As we watch the news pour in regarding Coronavirus and walk into stores to see products flying off the shelves, it is imperative that shippers and carriers start thinking about the impact this is going to have on the domestic trucking markets. Large events and schools are already being cancelled, and the talk of mass quarantines are beginning to be the topic of conversation.
China was hit hard when the outbreak hit, but we are already starting to see that manufacturing is up in the region. The Port of Los Angeles has been affected with the slow down, but an increase is imminent. Drivers are weary of heading into populated areas, leaving shippers wondering how they are going to be able to keep up with demand as usage increases in many verticals.
Analysts are predicting that the chaos is going to lead to an increase in spot activity and pricing levels that will be similar to the 2018 trucking market. With 30% increases in pricing on the horizon, utilizing technology to manage capacity will be essential. Ensuring that an organization is managing their current capacity appropriately while tapping into other capacity that is positioned to handle their supply chain needs in the near future is necessary.
“Drivers are weary of heading into populated areas, leaving shippers wondering how they are going to be able to keep up with demand as usage increases in many verticals.”
FreightWaves reported that, “Panic buying is causing an unprecedented surge in domestic freight volumes. The outbound tender volume index is now at 11,224.85, which is the highest point in its three-year history. After surging 6% last week, OTVI is up another 7% since then. Two weeks ago, we predicted a jump in volumes from a typical “March bump,” but we did not properly forecast this type of rise. This surge is not typical, nor will it last. But for now, carriers are in a position to reject contract loads to test the spot rate because shippers are reeling to restock goods as fast as possible.”
Other analysts, such as David Ross with Stifel, are predicting that sometime this year, the increase in volumes now and the re-stocking effort is going to create problems for capacity management. “We expect transport pricing growth to stay soft near-term, but we’re watching capacity exits and a potential re-stocking event to drive rates higher again at some point this year,” wrote Ross.
“…tapping into all capacity available will be the key to mitigate the risk of supply shortages or skyrocketing cost.”
A platform, like the Emerge Digital Freight Marketplace, is the first line of defense against market volatility. Managing capacity in one place, as opposed to spreadsheets and emails, while tapping into all capacity available will be the key to mitigate the risk of supply shortages or skyrocketing cost. Emerge is at the epicenter of a significant shift in supply and demand, resulting in supply chain disposition and grappling uncertainty in the domestic truckload market.
The Emerge team is composed of industry thought-leaders ready to help talk through your capacity challenges in these chaotic times. Please don’t hesitate to reach out to set up a consultation to discuss your capacity struggles so we can help you navigate the market and help your company remain above water.