Freight Rate Woes

Market factors and a new government mandate make getting your product to market more costly.

If you’re concerned that increasing transportation costs are impacting your bottom line, you’re not alone. According to Greg Keys, Director of Logistics and Warehousing for Gamer Packaging, trucking rates since the end of summer 2017 have trended to a level not seen since the mid-1990s.

What is causing the spike in trucking rates?

According to Keys, much of it can be boiled down to supply and demand. “Excessive demand for available fleets results in increased prices,” he explains.

Driver shortages, the nation’s robust economic growth, increased global economic activity, inclement weather and even the recent wild fires are a few of the market forces at play. In response to the tight truckload capacity, fleets are ordering more trucks and putting major bonuses and pay raises in place to draw more drivers. As shippers and carriers adjust to a new normal, says Keys, “It’s definitely a carrier’s market right now.”

Another factor impacting trucking rates is a new federal rule that requires all truck drivers to automatically record hours of service and related driving data through an electronic logging device (ELD). Slated to be fully implemented by April 2018, the ELD (or e-log) Mandate has left many shippers wondering how the regulations will affect truck capacity, rates and service levels.

Already some smaller fleet operators have exited the industry due to increased technology costs and a steep learning curve, as well as the impact the mandate will have on pay as electronically tracked drivers are forced to comply with strict hours of service limits. In one survey of over-the-road truckers, 71 percent of independents and small fleet owner and operators said they would quit before complying with the ELD requirement, although long-term impacts are yet to be known.

How can you minimize impact to your business?

Although it’s difficult to predict how long freight rates will stay elevated, Keys does not see much relief over the next few months, particularly as the ELD Mandate is fully implemented. However, there are ways you can minimize the impact to your business:

Schedule in advance. Proactive planning enhances your ability to find favorable carrier rates.

Be mindful of current weather conditions. Hurricanes, winter storms and wild fires have hit the country hard in recent months. Consider the snowball effect these events can have on trucking routes and capacity.

Be flexible with pick-up and delivery dates.

Consider rail as an option. Again, advance planning is essential, considering rail requires additional transit days.

Partner with Gamer Packaging through the uncertainty. “No matter what external forces are driving the transportation industry, we are committed to working alongside our customers to meet their deadlines and successfully deliver their products to market,” says Keys. He cites Gamer’s use of TMS, a transportation management program, as one strategy employed to provide customers the best service and most competitive rates. “It’s all about building trust and going the extra mile to provide the value our customers demand and deserve.”

Learn more about our logistic and warehousing options here!