What are you seeing and hearing in the trucking market today?
“We aggregate in excess of $17 billion in annual freight spend through our transportation management system network and we recently ran the numbers for the last six months [through early October 2017] and what we’re seeing is that over the last six months rates have increased by 22 percent across the board for shippers in the marketplace,” said Potts. “Dry van rates have increased 19 percent and refrigerated rates have increased close to 27 percent. About half of those increases have come since August 20 when Hurricane Harvey hit.”
“We’re also seeing a significant increase in loads going to the spot market,” added Potts, “with about a 17 percent premium being paid for loads in the spot market over traditional contracted rates.”
Potts also pointed to the growing economy and growing manufacturing activity as other factors leading to tighter trucking capacity.
So, are shippers in a better position to weather this storm today than in the past? What’s new and different today?
“I believe shippers are in a better position today,” said Potts, highlighting how shippers today have access to real-time data about market rates via benchmarking indexes built directly into the TMS, along with more advanced system capabilities to find capacity and cover loads when contracted carriers reject tenders.
But the part I found most interesting was his comments about tapping into the long tail of carrier capacity, citing Uber Freight as an example.
“One of the things we’ve done in the past year is partner with Uber Freight,” said Potts. “A lot of companies view them as a traditional broker, but they’re really bringing a lot of the same technology that they brought to the taxi industry to the commercial transportation industry. So drivers are able to download an app and get real-time visibility to available loads and what those loads pay.”
“If you look at the trucking marketplace, as we all know, it’s very fragmented. There’s over 470,000 carriers, but only about 10 percent of them — or roughly one-third of the capacity — are fleets with more than 6 trucks, so many shippers are using the medium and large-sized fleets, but there’s a long, long tail of smaller, private owner-operators that shippers haven’t been able to access efficiently. So one of the things that Uber Freight brings to the marketplace is providing shippers with access to that long tail of capacity in a different way. It’s about trying to get friction out of the system and introduce capacity to the marketplace that shippers, historically, haven’t been able to work with efficiently.”
I encourage you to watch the rest of my conversation with Jeff for additional insights and advice on this topic, including how shippers and carriers should approach freight procurement in the weeks and months ahead. Then post a question or comment and keep the conversation going!