U.S. Trucking, the Congested Road to Balance in 2019

U.S. Trucking, the Congested Road to Balance in 2019

2019-04-03T18:18:56+00:00April 3rd, 2019|Domestic, Export, Import, Shipping News|

The shipping market may have finally softened after almost a year of tariff increases and U.S. government trade programs wreaked havoc on inventory levels as companies rushed to import additional product and maintain service levels to consumers.  But the mad rush for warehousing, intermodal, and equipment left domestic trucking carriers holding a huge problem while trying to walk a delicate line between delivery expectations and pricing realities.

Effective December 18, 2017, the Electronic Logging Device (ELD) mandate, part of the Moving Ahead for Progress in the 21st Century Act (MAP-21) transportation reauthorization bill signed into law in 2012, effectively placed significant limitations on the hours of service (HOS) domestic carriers would be available, further aggravating an existing driver shortage.

With less capacity available for truckers and demand increasing from tariff pressures, the market began shifting to accommodate a new normal. Domestic carriers could now begin increasing rates and asking for driver-facing initiatives such as bathroom privileges and basic waiting courtesies.

Meanwhile, ports started to feel the impacts of inventory front-loading as critical changes to intermodal routes for inland deliveries, limited trucking hours, and mega-vessel deliveries began compounding problems across major U.S. gateways such as Los Angeles and New York.  Mega-vessels began delivering twice as much volume to ports every time they called, leaving a slew congestion in their wake.

Truckers, now limited in hours of service, were also forced to deal with chassis shortages, positioning, and equipment displacement.  Domestic drivers saw their profit go out the window as they sat waiting at port complexes and turned around less containers per day.

ACCESSORIAL CHARGES

Enter accessorial charges.  As reduced capacity started to impact service, consignees expanded their expectations, blaming drivers for late deliveries, instead of the overtaxed port systems, ocean carriers, or their own inventory capacities.  Truckers, desperately trying to manage their revenues, began issuing accessorial charges for waiting time, weight, delays, and specialty maneuvering.

Unfortunately, as consignees effectively saw this as another ploy at a rate increase, trucking companies adamantly began to work on more creative solutions that could keep both sides satisfied.

MOST COMMON ACCESSORIAL CHARGES
  • liftgate
  • re-deliveries
  • re-classification (LTL)
  • re-weighing (LTL)
  • inside deliveries
  • loading/unloading overtime
  • detention & demurrage

FINDING BALANCE

Some carriers have simply limited their delivery radius to below the 500-mile mark in order to ensure a same-day delivery, while others have begun trying alternative moves such as local transloads and specially timed drop-and-picks that ensure drivers bring empty equipment back to the port.

While the U.S. market struggles to find balance at congested terminals, domestic truckers, as the final-mile carrier, are forced to bear the brunt of the backlash.  Consignees should work closely with freight forwarders, ocean carriers, and ports to coordinate solutions and keep consumer cargo flowing.

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