Shippers across the globe are encountering tremendous headwinds when it comes to their supply chains. For example, in drayage, LA/Long Beach ports are setting records for ships anchored off the harbor; around 50 ships are waiting to pull into the port to unload. This means fully stocked containers sitting aimlessly; when containers get stuck offshore like this, it can create a container shortage that adds friction to the international supply chain.
At the same time, these ship captains aren’t staring at empty terminals; nearly every port in America is seeing record throughputs, meaning chassis shortages are also quite prevalent, at the very same time that warehouses are near (or beyond) capacity.
It isn’t just the pandemic causing challenges. Across the US, we’ve seen tremendous issues with infrastructure. One of the supply chain’s most important bridges was closed for weeks, causing millions of dollars in daily costs to the shipping industry. Hurricane Ida has closed sections of the Mississippi River, which is critical to the flow of goods. Wildfires raging in California are also creating hurdles for supply chain practitioners.
What This Means for Capacity
For many shippers, delays and challenges across their supply chain have led to an unwillingness to change vendors or partners. Shippers may not be happy with the results they see in terms of SLAs or pricing, but there’s some comfort in working with the “devil you know,” especially in unprecedented times like we’re in.
However, this is leading to challenges as trucking rates increase, and many carriers are chasing the highest dollars available, often at the expense of long-term relationships (and possibly even contracted agreements). In fact, despite the financial windfall, many carriers are struggling to find enough drivers to keep up with demand. Some carriers are offering massive referral or new hire incentives just to find drivers to move freight.
And the capacity crunch isn’t limited to trucking.
Many rail lines have had to close down access to the busiest stations across the US in the rail space. Regarding steamships, many of the biggest BCOs are chartering their own ships from overseas, potentially saving money (and adding some semblance of predictability) to their supply chain approach. However, this approach may open new challenges for shippers. For instance, there are ports where ships can avoid long delays, but there’s no assurance that chassis will be available when the boat hits the dock.
In other words, it’s a mess out there right now, so the “devil you know” approach isn’t necessarily a bad one.
Why Now Is The Perfect Time to Issue RFIs
The challenge with a “devil you know” is that, well, it’s still a devil. Many of the most progressive and tech-forward companies in freight are actually solving the issues from above. This means shippers who aren’t necessarily looking to make a change might be leaving themselves hamstrung with known issues.
Despite what many trade publications and mainstream media are reporting, there’s still tremendous competition between trucking companies looking to increase their revenues. Capacity is tight; it’s not locked in.
There has also been a massive sea change regarding the corporate social responsibility many fleets and LSPs are offering. Greener trucks are rolling out regularly, meaning sustainability-focused shippers can reduce their carbon footprint while saving money, if they know where to look.
Besides, sending out an RFI (Request for Information) or RFP (Request for Proposals) is not the same thing as changing your carrier partners… it’s merely exploring what other options may be available to support this unique peak season (in many cases, we’re seeing customers come to Cargomatic to gain additional capacity, not to replace what’s already in place).
About the Author: Keith Olander is a 15+ year shipping industry veteran, having served in roles with steamship lines and transportation companies alike.
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