Transportation Industry Update: Q1 2018 Quarterly Industry Report
By: Frank McGuigan, CEO, Transplace
Three months into 2018, the transportation industry has already observed a number of rapid developments and heightened challenges faced by shippers and carriers alike. From a marketplace standpoint, it’s no secret that there is currently an abundance of demand and not an abundance of supply. Truckload and LTL contract rates are trending upward, and though the upward trend of spot market rates has leveled, they remain up as much as 30% year-over-year on a per mile basis, having a deleterious impact on shippers’ budgets. As we head into produce season in Q2, we expect the supply/demand imbalance to remain.
Given the current state of the market, it is critical that shippers remain close to their logistics network. Proactively managing routing guides by using data and analytics will enable recognition of underperforming tender acceptance in lanes/regions and drive a swift sourcing action to bolster underperformance. Further, by using historical data to better predict when/where shortages will occur, shippers can then dictate procurement requirements impacting carrier choice, lane depth etc., as well as drive better utilization of the trucks that are already in the network. Last, all of this can and should be automated with the right TMS to drive operational improvement on a daily basis.
The Right Industry Information to Drive Ongoing Success
In addition to staying close to your logistics network, it is important to understand the impact of external economic factors on the freight market. For example, in Q1 of 2018, retail sales growth has slowed and the automotive segment is no longer growing – however, manufacturing is strong, with the Manufacturing Index currently at 60.8. We expect that this strength will continue to absorb excess capacity and elongating the current supply/demand imbalance.
As part of our efforts to keep shippers informed on these market fluctuations and trends, Transplace provides a quarterly industry recap to share insight into the current transportation landscape – and help shippers glean actionable steps to succeed in the current climate. This quarter’s report includes information on:
- Fuel prices and the short-and long-term outlook for diesel
- Current capacity conditions and truckload rates
- Intermodal and rail traffic trends
- A look at the economy and vertical market conditions
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