As the old song says, “second verse, same as the first.” Substitute “month” for “verse” and that lyric could very well apply to the start of 2021 in terms of the bulk freight industry. In this article, we’ll break down what we saw in February and what we anticipate for the month ahead.
February 2021 recap
In many ways, February 2021 has been a 28-day extension of the conditions the bulk freight industry experienced in January. Tankers and dry bulk equipment are still very hard to come by for shippers as the driver shortage and COVID-related factors continue to limit driver and equipment availability nationwide.
As we noted in our 2021 outlook article, this tight capacity has created a carrier’s market in which shippers would do well to become a “shipper of choice” to make their freight more attractive to carriers. This includes being prepared to pay the higher rates of the moment, and to be as flexible as possible with carriers in terms of lead time and loading/unloading appointment times.
However, there were some differences between February and January – and not necessarily good ones. The weather throughout February was challenging, with deep freezes and snowstorms in much of the country. This included a catastrophic situation in Texas which left millions without power and led to several fatalities. These storms led to service disruptions, further tightening bulk freight capacity.
Survey results show shipper optimism
The current capacity crunch would not be so ‘crunchy’ if shippers were continuing to have a downturn in load volumes, as they did at the beginning of the pandemic. But the opposite has happened. Shippers have loads – and lots of them – and are ready to get them on the move. The capacity to handle these high volumes of loads just simply isn’t there.
If anything, we can expect shipper load volumes to increase throughout 2021. In the recently released State of The North American Supply Chain Survey from Averitt Express, 1,800 shippers were interviewed in late 2020 regarding their projected activity in 2021. 73 percent of shippers expected to ship more in 2021 than they did in 2020. That’s a jump of 7 percent when compared to responses to the same question at the end of 2019.
We are seeing signs that shippers are making adjustments to support these increased volumes in light of the capacity crunch. For one, shippers are willing to pay carriers to drive in from farther distances to pick up a load. Previously, anything outside of about 30 miles was undesirable
We also are seeing signs that shippers are willing to be more flexible on scheduling. When equipment isn’t available on the requested date, shippers are willing to see what is available and try to find common ground between their schedule needs and carrier availability. If this means waiting a few extra days, many shippers are willing to do so.
Looking ahead to March
Much like February felt like a repeat of January, we don’t expect March to be much different from the previous two months. Capacity will remain tight and rates will likely remain high. According to DAT Trendlines, fuel rates continued to rise in February while truck rates, though slightly lower than January in general, continue to fluctuate wildly from week to week.
If you are looking for an expert bulk transportation partner to guide you through these uncertain times, contact Bulk Connection today.