Freight Shipping Market Volatility Makes 3PLs Indispensable

August 22, 2019 by Meyer Baron
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Freight shipping is a reactive industry, much like the tail of the dog. Freight carriers can’t create demand, they just react to it. When the economy is as strong as it was in 2018, demand is high, capacity is low and rates rise. In addition to a strong economy, 2018 was notable for the introduction of Electronic Logging Devices (ELDs), which reduced capacity, and a shortage of new heavy-duty freight trucks.

The Curious Case of 2019

2019 is a bit of a different story, as is often the case in the year following a boom year.

  • Truck manufacturers built more Class 8 trucks than the market could absorb
  • Manufacturing is down, so shipping of manufactured products has declined
  • Exports of agricultural goods has declined, along with the shipping of those products

Market Volatility and Confusion Reign

The result of these three market forces is a very volatile and confusing freight-shipping market.

More trucks means increased capacity and a lowering of demand, which led to a slight lowering of spot rates for Truckload shipping — even though more volume than ever is being carried.

Some carriers thought the good times would last forever and took on too much debt to buy new trucks, more than they needed in some cases. They weren’t prepared when rates dropped, couldn’t handle their debt and were forced out of business.

Meanwhile, DAT Market Analyst predicts that spot rates will be on the rise in the second half of 2019 and will average somewhere between 2017 rates and the peak rates of 2018. They may be right, but with market conditions like this, what will happen next is hard to predict.

What’s A Shipper to Do?

When facing an uncertain freight-shipping future, the best thing a shipper can do is rely on a 3PL with plenty of experience and extensive LTL and Truckload shipping carrier networks like FreightCenter.

Relax, We’ve Got Your Shipping Covered

With our extensive, fully vetted carriers, we’ve got your shipping covered. Most FreightCenter customers probably didn’t even know that the freight-shipping market was going through such a turbulent time, because we always make shipping easy and affordable. So, if you’re already a FreightCenter customer, feel free to pat yourself on the back (high-fiving yourself might be easier) for choosing a stable leader in a sometimes-volatile industry.

If you aren’t a FreightCenter customer yet, this is the perfect time to see how we can help your business ship more efficiently. Get started with a free freight quote or talk with one of our National Account Managers (shipping experts) at 800.716.7882.

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