Capacity: Challenges and Impacts

For asset-based companies and brokers alike, capacity and the spot market can have major impacts on rates and rate predictions for freight. As were nearing the end of Q1, it only seems fitting to take a look at predictions for 2017 and how they’ve played out so far in terms of the market. There were quite a few expectations for change, including promises of increased demand from President Donald Trump’s plans to boost business in the states, but initial reports suggest shippers can back down slightly from their concerns about big price hikes for the time being.

While the price hikes aren’t immediate, there is still a noticeable boost in freight demand for the United States this quarter. Market predictions by industry analyst Stifel suggests truckload demand will continue to rebound while supply will stay down between two to three percent; in part from efforts to protect utilization and driver compensation, but also due to some of the looming federal regulations  (e.g. FSMA, ELD Mandate). With supply decreasing and demand continuing to rise, Stifel believes the “prospect for positive pricing momentum is building” in the truckload sector.

Capacity Challenges

There are many factors that could affect capacity, with different factors impacting different modes of transportation. According to Stifel, due to weak 2015 and 2016 demand, intermodal and truckload carriers are reducing capacity to boost returns on investment, while less-than-truckload (LTL) and air carriers are also staying on the conservative side, not adding much capacity ahead of upcoming safety-focused regulations. Probably the most notable upcoming regulations are the FDA’s Food Safety Modernization Act (FSMA), set to go into effect for non-exempt carriers on April 6, and the Electronic Logging Device (ELD) Mandate set to take effect in December. There are concerns that some carriers may choose to leave the business or remove some trucks from circulation due to the impacts from these requirements. Carriers are being encouraged to take the necessary compliance steps as it seems less likely that these rules will be set aside or postponed as they have already survived a number of legal hurdles.

How Trinity Combats Capacity Challenges

With tightening capacity challenges, we continue to rely on the relationships we build with our network of 32,000 carriers. We have an entire Carrier Relations team dedicated to helping carriers join Trinity’s network, answering questions, and studying the latest industry changes and regulations to educate carriers and Trinity’s team members. With our network of vetted carriers potentially growing every day, we can combat challenges with tightening capacity. We also work with a network of intermodal carriers, and can arrange the movement of freight that isn’t necessarily time-sensitive via rail.

Strengthening relationships with our carriers and encouraging those who are non-exempt to become compliant with these regulations is something that we plan to continue through the implementation of upcoming regulations and industry challenges.

Other Potential Impacts

There’s a lot of talk now about some e-commerce and ride-sharing companies venturing into the world of last-mile delivery and order fulfillment, and autonomous trucks are hitting more headlines as companies test out beer runs and other highway convoy trips. Stifel predicts that the so-called “uberization” of truck brokerage will not happen anytime in the near future as there are still some hurdles, and it may be a few years still until autonomous trucks are technically ready to operate.

As a full logistics solutions provider, we are committed to helping our customers and potential customers understand the impacts of these industry changes. Look for an update on the Food Safety Modernization Act ahead of its implementation on April 6.

Our rates are directly impacted by any changes in these regulations and the market. We will continue to stay competitive and work with on our carrier relationships to get you the best rate for your freight, and to get it delivered safely and on time.

Could this impact your business?

If you are looking for more information on how these regulations could impact your industry or to secure a rate for freight you need to ship in the near term, call (866) 603-5679, or request a quote online and a logistics expert will get back to you within 24 hours.

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