The truck driver shortage had been an issue before the COVID-19 pandemic disrupted supply chains, and the recent growth in consumer demand has further exacerbated the problem. According to U.S. Bank’s data, although freight shipments are still below pre-pandemic levels, they have seen a 4.4% increase from the first quarter.
Prices have increased to cope with the rising shipping volume and higher diesel prices, while capacity remains tight. Bobby Holland, the vice president and director of Freight Data Solutions at U.S. Bank, stated that rates will remain high as many of the factors contributing to the record-breaking spending in the second quarter have not subsided. The data for this index at U.S. Bank goes back to 2010.
“We are still facing a shortage of truck drivers, high fuel prices, and a chip shortage, which indirectly affects getting more trucks on the road,” Holland said.
These challenges exist across all regions, but the Northeast has seen the most significant increase in spending from the first quarter due to “substantial capacity limitations,” as stated in the report. The West saw a 13.9% increase from the first quarter, partly attributed to a surge in consumer goods imports from Asia, which has driven up truck activities.
The limited supply has forced shippers to rely more on the spot market for freight rather than contract freight services, as reported. However, some shippers are now starting to lock in higher-than-normal contract rates instead of committing to even more expensive spot rates, as mentioned by Holland.
DAT data shows that spot posts in June were 6% lower than in May, but still increased by more than 101% year-on-year.
“With the high demand for trucking services and shippers needing to meet their schedules, they are paying more to move their products,” said Bob Costello, senior vice president and chief economist for the American Trucking Associations, in a statement. “As we continue to address structural challenges like driver shortages, we expect the spend index to remain high.”
Even with higher contract rates drawing volume out of the spot market, finding capacity remains a challenge. Less-than-truckload (LTL) carriers such as FedEx Freight and J.B. Hunt have implemented volume controls to maintain high service levels. “Tight capacity on the truckload side means carriers are only accepting about three-quarters of all the [contract] loads that shippers send them,” said Dean Croke, the principal analyst at DAT, earlier this month.
Post time: Mar-12-2024
