By Cain Adams
Trinity Logistics/Longboard Logistics
China is holding its Chinese New Year from Feb. 12-26 this year, and as of Monday, Jan. 4, there were 33 cargo ships anchored off the Los Angeles port waiting to be unloaded. Normally, China parks about 20 percent of the vessels, which gives the U.S. ports time to relax. It also helps bring cargo pricing down.
This year, news is talking about 2-3 percent parked. There is just too much freight sitting in China needing a ride. No breaks mean no reduction in freight rates. Yikes.
As of Tuesday, Jan. 5, we saw on Truckstop.com that load-to-truck ratio in every state showed loads far surpassed available trucks in the spot market. For instance, Washington was showing 4,400 total loads posted with 155 trucks posted. Idaho was showing 1,180 loads posted with just nine trucks posted. There just are not enough trucks to handle all the freight moving right now.
The East Coast has plenty of freight to keep drivers local, too. Why leave the house when you can make a boat load and come home at night?
We are now seeing checks hit people’s bank accounts. Guess what happens with that money? Yep. It goes into the pipeline, and we are back to the races. Inflation seems to be the word of the day. We have even been using the “I” word with truckers just to see if we can get a little lower price for our customers. It’s not happening, people.
How about the $1.5 billion dollars for the box program? That too is now in the pipeline. That’s a lot of boxes, if you ask me. We are basically saying that freight prices seem to be willing to stay high for a while. How long? We are not sure.
We think that if there is a lockdown, rates may come down just a bit but will bounce back up. We just checked on Texas, and there were over 6,369 loads posted with 255 trucks available. Sure, most trucks do not post themselves, but the 6,369 number seems really high this early in the season.
Idaho, Washington and Oregon are shipping to the Northeast at $9-$10 per 50-pound bag. We are seeing Washington to Chicago at $5.25-$6 per 50. Drivers are home and just taking a break. They have made their money, and it’s now showing. We think the trains are not delivering on time as well. This is putting pressure back on the trucking. Trains have plenty of freight. They don’t need to be on time, we guess. I sure wish I had that luxury.
What is good, though, is people are eating. Vaccines are shipping, and politics will simmer down in a month or so. We can all say things like, “Wow, I am getting gouged.” But really, what is happening is just supply and demand and a free market system.
Some areas are making money while others are not. Chaos is not always a bad thing. Chaos in a market shows areas which are weak or strong. It also can increase profit margins. When the market is predictable, margins are flat, boring and usually low.
So how can you as a company pivot? How can you navigate to better your business?
This is a great time for all of us to take a look at our own business models and learn to pivot. Brokers, like myself, have lost profit. We can’t book as many trucks as we want. For us, it’s volume. How many trucks can we book in a week? But, if the number of trucks is less available, we have to learn to pivot, too. We have to look at different lanes, products and procedures. We have to be better at what we do and work closer with our drivers making sure they call us back for the next one.
These are ways we can help our customers. And that my friends is just what we are doing. Stay classy and keep pivoting, people.