After enduring a 2018 marked by tight capacity and increasing freight costs, U.S. shippers are anticipating a slump in freight movement in 2019, an industry study shows.
While supply chain operations last year were generally boosted by a consumer recovery that began in 2017, they were also hindered as the trucking industry adjusted to the electronic logging device (ELD) mandate that went into effect in late 2017, according to the "4th annual State of the North American Supply Chain Survey," produced by Cookeville, Tenn.-based freight transportation and supply chain management provider Averitt Express.
Based on responses from more than 2,300 individuals from across North America, the survey was designed to gauge the challenges faced by shippers in 2018 and to gain a better understanding of their outlook for 2019, Averitt said in a Jan. 31 release. The full report is available online.
In a nutshell, the results showed that shippers in 2018 faced  diminishing long-haul freight capacity, triggered by a continuing shortage of professional over-the road-drivers and increasing regulations within the transportation industry.
By the numbers, more than a quarter of shippers surveyed encountered issues with capacity, marking a nearly 7 percentage point increase over the previous year's results and more than double the results from 2016. Under the pressure of insufficient supply, shipping rates increased, with nearly half of all respondents saying rate increases were an issue in 2018 ... a 7.5 percentage point increase from the previous year.
Measured by its impact on full-load shipments, those trends caused a rise in problems with on-time service, 42 percent of respondents said, marking a 6.6 percent increase over last year. In response, an increasing number of shippers turned to non-standard services—such as expedited delivery—to move freight through their supply chains.
With no long-term solution to those puzzles in sight, shippers are looking at 2019 with wary eyes, especially as they see growing hurdles with trade and tariff policies, Averitt found.
"Factors including sinking oil prices and higher interest rates have given economists a more subdued outlook for 2019. Less investment in business growth is expected throughout the year as more businesses seek to protect their 2018 gains," headlined by the Trump administration's $1.5 trillion tax cut package, Averitt said.
"Additionally, short-term uncertainty over the state of trade relations has only added to business anxieties going into 2019. Toward the end of 2018, many businesses focused on increasing their imports to avoid increased duties on Chinese imports that are expected to go into effect in the first quarter of this year," the report found.
Those concerns come in an atmosphere where historical trade relations are being upended as the U.S. and U.K. challenge decades-old deals, ranging from Brexit to the North American Free Trade Agreement (NAFTA) and China-U.S. agreements. Asked how trade tariffs impacted their businesses in 2018, 54 percent of respondents were unsure, 41 percent saw negative effects, and a scant 5 percent reported positive impacts.
Averitt's own business is not immune to the challenges highlighted by its survey. The company recently said it was putting resources into an effort to ramp up its share of the fast-growing e-commerce market. In January, the firm opened the first in a series of distribution and order fulfillment facilities planned to address rising demand by e-commerce shippers to place their inventory closer to key markets.
Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing