Shipping and Logistics
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/9c756c9a19a52dfbdcc7362b7fb9562c.jpg)
Truck Shipment Delays & Higher Freight Rates Becoming the Norm
Written by Sandy Williams
April 24, 2014
SMU has been hearing anecdotal reports about difficulties with finding truck transport as companies try to catch up on winter weather delayed orders. The MID-SHIP Report has been reporting for months that truck availability is at a premium, mostly due to a shortage of drivers.
Comments we have been hearing range from product sitting on docks waiting for carriers to dramatic spikes in freight costs.
One service center we talked to had the following to say: “It has become a bid war for trucks right now. Sometimes we find that there is availability but all of a sudden that rate that let’s say might be $1000 for at truckload to go from service center to customers, all of a sudden asking for $1400, and in some cases we have to absorb it and in some cases we go back to the customer and ask how hot the truck load is and ask them to incur some of those costs too.”
Another said: “We had an interesting little twist thrown in getting a load in because a particular driver wouldn’t take it because he couldn’t get back haul set up to align with the stars to be the best situation for him. It changed the load by a day because of his backhaul abilities to fill the truck going backwards, and that is pretty independent thinking — but that’s the market place. I had another vendor tell me freight was up 25% in less than 30 days. That was told to me in the beginning of April.”
Just what is going on right now? Freight volumes surged 83 percent year over year for a single month record in February in the 18 year-history of the DAT North American Freight index as normal supply chains were disrupted by the severe winter conditions. On a monthly basis freight volumes were up 17 percent from February to March 2014. Flatbed loads rose 38 percent in March due to normal seasonal trends and pent up demand from delays due to recurring storms. Flatbed spot market rates in the week of April 13-19 ranged from $2.20 mile in Los Angeles to $3.70 per mile in Pennsylvania as capacity remained tight.
Demand for trucks has been high with the load to truck ratio the week of April 6 -12 at 39.6 loads per truck (down to 37.5 last week). In general, the trend has been climbing since October 2013 when the ratio was 9.3.
Heavy snow and ice delayed loads through most of the first quarter of 2014 and effects are still being felt said one Southern service center:
“The Northern weather patterns are having a trickle down affect on rest of country. The carriers are aware of the issue and they are definitely taking full opportunity to collect higher rates, especially for material coming into the ports. Ourselves and several customers I speak with routinely have told me of rates coming out of the East Coast, and even down in that Southeast area, where trucks are asking for premiums 70-85% over what their rates were just 12 months ago.”
In a February white paper, the American Trucking Association said that there are roughly 30,000 truck driving jobs available to be filled. Trucks move nearly 70 percent of all freight tonnage in the US utilizing over 3 million truck drivers.
ATA says that over the next 10 years the industry will require 97,000 new qualified drivers annually, almost a million new drivers over the ten year period. The shortage is due to an aging workforce that is retiring at the rate of 100 per day.
It has been difficult to attract younger people to the industry. When asked what is a causing the problem, a spokesperson from ATA told SMU, “Lots of reasons: new drivers have to get a CDL versus other blue collar occupations that don’t require a CDL (e.g., construction worker), which costs money. Time away from home. Pay must, and will go up. More regs from the feds, which bothers drivers. It is a very complex issue with no silver bullet to fix.”
Another problem that has been mentioned is new regulations by Federal Motor Carrier Safety Administration (CSA) on how many continuous hours drivers are allowed to work.
“Shippers will need to start looking forward in their supply chain planning to compensate for the hours of service now enforced by the CSA program,” said Damon Gunter, President, MoveTran LLC, a logistics company located in Baltimore. “We have had trucks sit outside our facility 6+ hours to comply with the CSA rules prior to getting loaded which is also impacting the flow of product.”
“We notice that our customers are having a hard time getting trucks to pick up product from our facility on time. We see rate increases by the trucking companies starting to impact shippers bottom lines.”
Gunter added that 75 percent of MoveTran product is brought in by rail and 95 percent leaves by truck. “Some of our customers are now looking at the possibility of moving their product via rail, a new source of transportation mode that many are not use to.”
That may not be as easy a fix as some may think. According to one railroad executive with whom SMU spoke over the past few days. It seems the railroads are also having their own problems related to the number of available railcars there are to move steel coils, “I believe there is indeed and industry wide supply issue with coil cars. Gondola’s and bulkhead flats tend to be more hit and miss depending on the RR. Some are fine and others with large fleets are struggling and everything in between. On coil cars, we are retrofitting standard gondola’s with cradles to help our situation. I don’t know of any new builds on coil cars at this time in the industry. Last I heard, it was around a 12-15 month lead time on new coil cars. They are not exactly getting the priority. Tanks and Auto’s hold that. So justifying putting that kind of capital down for business 16 months down the road based on the shortage over the last couple of month with all the winter issues I think would be pulling the trigger a bit early. That could definitely change sooner than later however.”
Stuck in the middle is the customer that just needs their steel…
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/sandy-williams.jpeg)
Sandy Williams
Read more from Sandy WilliamsLatest in Shipping and Logistics
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/canada.png)
CRU: Canadian government orders halt to rail stoppage
Canada’s government has ordered an end to the brief rail stoppage which had threatened to disrupt the movement of commodities.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/rail_transportation.png)
Union lockout shuts down Canadian railways
Two rail providers have locked out union workers at their operations in Canada.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/fist.png)
Labor woes threaten Canadian rail network
A work stoppage could hit Canada’s rail network as two rail companies have said they will lock out union workers on Thursday if no labor agreement is reached.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/05/port_indiana_pile_welding_2.jpg)
Maritime union warns of impending coastwide ports strike
The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) have just over two months left to reach a new labor agreement and avoid a strike at all Atlantic and Gulf Coast ports. However, with talks still suspended, ILA’s president says a strike looks more likely with each passing day.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Mississippi-River.png)
Flooding on the Mississippi forces lock closures
Flood-level waters have prompted the US Army Corps of Engineers (USACE) to close locks on the Mississippi River.