slowdowns in the flow of goods, but they also compete for refrigerated capacity.  Security concerns and the unstable nature of the COVID vaccine require constant monitoring, which means two-driver teams. Doubling drivers puts further strain on staffing shortages coming into produce season.

High demand means high value. Carriers who lose or damage shipments will forfeit contracts, profits and industry standing.

The shipment of fragile medical supplies also requires additional training for all who will handle them. COVID-19 is a matter of life and death, so the vaccine has a high demand. High demand means high value. Carriers who lose or damage shipments will forfeit contracts, profits and industry standing. According to information gathered by Heavy Duty Trucking, “WHO estimates nearly 20% of temperature-sensitive healthcare products get damaged during transport, and 25% reach their destination in a degraded state because of breaks in the cold chain”. Refrigerated freight specialists will need impeccable capacity logistics, highly trained drivers, well-maintained fleets and smooth transitions at both load-in and load-out to compete in Operation Warp Speed.

Carriers who possess both the experience and equipment needed to handle the vaccine roll-out is a small percentage of trucking. These companies will find themselves highly sought after as a part of the solution to a virus projected to have claimed 1 million Americans by May 2021.

Investing In Support

Factors such as driver shortages and a massive overhaul in e-commerce are sure to confound already challenging conditions. Investing in 3PL support is the profitable choice for fleets distributing any kind of temperature controlled freight this produce season. BlueGrace is connected to both national and regional carriers with refrigerated capabilities ready to handle your next load. Contact one of our experts today to learn more.

Understanding the Capacity Effects of the ELD Mandate

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Carriers in the trucking industry are still adjusting to the growing pains of the federally mandated electronic logging devices (ELDs) following implementation deadlines earlier this year. For many carriers, even with deadlines in the rearview mirror, there is still confusion around the details of the mandate. Even those who are fully intent on cooperating may not be confident that they are in full compliance, or which specific aspects of their operations even need to be in compliance. 

The fines, which went into effect in April, state that under Title 49, section 521, any driver or carrier who does not keep a Record of Duty Status (RODS) is subject to being pulled off the road and face a civil penalty of $1,000 to $10,000 for each offense. Even still, one-third of U.S. truck drivers still use paper logs to track hours of service, despite the federal mandate, says a new survey with 2,400 respondents from software-as-a-service (SaaS) company Teletrac Navman that provides GPS fleet tracking. 

But contrary to popular belief, fines are regularly being issued to carriers.

While there has been an industry narrative developing since news of the mandate emerged that the potential to face fines is more of a “boogeyman” scare-tactic than a real concern, the evidence tells a different story. But contrary to popular belief, fines are regularly being issued to carriers. Almost $32 million worth of fines had been racked up as of Feb. 28 and another $142 million as of Aug. 22, totaling at $174 million. 

Source: https://www.supplychaindive.com/news/fleets-not-using-ELD-data-survey/531410/

BlueGrace’s Brian Blalock, Senior Manager of Sourcing Strategy, and Raddy Velkov, Director of Trucking Operations, explain these fines’ effect on the nation’s trucking capacity, the lanes that are the most affected, and how to use mode optimization to respond to the situation in their webinar,“Response to the ELD Mandate”.

Blalock says that with trucks being taken off the road, shippers are experiencing a constriction of capacity, “which means things are becoming more and more difficult for us as shippers to be able to create good business plans, make good decisions and make sure our freight arrives on time and in full.” 

First, Blalock lays down how the ELD mandate affects different routes, i.e. local, short haul, tweener, and long haul.  

What Does the ELD Mandate Mean: Transit times, Capacity, and Rates 

Local (less than 100 miles): Runs that are under 100 air miles are considered not subject to the ELD mandate, so the segment of small carriers that operate entirely on a regional basis have been unaffected.  

Short Haul (100-450 miles) “As the mileage grows… there is more of an adjustment period due to the longer length of haul.” But if you drive beyond the 100-mile radius or take more than 12 hours to return to your home base, you are required to maintain a RODS.  

Tweener (450 – 800 miles) This category is the most affected by the ELD mandate, Blalock and Velkov explain. Smaller carriers that were running one- and two-day points illegally were able to charge shippers less because they were recording use of the equipment for one day, whereas the larger size carriers who were in compliance had to pay the true, higher amount. 

Once you’re inspected and ticketed by the DOT you are more likely to get ticketed or inspected again.

“Larger carriers… were compliant to run these two-day points,” Velkov explained. “Some of these larger carriers were already compliant for a lot of years, just due to the sheer size of their fleet.” Velkov added, “Once you’re inspected and ticketed by the DOT you are more likely to get ticketed or inspected again, so the carriers with larger fleets were getting inspected more than the owner-ops. with one or two trucks, so they wanted to adjust the playing field in this market space and be price competitive.”  

Long Haul (over 800 miles) The long haul runs are also affected by the ELD mandate, of course, but many carriers operating these runs were already in compliance. 

With the ELD-mandate changing business dynamics many carriers have made it their goal to minimize cost in order to reduce rates to stay competitive, but that’s only one piece of the puzzle.  

Analysis with BlueGrace 

If all of the conversations you’re having internally are about rates, you’re having the wrong conversation.

“If all of the conversations you’re having internally are about rates, you’re having the wrong conversation,” Blalock said, “because more of the cost can be driven out by better decisions than by any decisions that can be made to rates.”  Velkov and Blalock explain how businesses can use data to optimize their business models, using the metrics and analysis available with Bluegrace’s services. The process starts by looking at a full picture of the supply chain to understand the network and cost distribution. 

Shippers should internally ask questions like, which vendors are costing more money than they’re worth? Can I negotiate better dollar per pound rate with them? Are we losing money with this a specific vendor? Once you have a strong understanding of your current network and the costs associated with your vendors, you can begin to dig deeper by looking at various analysis offered by BlueGrace, such as the ship weight analysis, explained below.  

Ship Weight Analysis Report: This measure allows shippers to look at month-to-month based on average weights cost per pound per month to determine if there are any outliers. For instance, were there any particular times your company did better than others? 

There is a tendency to steer away from FTL because of cost, to shift to multiple LTLs, but this may not always be the best option.

“You’re not always looking for mistakes, but instances in which things were done considerably better,” Blalock commented. You want to understand the exact cost per unit, or as Blalock says, the cost to put each widget on the shelf. This will help you make smarter business decisions, for instance, whether or not to book full truckload (FTL) or less than truckload (LTL.) “There is a tendency to steer away from FTL because of cost, to shift to multiple LTLs, but this may not always be the best option,” Blalock said. You may be making the mistake of booking LTL thinking it is saving you excess cost, but if sixteen LTL booking costs you $200 each, versus paying for one $1000 FTL, you’ve just paid in excess of $2,200. 

How BlueGrace Can Help

With the ELD-mandate in effect and a capacity crunch in full swing, there is an industry-wide pressure to curb costs, but there is no reason to fold under the pressure. There are plenty of opportunities to save on costs waiting to be revealed. All it takes is a hard look at your business model.  To speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below.