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3PLs offer shippers ‘untapped capacity’

3PLs offer shippers ‘untapped capacity’

As the second half of 2018 unfolds, shippers are presented with compounding challenges as the holiday season approaches. The truck driver shortage is showing no signs of loosening, lower tax rates have fueled consumer spending, and the tariffs imposed on Chinese goods are spurring manufacturers to stock up on imports in order to get ahead of the presumed price increases, all of which are driving truckload capacity constraints.

In the recent American Shipper article, “3PLs offer shippers ‘untapped capacity’”, Maggie Turner, National Account Manager at AFN, delves into the complexities of the market and shares insight on how shippers can successfully navigate this uncharted territory. Turner discusses how shippers have found new ways to make themselves a ‘shipper of choice’ and tap into available capacity by working with a trusted 3PL to gain access to smaller carriers.

Please read the article to find out more.

 

To learn how AFN can help you access untapped capacity, contact our supply chain professionals today.

As US demand rises, 3PLs see margins squeezed

January is nearly over, and while there are some indicators that the truckload freight market has plateaued after a roaring and record-breaking 2017, there has not been as of yet a return to “normal” volumes and rates.

In this environment, it is imperative that shippers and logistics providers develop “a strategic partnership rather than a transactional relationship,” as Rachal Snider, AFN’s Vice President of Customer Supply Chain, explains in this recent article from The Journal Of Commerce. For more market insights, please read the article at JOC.com (subscription required).

 

Please feel free to reach out to AFN at info@afnww.com with any questions.

Short-term Truckload Rate Outlook

Truck capacity headwinds will continue to pressure rates higher as we head into the Q4 retail season.

Per DAT, the national average van rate reached $2.09 per mile last week.  The last time the average van rate was that high was December 2014.  National average rates for reefer and flatbed are also at multi-year highs.  Overall capacity remains very tight, which has driven van load-to-truck ratios to the highest levels in 7 years.

More freight is hitting the market, while rebuilding efforts continue in the hurricane-stricken areas – exacerbating the capacity crunch being felt nationwide.  In addition to these challenges, carriers are faced with a highly competitive job market in which drivers are being lured to opportunities in construction and the energy sector.  

Rate pullbacks are not expected anytime soon, so it is to shippers’ advantage to secure capacity early and lock in rates as a hedge against future increases.

 

National Spot Rates: Van, Flatbed, Reefer from 9/16 - 10/07

Source: DAT

Fall Crop Harvest Impact on Capacity

Per the USDA crop harvest progress report published last week, the corn and soybean harvest is off to a slow start.  Overall, only 17% of the corn crop is harvested, which is well under the typical annual average of 26%. Illinois and Indiana lead with the most complete corn harvest rates at 21% and 16%, respectively.  Progress is much slower in Michigan, Iowa, South Dakota, North Dakota and Wisconsin, all of which are reporting less than 8% of the corn harvest completed.  The shift in harvest-related capacity demand later in the month coincides with the ramp-up in capacity demand for retail shippers pre-positioning inventories for the holiday shopping season.

Diesel Fuel Price Expectations

The US average on-highway diesel fuel prices decreased slightly to $2.78/gal last week, vs. the last week of September.  Diesel prices are about 40 cents higher than 1 year ago.  Gulf coast refiners are back up and running following the post-hurricane disruptions and will ensure adequate supply stocks.  As a result, diesel prices should be fairly stable over the next few weeks.

Mitigating The Impact on Your Supply Chain

As capacity tightens and rates increase, now is the time to work with your 3PL provider to plan ahead for the end of 2017 and beyond. For more thoughts on ways shippers can thrive in the current market, please see 3PL: Shippers will need to look beyond lowest cost.” As always, please feel to contact us at AFN to discuss your needs. Our team is happy to help.

 

3PL: Shippers will need to look beyond lowest cost

Freight capacity and demand could be a boon for the right carriers- and a challenge for 3PLs and shippers.

Market factors converging over the summer that have affected freight movement and pricing could continue, and are putting some pressure on third-party logistics providers. As a result,”…[suppliers and shippers] are going to start going with carrier partners that have proven they have a higher level of service and on-time delivery percentage,” said Rachal Snider, vice president of customer supply chain for AFN. “Those carriers may have a higher price point, but sometimes you get what you pay for.”

Learn more in FleetOwner‘s latest feature story: “3PL: Shippers will need to look beyond lowest cost.

 

 

Is the Tide Turning for Small Trucking Companies?

As industry capacity shrinks and the Trump administration proposes to roll back regulations, small motor carriers may get some much needed breathing room.

There’s been enormous bottom-line pressure applied to small- to medium-sized trucking companies — those operating anywhere from three on up to 150 trucks — in recent years. Yet that pressure may be set to ease significantly in 2017 if capacity cuts and a proposed “regulatory rollback” occur as expected.

“They are actually in a pretty good position now,” Dan Pedowitz, vice president of LTL for third party logistics (3PL) and freight brokerage firm AFN, told Fleet Owner.

Learn more about 2017 capacity and the impact on small carriers in Sean Kilcarr‘s latest Fleet Owner’s online exclusive including his interview with AFN’s own Dan Pedowitz, Vice-President of LTL.

 

What Do Freight Shipping and Monte Carlo Have in Common?

Optimizing Freight Capacity for a Winning Solution

Monte Carlo Freight Method The transportation industry and this glittering European country are about as far apart on the glamour spectrum as possible.  But – wait – there really is a connection between successful 3PLs and Monaco’s namesake Monte Carlo methodology.  Used by professional gamblers among others, the Monte Carlo method is used to optimize earnings in many industries, particularly financial services.  Logistics experts use many of the same “what if” scenario planning techniques to manage relative risks and find the most efficient and safe way for your freight to reach its destination.  On the Riviera, it’s about optimizing winnings in a casino; in our industry it’s all about optimizing freight and capacity.Optimize Freight Capacity for a Winning Solution Click To Tweet

We must account for complexities on each side of the business as we match shipper/freight requirements to the carrier/equipment capabilities.  The variables in transportation, for example, are pretty much infinite, ranging from those that we can quantify and calculate (number of lanes, miles, weight, etc.) to the unknown and unexpected (loading/unloading delays, road closures, equipment malfunction, and weather, to name just a few).

That’s why you need a 3PL with the expertise to play out a number of “what if” scenarios in order to truly customize your transportation solution.  The plan may need to change every few months or even every few days to adapt to new or changed variables.  Utilizing these concepts, AFN’s dynamic planning ensures optimal logistics solutions for the unique freight and capacity requirements of our clients.

Interested in learning more about The Monte Carlo methodology – or going to Vegas soon? Go here.
For entertaining anecdotes about how some notorious gamblers bear the odds, go here.