Heavy Duty Trucking, August 2019

HDT AUGUST 2019 24 WWW TRUCKINGINFO COM Tightening supply chain drives up cost of logistics T he booming economy pushed logistics costs incurred by U S businesses 114 higher last year to 164 trillion 8 of the 205 trillion gross domestic product of the entire United States in 2018 Thats per the Council of Supply Chain Management Professionals State of Logistics Report released in June Sponsored by Penske Logistics the report is authored each year by consultancy A T Kearney Rising economic activity fueled a strong job market and pushed up wages which motor carriers and warehouse operators passed on to shippers as higher prices Shipping activity was especially intense in the fourth quarter as American business began dealing with heightened U S China trade tensions and business inventory reached an all time high of 275 trillion That drove up inventory carrying costs to where they eclipsed hikes in transportation costs The report found the growth of e commerce in both volume and scope helped fuel Fleetlogistics TRUCKINGS SUPPLY CHAIN BUSINESS REPORT Spot market rates for dry van and refrigerated shipments in June were the highest since January according to DAT Solutions as truckload capacity was more constrained thanks to the annual Roadcheck inspection blitz and an urgency to move shipments before the close of the second quarter DAT expects spot market Truckload rates heat up in June NOTE THE DAT TRUCKLOAD FREIGHT VOLUME INDEX IS BASED ON LOAD COUNTS AND PER MILE RATES RECORDED IN DAT RATEVIEW WITH AN AVERAGE OF 3 MILLION FREIGHT MOVES PER MONTH Spot freight index modes such as motor carrier intermodal third party logistics air freight and freight forwarding as the rest of retail sought to rise to the occasion Supply could not keep up with booming demand Cost factors The report said logistics costs are rising due to these key factors Retooling of supply chains to accommodate more e commerce sales online purchasing increased by 142 last year including a spike in the need for smaller more costly warehouses Extremely high utilization of existing truck fleets limiting available freight capacity Changes in hours of service regulations and mandatory electronic logging devices causing smaller trucking firms to cease operations consolidate or be acquired by larger transportation companies Tight labor market driving up wages for truck drivers and warehouse workers The report not only reveals the cost of U S logistics said Rick Blasgen president and CEO of CSCMP it discusses technology and other forward thinking applications for leaders to use as they improve their overall supply chain performance Over the last two years point out the reports authors uncertainty became a steep grade Carriers and shippers faced a choice to either slog through it with conventional tactics or engage with opportunities to do something different something better More and more are trying the latter approach and are reaping the rewards As this latest hill is crested and the players in the industry can see forward to how the next ones will test them the rewards will go to those that seek bold new solutions David Cullen Carriers and shippers faced a choice to either slog through it with conventional tactics or engage with opportunities to do something different something better volumes to gain strength in the second half of this year although rates probably will not rebound to 2018 levels Dry Van Freight volume was 44 higher than a year earlier according to the DAT Truckload Volume Index which reflects the change in the actual number of loads moved each month Compared to the first six months of 2018 van volume was 7 higher in the first half of 2019 The national average van rate was 189 per mile including fuel surcharges which was 10 cents higher than Mays average Year over year the national rate was 43 cents lower but the June 2018 average was also the highest van rate ever recorded Refrigerated The average rate rose to 225 per mile another 10 cent increase from May and 46 cents short of the record set in June 2018 Reefer volume fell monthover month for the third year in a row as agricultural producers continue to grapple with disruptions due to unpredictable weather Compared to June 2018 reefer volume was up 13 Flatbeds Rates averaged 230 per mile in June 3 cents over May average and 52 cents below another record rate set in June 2018 The volume of flatbed loads was 9 higher than a year ago