It seems there’s not a single industry that hasn’t been impacted in some way by the COVID crisis. The shipping and logistics industry is no exception. We know there has been concern regarding recent increases in freight costs and even some slower than normal delivery dates, industry-wide. So, SPC is here to help you manage through these challenges. We asked our experts, Randy Weiler, Director of Postal Affairs and Logistics, and Mark Mycek, Traffic Manager, some of the most important shipping questions as the industry responds to the COVID crisis. Here’s what they had to say:
With Q4 being one of the busiest times of the year for freight, what do you see happening as demand increases?
In a typical year, freight companies often raise prices during the holidays, even more so this year with a presidential election and heavier than historic mail-in voter ballots. As prices continue to rise heading into the end of the year, truck availability may be challenging at times, and some delivery dates will be difficult to meet. These issues may cause more freight to move via rail than has in the past. And while rail can be a cost-effective alternative if trucks are scarce, rail service will add 2 to 3 days to most delivery windows due to the loading and staging of rail cars. Post-pandemic, as industries re-open, drivers may take advantage of carriers willing to pay higher wages to help make up for lost revenue, causing rates to rise yet again.
The second wave of COVID-19 is here. How is this impacting retail and other industries that rely on deliveries?
We are hearing of supply chain delays of inbound merchandise to major retailers and e-tailers. This has impact on marketing plans that depend on available merchandise for inventory and fulfillment both on line and in store. Those avoiding these issues have shipping and logistics contracts in place to help mitigate price volatility and shipping delays. We expect to see these challenges continue until we can return to a state of normalcy.
Recently, we were informed of a shortage of drivers as well. What is the current state of that situation?
Forecasts through year’s end continue to show a shortage of drivers, available transport and higher price points. With this in mind, transportation companies are trying to adjust. Job postings for truck drivers are plentiful. Compensation for drivers is increasing and truck and trailer purchases are on the rise. All of these changes in the transportation industry will take time to come to fruition. The good news is that these changes should improve availability as we move toward a post-pandemic world.
How are fuel prices and surcharges impacting the freight industry?
SPC works with our contract carriers to secure the best rates possible for our clients. We help you avoid any surprise surcharges that can change from week to week. Thankfully, diesel fuel prices and surcharges have stabilized and really haven’t been a major factor in the rising costs.
In Q1 of 2021, where do you see rates on shipping going?
The current supply/demand gap will begin to weaken, more drivers should enter the market and pricing should trend lower. However, if commerce re-gains significant momentum with a strong transportation demand, pricing may not fall much from the current rates. Much of this will be decided by the forthcoming COVID-19 vaccine push and how quickly our world returns to pre-pandemic life.
What can SPC’s customers do to plan ahead to mediate any unexpected price increases?
Broaden your schedules—work closely with your SPC rep to plan ample time to be flexible. Know that during these challenging times it may be necessary to plan to release marketing creative and data files earlier than normal to ensure in-home targets are met. Over-the-road pricing can often be mitigated by allowing enough time for carriers to find alternative routes or move to rail. Rail will add 2-3 days to deliveries and needs to be booked for pickup 4 days in advance. Rushed schedules and shipping will likely result in higher freight costs. Include an increase in transportation spend in your 2021 budget plans.
So, is there any good news in this?
Sure. Knowledge is power and knowing, understanding and planning to meet these challenges will give you and your company the best chance for success. We’re helping create awareness of the unique circumstances we’re facing in the world of transportation logistics. SPC is constantly working with our partners to bring the best prices and solutions to our customers. Our contract carriers are able to respond to the rapidly changing requirements of our marketing customers with an eye toward ensuring that campaign materials reach their targeted audiences on time.