Logistics experts predict that many American firms, including those in the recycling industry, will experience higher over-the-road shipping costs within the next six months. This increase stems from a combination of variables.
One factor is the devastation caused by recent natural disasters, such as the ongoing wildfire outbreak in Northern California and Hurricane Harvey and Irma. During the time of Hurricane Harvey an estimated 10 percent of the nation’s trucking was impacted, which led to a 5.5 percent increase in spot freight rates and a 72 percent loss of loads from Houston alone. According to some estimates, the combined impact of Harvey and Irma could have ripple effects throughout the logistics chain for months to come or at least until January 2018.
Another factor is the current shortage of drivers. Back in March, The American Truckers Association reported approximately 48,000 unfilled trucker positions. Research experts believe that by 2025, the shortage may worsen to more than 170,000 unfilled positions. With the average age of truck drivers being 49, the possible cause of this may be truckers aging out and retiring from the industry.
Lastly is the recent federal rule that will require drivers to use an electronic logging device (ELD). J.B. Hunt of J.B. Hunt Transport Services told shippers to expect stiff contract rate increases as high as “10 percent or more” as the ELD mandate exacerbates an already tight driver shortage. Experts told Logistics Management (LM) that the current tight capacity situation is projected to continue well into 2018, partially because of the 4-to-6 percent productivity hit that is widely expected from the coming December implementation of the ELD.
As capacity tightens and natural disasters occur, shippers will face the challenge of reaching more customers with fewer resources.