The first quarter is over, and the transportation industry took a bit of a proverbial beating. One of the most recent closures was a California-based family-owned company that had been in business for 70 years. Boateng Logistics, Convoy, J.J. & Sons Logistics, Meadow Lark, and Yellow Freight have also closed down lately.
What’s going to happen in the second quarter? Our expert shares some Q2 trends in transportation that you need to pay attention to.
Supply and Demand
When 2023 came to an end, the drop in van load-to-truck ratios was down more than 40%. Reeder load-to-truck ratios were down more than half. The bottom line is there are more trucks than work in areas, and that’s not good. It’s leading to a very competitive market.
Because there are more trucks than work, dry van rates dropped by about 3 cents per mile at the end of 2023. Reefer rates were down about 10 cents per mile. They’re still better than in 2020, but when grocery prices, insurance, and interest rates are so much higher, it’s not ideal to have spot rates dropping.
An Unstable Economy
The nation’s top economist warned that the economy is headed for a recession. The Economic Cycle Research Institute’s (ECRI) Leading Economic Index started a decline. In 120 years, that sign of a recession has only been wrong once. The job market and GDP growth are also stagnant in some areas, which is also alarming.
Last year, the Fed expected to start lower rates following the improvements experts were seeing last year. However, recent announcements are that the expected June rate cut won’t happen at all. Interest rates on everything from truck loans to business loans and credit cards to lines of credit remain higher than many have ever seen before.
Slower job growth, higher prices of goods and services, and higher interest rates are a triple whammy. They all impact a consumer’s spending power. If they’re not spending, less cargo and freight is moving around.
Unpredictable Weather
Weather patterns have created some unbelievable disasters. The high tides caused large portions of Maine and New Hampshire’s coast to flood and destroy homes and businesses. Days of heavy rain caused large portions of New England to flood. Even areas like San Diego saw historic flooding. With each of these natural disasters or emergency declarations, supplies are essential.
If you’ve never considered applying to haul FEMA loads, it’s time. FEMA lists 114 natural disaster and emergency declarations for 2023. In Q1 of 2024, there have already been 19 reported disasters and emergency declarations. When there’s a natural disaster, FEMA needs to get supplies to people as quickly as possible.
The items you haul might be non-perishable foods, blankets and clothing, building supplies, or temporary housing. FEMA loads pay more than average. The 2024 application process is over, but it’s a good time to start getting paperwork together in order to apply in 2025.
The other thing to keep in mind with the weather is that the roads you rely on may suddenly shut down. Temporary interstate closures are possible in snow squalls or blizzards. If a bridge or road washes out with heavy rains, it’s going to lead to detours that may put a driver off the planned schedule. Always have the technology in place for quick rerouting. Make sure your drivers can reach your dispatcher if something happens.
Advancing Technology
Technology is also changing the game. Some of them may already be used in your trucks. If not, it’s a good time to consider these upgrades.
Electronic Logging Devices
Electronic Logging Devices (ELDs) are a good way to ensure a driver isn’t going over his or her hours. The devices track automatically and have been required since 2019, but there are a few exceptions including:
- Drivers who have trucks manufactured before 2000.
- Drivers who use paper RODS for no more than eight days per month.
- Drivers who are delivering the truck they’re driving.
Exempt drivers must still complete all paper logs.
Autonomous Trucks
Self-driving trucks are quickly advancing, and they could be a game-changer. The trucks optimize their routes and use IoT sensors to analyze data to make time-saving and money-saving changes.
Daimler Trucks is one of the first companies to test autonomous trucks. The company chose roads in southwest Virginia. The trucks can drive in fog, different light levels, rain, and snow. With route planning creating the optimal routes, these trucks save time and money without decreasing productivity.
Self-driving trucks don’t need a rest break or to catch up on sleep. Loads could be hauled non-stop without needing rest breaks. However, It doesn’t have to mean there’s no driver. Think of the advantage of having a self-autonomous truck as an auto-pilot like you’d find on a plane. The technology could allow a driver to rest up and drive safely.
Artificial Intelligence (AI)
AI is probably one of the most important technologies to embrace. Filling trailers with the optimal weight and balance is critical. You don’t want a lot of empty trailer space leading to lower revenues along your routes. AI can meticulously plan loads and routes to optimize time management and revenues.
It can also continually check for permits, truck maintenance, and insurance to ensure there’s never any lapse that puts a truck out of commission. As deadlines for things like registration, permits, and recommended maintenance approaches, AI could complete the paperwork and schedule appointments automatically, which saves you time.
Cloud-Based Apps
Cloud-based apps and software make it easy to complete typical office tasks from anywhere. Instead of waiting until drivers return with bills of lading after they unload, they can upload them automatically with an app. If you happen to partner with a freight factoring company like TBS, upload the bills of lading to our app and get paid instantly.
Old-school methods found truckers completing the work and driving back to the company. Office staff generated invoices and mailed or faxed them to the broker or shipper. It could take weeks or months to get paid. Who can wait that long in today’s economy?
Instead, submit a bill of lading into the cloud-based app and let geolocation technology record your driver’s location. That bill of lading comes to TBS for approval and immediate payment. You can have the money you’re owed the same day.
Fuel Prices
Nationally, the price of gas is increasing throughout the U.S. While prices are lower than they were a year ago, most areas experienced gas price increases of as much as 19 cents between March and April 2024. The West Coast saw the highest increase. The national average price increase was 7 cents.
The same is true of diesel prices, though the increases haven’t been quite as high. Nationally, diesel prices increased by 6.5 cents. Again, the West Coast experienced the greatest increase of about 11 cents per gallon.
In addition to speedy payments with freight factoring, you gain additional services like fuel discounts. Saving money on every fill-up is going to help a lot. With a TBS Comdata or EFS discount fuel card, you can save up to 90 cents per gallon. That alone makes freight factoring an ideal arrangement.