The current coronavirus pandemic is pushing consumers to stockpile supplies, thus increasing the urgency and frequency of shipments for restocking supplies. Due to the surge in retailers and e-commerce distributors' needs to restock, van and reefer spot rates are sharply increasing. Truck wait times at pickup and delivery are getting longer.
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Truckers continue to deal with new challenges due to coronavirus constraints on truck stops and shipper and receiver facilities while the growing demand for medical supplies and consumer essentials continues. In some states, rest stop restaurant dining rooms are closed and takeout food is the only option. Pennsylvania, one of the major shipping lanes connecting the Midwest and the East Coast, shut-down state operated rest stops. This is posing issues for drivers who go through states like Pennsylvania--where rest is critical to ensure driver safety and supply chain efficiency. Due to these concerns, 13 Pennsylvania rest stops will be reopened today.
Truckers are facing a slew of other constraints including:
Lastly, trucking capacity is tightening due to demand to move shipments from manufacturers to retailers and warehouses, as COVID-19 is pushing consumers to deplete stores of supplies. Since February 29, the average spot market rate is up 6.1%.
With Chinese exports coming almost to a near collapse with record lows in 7 years, we are beginning to see some dry exports building back up with exports to Australia. However we are seeing a change in normal supply and demand across the board for goods and manufacturing pieces coming out of China. At ATTS, we are keeping our eyes on the epidemic in China as this directly impacts our customers. While material shortages and work stoppages both inside and outside China are causing disruption to our customers, we are committed to ensuring as smooth a transition as possible through this time of uncertainty. Once the fear begins to subside and we have a solid timeline for work resumption in China, we anticipate business will be booming as companies try to make up for the Q1 slowdown due to COVID-19.
With the changes coming to the logistics industry with the advent of automation, ATTS INC prides itself on delivering outstanding service while mixing the old with the new. We strive to provide our clients the feeling of security that comes with working with humans, and not just machines. We utilize human critical thinking and problem solving skills, along with cutting edge technology, to ensure freight is delivered on time and at a competitive rate. This allows us to build great relationships with our clients, the life blood of the freight industry. ATTS INC welcomes the future and embraces the changes that are coming in the industry, without sacrificing what matters most to our clients! At ATTS INC we want our clients to know we handle all the details.
Analysts at Morgan Stanley predict decreased truck capacity in 2020, translating to higher truckload rates. The five reasons they believe decreased truck capacity will occur include:
1.) Carriers have to convert to the electronic logging device (ELD) by tomorrow, December 17. The ELD rule takes full effect and the AORBD exemption ends.
2.) Carrier insurance premiums have been on the rise due to catastrophic accidents. Carriers have seen over a 50% increase in premiums.
3.) Drivers' failed alcohol or drug tests that initially went unreported will be required to be entered into a federal database on January 6, 2020.
4.) On January 1st, the International Maritime Organization (IMO) regulation begins. This regulation seeks to put a 0.5% restriction on sulphur emissions in 2020. Currently, the mandate is 3.5% and the maritime industry will move toward fuels composed of less sulphur-- i.e. diesel. Diesel prices are expected to rise by up to 30%, which will highly impact small truckload carriers.
5.) On January 1st, the California AB 5 rule goes into effect. This rule will affect carriers who do business in California and will require indepent contract carriers to operate as company employees. Some carriers are looking to reduce operations in California.
For these reasons, rates are expected to increase in 2020--potentially back up to 2018 levels.
More information on this matter is available here.
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