Freight capacity challenges from the first half of 2021 will likely continue into the second half of the year, according to a forecast from third-party logistics (3PL) and supply chain solutions provider Transportation Insight.
The Hickory, North Carolina-based firm creates a quarterly report examining trends and providing multi-modal transportation and logistics management insight across full truckload, less-than-load (LTL), small parcel, international, and brokerage environments.
Conditions will remain tight across the major transport modes, including small parcel, less than truckload (LTL), truckload, and international ocean routes, the report found.
Looking into the third quarter of 2021, capacity constraints for small parcel shipments will become even more pronounced ahead of the holiday peak, as both the UPS and FedEx Ground divisions will likely limit capacity to maintain service levels and remain profitable, Brian Broadhurst, Transportation Insight’s vice president of parcel SMB Solutions, said in a release.
Likewise, less-than-truckload (LTL) traffic will see a continued capacity crunch and possible rate increases. “Conditions are unlike anything the market has experienced. Many major carriers are not accepting new business. Fuel surcharge averages are trending upward to 22%,” Transportation Insight’s vice president of pricing services, Chris Mendenhall, said in the report.
The truckload sector also faces a variety of capacity issues and rate increases, and truck and driver shortages are contributing to astronomical spot rates—already up 61% on average across all equipment types and set to rise even higher. “All indicators point toward a full truckload environment with tighter capacity and elevated truckload contractual and spot rates continuing to [the] third quarter,” James Mathews, Transportation Insight’s senior director of truckload procurement, said in the release.
Finally, international ocean shipping disruption will continue through peak season. Port congestion on the U.S. West Coast is slowly improving, but shipping costs that are already at historically high levels, will increase “in a substantial way” over the quarter, the firm said. And demand for air freight is also on the rise, driving up costs as capacity issues build.
Capacity demand is driving up over-the-road transportation rates. Parcel carriers are already prepping new peak season charges. Fuel costs are increasing everywhere. What’s next?— TransportationNsight (@TransprtInsight) July 1, 2021
Read our updated Transportation Rates Forecast for an exclusive look ahead. https://t.co/K3pu47oslx pic.twitter.com/a85unn6Ypk