US research company FTR has announced that sustained capacity tightness and pay increases across the road transport industry could elevate shipping costs in North America.
According to the company’s Shippers Conditions Index (SCI) for September, continued capacity shortages degrade service and push rates higher in the US market.
“The typical slowdown in freight tonnage during the winter months will only offer a minor and short term reprieve with the Shippers Conditions Index expected to remain in the current range for the foreseeable future,” predicted Jonathan Starks, FTR’s Director of Transportation Analysis.
“While truck capacity hasn’t been as bad as we saw during last winter, it has remained tight and, as a consequence, rates have been elevated throughout the year.
“Recently, concern has moved from capacity on the roads, to problems at the ports. We are seeing potential impacts to retailers Black Friday plans because of the port congestion. To add to the troubles, importers are getting hit with surcharges at the ports. They are dealing with delays in getting goods and additional costs on top of that. If a resolution of the west coast labor dispute or a winter slowdown in freight doesn’t ease the situation, we could have a very tough operating environment in early 2015 for those that are dependent on those ports.”
According to Starks, US truck fleets are now getting more confident in their ability to secure rate increases for next year and have been busy ordering new trucks for delivery in 2015.
“However, we don’t believe that it will be enough to significantly alter the supply and demand balance. The market will soften as we head into the New Year (weather permitting) but will tighten again as soon as spring appears. Shippers need to be prepared for another year of dealing with tight capacity and increasing rates – no matter the mode.”