By: Tallen Birmingham, Sales Executive, Triple T Transport, Inc.
During the last week of February, I was sitting amongst my peers from the logistics industry listening to Bob Costello, Chief Economist for the American Trucking Association, give his annual economic update. As Costello reeled off his prognostications for 2020, I, like many in the crowd, was left wondering how COVID-19 would shape the year.
March was marred with volatility and unpredictable spikes. In an attempt to prepare for “shelter in place” ordinances mandated in states across the country, consumers instantly adopted binge-buying behavior disrupting the supply chain and the market rates that follow it.
According to Freight Waves Sonar, outbound tender volumes reached record highs throughout the latter half of March.
In response to high demands, President Trump suspended Hours of Service (HOS) for carriers hauling goods needed for relief. Originally these exemptions were scheduled to run until April 12th, but it was recently extended until May 15th. The Federal Motor Carrier Safety Administration (FMSCA) states that any driver hauling essential goods is exempt from the HOS rule. These exemptions along with the closing of non-essential manufactures helped free up capacity.
Over the past couple of weeks, however, outbound freight volumes have dropped off considerably. According to Seth Holm from Freight Waves, outbound tender volumes have dropped 26% since peak volumes were recorded. With the initial surge behind us, Americans are feeling more confident in their preparedness amidst the COVID-19 crisis. For the past six weeks the Consumer Brands Association has conducted a survey on consumer’s concerns and preparedness. Katie Denis from the Consumer Brands Association writes, “Preparedness also held steady from last week, with 76 percent of Americans reporting they feel prepared for the coronavirus’ impact on their life, but is up significantly from the first time the question was asked on March 11, when preparedness was 65 percent.”
Retail volumes should remain steady, but, with the foodservice industry practically shuttered and non-essential manufacturers slowing production, more pricing and market swings are inevitable due to the effects that a dramatic drop in volume will create. It is also important to note the announcement of several major meat processing plants closing doors due to outbreaks of COVID-19 amongst employees and the effects it will have on freight volumes.
At Triple T Transport, we talk figuratively about the pendulum swinging between two directions: the vendor and the carrier. When the pendulum swings too far in either direction, it will inevitably correct itself. When trucking capacity leaves the market and shipping volumes rise; the pendulum swings in the direction of the carrier causing rates to increase. Conversely, when volumes are down and there is excess capacity; the pendulum swings to the vendor causing rates to decrease.
For shippers in the retail industry, it is important to be cognizant of the transportation environment. That is why partnering with a third-party logistics company (3PL) like Triple T Transport is crucial to protect from dramatic swings and wide price fluctuations. The 3PL companies can help you navigate the challenging environments we face today, by creating client specific plans to alleviate your logistics problems. Armed with the knowledge of the market and access to a vast network of carriers, a 3PL can help save time and promote the best solution that fits your needs.
I think that we can all agree that the future months ahead are going to be further impacted by the duration and severity of the COVID-19 crisis. Market uncertainties will persist as we push forward. Produce season is a fast approaching variable, which each year affects capacity in many regions of the country. With the food service industry being shuttered, produce volumes are dropping due to less demand. For now capacity is loose in regions like Florida and Central California, but once “shelter in place” orders are lifted it could look much different. It is important to have a plan in place when the pendulum swings again.
At Triple T Transport, our top priority is customer service and building long lasting relationships with customers and carriers in our network. We strive to use technology and our 32 years of experience to support these top priorities. Triple T offers solutions and education for the unique challenges that customers face with changing market conditions.
Contact Triple T today for specialized plans and to experience the difference of our award-winning service. For all inquiries, please reach out:
Tallen Birmingham | Sales Executive
Triple T Transport, Inc.