ChainLink Solutions will continue to monitor all market trends and forces to provide customers the best possible logistics solutions to exceed all expectations and deliver on-time, in-full services. Please reach out to us directly or by email to receive a quote or service packet.
Supply and demand
Supply summary
- 3.5% Y/Y growth in the U.S. Class 8 tractor fleet for 2021 (e.g., for-hire, private, LTL, parcel, etc.). Source: ACT
- Nearly all growth will come in the second half of 2021 due to the semiconductor industry shortage currently limiting tractor production.
- Contraction in two key labor pools to trucking—21-year olds and 45- to 65-year olds—will be a challenge for years to come. Source: U.S. Census Bureau and ACT
- Anecdotal insights suggest that stimulus checks and extended unemployment benefits are keeping some drivers out of workforce longer.
Demand summary
- Federal COVID-19 stimulus programs contribute cash and goods to the economy.
- Retail inventory restocking will take most/all of 2021 to return to normal.
- Housing industry strength is key contributor to freight demand.
- Industrials/manufacturing return is also adding to freight demand.
Spot market, committed market and capacity insights
We recommend preparing for tension and volatility. Expect seasonal movement in truckload pricing with the year-end offering at a higher cost per mile than today.
Ocean and air import volumes impact North American surface transportation
Loaded ocean containers in North America have not been unloaded and returned to Asia at the same pace as they were coming in, creating capacity issues in Asia and rapidly rising pricing. There is a similar situation with intermodal and truck trailers. Loaded trailers are trapped at businesses, keeping them out of rotation.
The current ocean environment offers these insights:
- Ports of Los Angeles and Long Beach continue to experience 20-plus vessels anchored, waiting for unload, which will create heavy demand for truckload, intermodal, and LTL for the foreseeable future.
- Retail inventory replenishment is central to the forecasted volume growth as retailers strive to get back to normal inventory to sales ratios.
- Ocean carriers are systematically limiting containers that move into inland locations due to lack of locomotive power and lack of chassis supply at inland ramps.
Global air services are not immune to market tension. Los Angeles and Chicago currently face significant demand and congestion. Expect longer turnaround time before freight is made available by the airline as well as longer lines for truck drivers waiting to recover cargo.
Proactive planning with ample lead time and annual commitments can help secure the best price and capacity for the next 12 months.
LTL & Consolidation
LTL tonnage forecast
Demand forecasts for LTL are robust with Q2 at 7.5% growth quarter over quarter. Year over year growth for 2021 is at 9.9% according to ACT Research.
Like truckload, LTL has a smaller fleet that is striving to add some capacity. Key to volume the past 12 months has been ecommerce middle mile transport. As industrials return, LTL carriers will send pricing signals of what freight they want and don’t want, as there are freight options to choose from.
The North American LTL network has evolved to meet ecommerce opportunities, whereas the industrial sector leans a bit to the Midwest and often provides good palletized freight. Expect LTL carriers to adjust pricing in ways that help them achieve a freight and lane mix that brings increased balance and yield assurance.
- California Eastward lanes are experiencing the greatest delays associated with high import volumes.
- Transactional shippers may be struggling with certain carriers. C.H. Robinson offers a portfolio of LTL carriers to help shippers secure capacity.
- Carriers are declining large shipments. Consolidation in the middle mile can help serve larger partial load shipments.