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According to the Council of Supply Chain Management Professionals, over-the-road truckers who are waiting for a turnaround in the freight cycle should focus on making the best use of their truck’s space to ride out the ongoing market weakness.
CSCMP’s 35th Annual State of Logistics Report said that despite the freight sector showing some green sprouts of recovery, demand is still sluggish and there is excess capacity. The ecommerce sector is one of the green shoots. The U.S. market for ecommerce grew by 8% in 2023, to $1.117 trillion. Retail sales increased from 14.5% to 15.6%.
The report cited a number of factors that are holding back a more diversified recovery, including simultaneous geopolitical conflict around the world, high inflation, high interest rates, climate change, and, aside from the U.S. sluggish consumer demand. CSCMP stated that the most successful carriers are those who can mitigate these factors through focusing on capacity optimization instead of rates, and collaborating with shippers or third-party logistics providers in order to minimize empty mileage.
The report stated that digital freight matching tools can help fleet operators complement their own volume with third-party shippers. This will enable higher levels of utilization, and filling deadhead miles. It added that options include route optimization software to minimize such empty miles, advanced bidding tools for quickly mobilizing deals and securing favorable rates, and integrated transportation systems.
Ecommerce sales continue their upward trend. (Council of Supply Chain Management Professionals).
A Bloomberg-Truckstop study released in May revealed that sentiment among North American truckload carriers operating on the spot market improved during the first quarter 2024. CSCMP stated that shippers still have an advantage over carriers for the time being. They can continue to negotiate lower rates, reset their carrier portfolios and improve the resilience of their logistic. CSCMP said that freight rates are unlikely rise until at least the second half 2024.
According to the U.S. Bank’s Q1 2024 Freight payment Index, shippers cut their spending by 27.9% in the first quarter 2024. Spending fell 16.8% in comparison to the fourth quarter 2023. The U.S. Bank’s report shows that shipments have declined by 21.6% on an annual basis.
CSCMP predicted that when a market turn occurs, the carriers that will be best positioned to benefit are those that have a proven record of consistent service and who continue to invest in maximizing available capacity.
Andy Moses, senior Vice President of Sales and Solutions for Penske Logistics which sponsored the study, said: “Our customers and the industry continue to face significant obstacles in maintaining a consistent and efficient supply chain.” “Investing in technology to improve agility and resilience can better position organizations, and the industry at large, to navigate future disruptions seamlessly.”
CSCMP reported that more than 1,500 freight brokers, and 25,000 asset based carriers, left the market in 2023. This trend has continued through 2024.
CSCMP stated that the trend of larger shippers monetizing their own logistical capability could also make recovery more difficult for carriers in the long-term. These moves tend to blur the distinction between shippers, 3PLs, and brokers. Some of them are adapting by offering asset heavy services such as truck management or drop-trailers.
The State of Logistics Report (r) for 2024 is now available! Discover the trends and insights that are shaping the logistics industry. Produced by CSCMP, Kearney and presented by Penske Logistics. Download today: https://t.co/oxmG4NYo1b pic.twitter.com/USWBnniv3g — cscmp (@cscmp) June 18, 2024
According to CSCMP, among the trailblazers the theory is that they look at logistics functions as a unit and redesign them, not only with an eye toward cost reduction but also to unleash capacity. It said that while few companies have achieved this level of innovation they are on their way. The study’s authors say that some of the biggest players are close to achieving this “4PL” goal of end-toend supply chain management. Amazon is the closest.
Amazon is ranked No. 1 on the Transport Topics Top 100 list of the largest logistics companies in North America and No. Transport Topics’ Top 100 list of North America’s largest logistics companies ranks Amazon No. TT’s Top 100 private carriers list.
The study concluded that a greater capitalization of technology capable of improving coordination is needed for the rest of the segment. The study found that route optimization, rate-shopping, automated dispatching, inventory calibration and cargo tracking are all essential network functions.
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