Executive Briefings

Tight Trucking Market Has Retailers, Manufacturers Paying Steep Prices

Retailers and manufacturers grappling with an unusually tight trucking market are paying the steepest prices in years to keep their goods moving.

Freight demand had been ticking up for months, closely tracking the strengthening U.S. economy. The market got a boost from retailers needing to restock stores and distribution centers amid the biggest jump in holiday sales since 2011. That wave of demand hit the trucking market just as a new federal safety rule kicked in, leading some drivers to idle their big rigs.

By the end of December, just one truck was available for every 12 loads needing to be shipped, according to online freight marketplace DAT Solutions LLC. That is the most unbalanced market since October 2005, after Hurricane Katrina, and compares with a roughly 1-to-4 ratio at the end of 2016.

Some companies are delaying nonessential shipments rather than scramble to find a truck. Others are paying a premium to ensure big rigs will be waiting at their warehouses when they need them. The cost to hire the most common type of big rig shot up to $2.11 per mile, including a fuel surcharge, in the week ended Dec. 30, a 3½-year high, DAT said.

“There’s a shortage of trucks available…there’s delays in shipping,” said DAT analyst Mark Montague. “Some loads that have to move [right now] are paying extremely high rates.”

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Freight demand had been ticking up for months, closely tracking the strengthening U.S. economy. The market got a boost from retailers needing to restock stores and distribution centers amid the biggest jump in holiday sales since 2011. That wave of demand hit the trucking market just as a new federal safety rule kicked in, leading some drivers to idle their big rigs.

By the end of December, just one truck was available for every 12 loads needing to be shipped, according to online freight marketplace DAT Solutions LLC. That is the most unbalanced market since October 2005, after Hurricane Katrina, and compares with a roughly 1-to-4 ratio at the end of 2016.

Some companies are delaying nonessential shipments rather than scramble to find a truck. Others are paying a premium to ensure big rigs will be waiting at their warehouses when they need them. The cost to hire the most common type of big rig shot up to $2.11 per mile, including a fuel surcharge, in the week ended Dec. 30, a 3½-year high, DAT said.

“There’s a shortage of trucks available…there’s delays in shipping,” said DAT analyst Mark Montague. “Some loads that have to move [right now] are paying extremely high rates.”

Read Full Article