Carrier capacity constraints are an age-old problem in the logistics industry. Between the long, lonely hours on the road, the stress of driving, and the time spent away from one’s family, trucking has never been a particularly attractive job to many people, making it difficult for carriers to find enough staff to support demand, even in a normal year.
Of course, this isn’t a normal year, and recent events have only exacerbated the carrier capacity crunch. A single driver getting sick or needing to quarantine out of precaution could result in a company being short-staffed for weeks. Worse, many carriers simply don’t exist anymore as a result of the pandemic. In 2020, 3,140 trucking companies ceased operations—nearly three times as many as in the previous year. The majority of those folded within the first five months of 2020 when many businesses were forced to close their doors, causing freight volume to plummet.
Unfortunately, that volume is climbing steadily as companies get back to business, address order backlogs, and prepare for the holiday season. But how bad is the problem—and, more importantly, how can shippers navigate it?
A widening gap
Data from DAT highlights just how low carrier capacity is right now. In Texas, the current ratio of available loads to drive-in trucks is around six to one. For reefer trucks, it’s even higher, sitting at around 12 to one. But flatbed truck space is an even more coveted commodity, with a staggering 18 available loads to every flatbed truck.
This enormous imbalance between available loads and available carrier space could have serious consequences for some shippers. Companies that can’t find capacity in good time may see some customers canceling orders in frustration—hurting both their revenue and their reputation. And with transportation rates already rising, shippers may find themselves paying more and more to secure the capacity they need, forcing them to either swallow the costs or pass them on to customers, putting further strain on their relationships.
A worsening problem
While carrier capacity constraints are a problem for countless shippers, some will be harder hit than others.
Asset-based carriers are generally eager to work with larger companies like major retail chains. These companies will likely have little trouble finding capacity at a reasonable rate as carriers seek to preserve the mutually beneficial relationships they’ve forged.
But for smaller shippers, finding capacity may only grow more challenging as freight volume increases. FedEx’s recent decision to drop 1,400 less-than-truckload customers is proof that this is a carrier’s market out there. Shippers that cannot offer consistent, profitable loads to carriers will struggle to access contracted rates, forcing them to turn to the spot quote market unless they can find the right broker.
A cure to carrier capacity constraints
Finding carrier capacity will continue to be an issue for many shippers for the foreseeable future—making a reliable long-term partner a must-have.
In addition to being a leader in the logistics technology space, CTSI-Global is a fully licensed, insured freight broker. We can do the heavy lifting for you, tapping our 20,000-strong carrier network to find the capacity you need—at the right price.
Don’t get crushed by the carrier capacity crunch. Contact CTSI-Global today.