The threat of a freight capacity crunch has loomed over supply chains and logistics since 2014, and many shippers are worried that it will come sooner than many industry experts think. So who is right? Then again, the capacity crunch may not be as much of a threat as expected, and it could reflect the growing pains in the freight shipping industry. With a little uncertainty over what it is and when it will happen, shippers should consider if industry growth is why it has not yet happened, why experts believe it could still happen, and what can be done now in order to prevent it in the future.
Until now, the freight capacity crunch remains a speculation among logistics providers and shippers. Recent studies have found that few shippers reported capacity issues over the past year. This is including usual peak shipping seasons. Though overall economy experienced fewer sales than were anticipated during the past two years. So the volume of current shipping containers didn’t change much.
Why is it expected?
GDP growth and increase in consumer spending are great but it doesn’t necessarily mean that there had been more freight shipments last year than during the pre-recession season. While consumers are indeed spending more, they are spending mostly on travel, data plans, and health care. With this, the added spending hasn’t really impacted the number of shipments made.
Forthcoming regulations are also seen to bring about the predicted capacity crunch. Starting December 18 of this year, truckers will be required to use electronic logging devices or ELDs. There are also existing regulations for hours-of-service or HOS. This means drivers wouldn’t be able to tell “white lies” in order to deliver more products. The ELD rule will prevent drivers from driving in excess which will put pressure on capacity. Meanwhile, a shortage of drivers are seen to grow which will increase risk for capacity break.
What should shippers do?
Regardless of expert or personal opinions, it’s always important to prepare. It’s always good to be ready in case it happen:
Increase alternative shipping options
The freight capacity crunch is most influential in its impact on rail and intermodal shipping options. Shippers can use this information to benefit from better rates from intermodal or rail shipping providers. These alternative shipping solutions, which can also possibly include drone delivery in the future, provide a safety net against capacity crunch. However, the relative ease of accessibility of these modes would only last as long as the capacity crunch remains away from the surface. This means shippers will need to look for alternatives now, and not when the capacity crunch becomes a major problem.
The next step towards protection against the possibility of capacity crunch would be to build strategic relationships with intermediaries and 3PLs. In the past few years, 3PL as provided IT services which most shippers believe bridged the IT gap. Strategic partnerships holds the potential to ease possible issues on a probable future capacity crunch.
Can shippers stop worrying soon?
No one can really tell. Some experts vouch for its possibility, while others downplay the likelihood of it becoming a reality. But rather than just hoping for the best, shippers should act immediately and prepare for it should it become a real threat.