With 2020 nearly gone and companies reviewing their 2021 truckload (TL) budgets, we see many changes coming to trucking costs and freight volumes in the year ahead. Some of the following trends are ongoing, while others bring new challenges:
Low capacity at year-end 2020 going into 2021
According to Fleet Owner magazine, while 2018 set a record in Class 8 truck orders, truckload capacity contraction will likely continue. More small carriers and even some larger carriers are failing. Transportation analyst firm Stifel predicts that in 2021, shippers can expect a 5-7% increase in truckload rates and 3-4% in fuel rates (~8-10% increase for freight budgeting).
Importance of managing transportation costs—especially truckload costs
Minimal TL capacity has been a massive part of the soaring shipping costs that will continue into 2021. Drivers are now at home doing remote learning. Smaller fleets are not adding capacity, and carriers, in general, are dealing with reduced driver numbers due to the Drug & Alcohol Clearinghouse implementation, trucker retirements, and fewer new drivers joining the workforce. Meanwhile, truckload spot prices are expected to surge. Some shippers are considering contract bids but need to understand that the market is driving higher costs.
Changing consumer buying behavior counterbalanced by stimulus funds
Consumer demand spiked in 2020, with a sustained shift to digital shopping and a move towards “Buy Online, Deliver from Store” (BODFS). The second round of 2020 stimulus checks and holiday spending may ensure consumers keep up the buying habits they have acquired in 2020. Meanwhile, e-commerce and rapid consumer delivery expectations will continue to impact freight costs and availability.
Continued shifts in freight modes, types, and destinations
The speed and frequency of freight moves across domestic and international markets have changed as we head into 2021. With COVID-19-related demand, the movement of essential goods will still trump that of non-essential goods. But destinations have also changed, and big-box lanes have surged. Meanwhile, freight has shifted from ocean to air and from truckload to intermodal, with increased parcel shipping. Experts expect intermodal volumes to help compensate for truckload volume squeezes.
Inconsistent regulatory and tariff environment
With a new administration coming into office in early 2021, U.S./China regulatory issues will not get ironed out for months, if not years—impacting freight flows for the foreseeable future.
There’s undoubtedly more uncertainty in 2021. But tighter truckload capacity will drive higher truckload rates across the board for shippers. Learn how the Axele transportation management system (www.axele.com) supports better visibility to optimize your operations, provide a one-stop-shop to run your business, automate your day-to-day manual tasks, and help you find the most profitable loads through optimization.