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Home » Forecast says shipping costs will stay “sky high” through first quarter

Forecast says shipping costs will stay “sky high” through first quarter

Trend driven by price increases from parcel and LTL carriers, pricing leverage from truckload fleets, AFS and Cowen find.

AFS logistics Screen Shot 2022-01-13 at 12.17.27 PM.png
January 13, 2022
Supply Chain Quarterly Staff
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Sky high shipping costs are expected to continue into the new year with transportation spend rising to record levels in the first quarter of 2022 due to the combination of rate increases applied by parcel and less than truckload (LTL) carriers along with ongoing strong pricing power for truckload fleets, a new study finds.

The forecast comes from the January 2022 Cowen/AFS Freight Index, a quarterly performance snapshot produced by third party logistics provider (3PL) AFS Logistics and financial services firm Cowen Research.

The trend is driven in part by record-high general rate increases (GRIs) announced over the past year by parcel and LTL fleets, the report found. “The two LTL GRIs in 2021—one in February and another in November—was a double whammy for shippers,” Jason Seidl, Cowen’s senior analyst for Airfreight & Surface Transportation, said in a release. “This gave carriers significant pricing power and they’re leveraging it.”

Carriers gained that pricing power due to the continuing pandemic and robust demand, both conditions that are now expected to persist through the first quarter, the report found.

“Our data and forecasting models indicate that shippers should expect and plan for the higher costs from the last quarter of 2021—which included the peak holiday season—to continue into the first quarter of 2022,” AFS CEO Tom Nightingale said in a release. “It’s a perfect storm that’s led to rising shipping rates across the board. When you combine historically high GRIs with escalating surcharges, the usual mitigating factors such as reduced weight or shorter distance aren’t enough to counterbalance the carrier’s pricing power and the resulting higher rates.”

Trucking
KEYWORDS AFS Logistics Cowen Inc.
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