The United States is facing considerable logistics challenges in the temperature-controlled trucking industry.
The e-commerce boom and need for refrigerated equipment to move COVID-19 vaccines will tighten capacity across the country, and ongoing driver shortage issues will further exacerbate those challenges. The capacity strain on temperature-controlled units will be compounded by the domestic produce season, which will further tighten capacity while driving up freight rates. U.S.-based produce sellers, retailers and distributors will be facing an even more challenging produce season this year.
Rising e-commerce demand has caused a general disruption in all industries in today’s marketplace. Online shopping has been growing steadily over the past few years, and 2020 was a tipping point. E-commerce volumes skyrocketed due to lockdowns, with sales figures increasing by an astounding 44% over the course of 2020. The massive influx of e-commerce freight demand has caused staggering capacity shortages, especially throughout the holiday season.
To complicate matters further, the U.S. is still suffering from a shortage of truck drivers. The initial impact of COVID-19 caused a volume drop of almost 20% in the less-than-truckload (LTL) market, forcing many carrier firms to institute layoffs and downsize staff in order to keep their doors open. With the significant bounce back in the market, many carriers are scrambling to find drivers to fill seats, and most are doing so with limited success.
In addition to the driver shortage, there’s also the vaccine rollout to consider, as distribution of the vaccine will be a considerable undertaking in logistics and supply-chain capabilities. COVID-19 vaccines require below-freezing transit and storage temperatures.
Temperature-controlled trucking rates are expected to climb through the first half of 2021 and remain strong throughout the year as the vaccine rollout continues. The domestic produce season contributes to the rise in demand, and puts upward pressure on freight rates.
While capacity consumed by the vaccine is temporary, the driver shortage and e-commerce growth will remain pervasive issues. In order to stay abreast of the volatility of the freight market, shippers should be looking toward strategies to minimize service disruptions, risks and costs. Transportation management systems (TMS) and third-party logistics providers (3PLs) can be valuable assets to help manage the current market volatility.
Shippers will struggle to maintain freight budgets as the market continues to fluctuate and capacity crunch worsens due to the ongoing driver shortage. If shippers begin preventative maintenance now, they can structure their supply chains to be more resilient, allow them to operate at peak efficiency during these unprecedented times.
The freight market will eventually stabilize, once pandemic restrictions have been lifted fully. However, the growth of e-commerce is expected to continue, as consumers have adapted to the “new normal.” Shippers need to be aware of continuing strains on capacity, especially in last-mile sector. Organizations that make investments in higher visibility and supply-chain optimization will ultimately be the victors when the dust has settled.
Jonathon Swart is director of sales at BlueGrace Logistics.
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