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High demand keeps lid on trucking capacity
Truck capacity may be loosening in some markets, but it is not abundant universally. Constraints on the addition of new capacity will keep pressure on U.S. contract rates despite the spot market price correction this spring.
For-hire trucking tonnage dropped in April from March, but stayed at a level much higher than the peak of the 2017-18 cycle in May and likely rose in June. We are not seeing signs of a steep drop in demand as of now.
Truck capacity may be tight or loose – or both, depending on your business. One thing that is sure is truck capacity is complicated. Beyond pure supply and demand, the number of constraints on capacity is rising.
The cost of equipment is rising, as is the cost of trucking insurance. These higher costs are leading larger trucking companies to abandon market-based pricing that follows spot rates in favor of “cost-plus” pricing. Carriers know how much it costs to operate a truck and they know what their margin requirements are.
Companies need a transportation spend management plan that can adapt to events as they happen. That means more analysis of potential “black swan events,” and more collaboration with carriers.
LA-LB truckers push for action on empty returns
Truckers serving the ports of LA and LB say restrictions on returning empty containers to terminals are an unfair burden put on them by ocean carriers. They said it also has a knock-off effect of adding to port congestion and the spiraling costs of container shipping.
Harbor Trucking Association CEO Matt Schrap, in a letter to the FMC and Biden Administration, said his group’s 400 carrier members have had difficulties returning empties to West Coast marine terminals since the advent of container alliances.
The HTA’s letter follows on the heels of Maffei’s statement that the agency plans a deeper investigation into how ocean carriers handle empty container returns.
Schrap said about 87,000 empty containers are lingering at the LA and LB ports, including near-dock depots for empties, while more are sitting at trucker yards or other sites across Southern California.
When a motor carrier cannot return an empty, they hold onto it or rent space at a yard to store. Schrap said motor carriers have tried to bill ocean carriers for the use of chassis and yard space for storing empty containers, but to no avail.
Empties sitting on chassis mean the equipment is not available to retrieve import loads, Schrap noted. That, in turn, means shippers must pay more demurrage at terminals and adds to the backlog that needs to be cleared out from the ports.
About O’Neill Logistics
O’Neill Logistics is a leading 3PL with operations in Rancho Cucamonga, CA; Savannah, GA; and Newark/Monroe, NJ. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.