We are witness to the chaos of a rapidly changing global economy, and a supply chain that continues to adapt to those challenges. With the disruptions, shifts, developments, and events that we’ve seen over the past two years, people often ask for our view on what’s next. We take that as a compliment; our knowledge is a product of having been in business for more than 60 years— in case you hadn’t heard, last year Tucker Company Worldwide celebrated its 60th!
We’ve seen a lot over the past six decades and anyone who knows us from the trade associations and government advisories we’re active in knows that we’re always open to sharing our perspective.
A popular question we keep hearing is “What’s going to happen this year?”, which is completely understandable. The potential turns the industry could take this year seem less predictable than any year in the past. The following is what we’re anticipating, which is all subject to change at a moment’s notice.
Mind your pallets: There is a growing concern as a pallet shortage strikes at the core of supply chains because practically every product moves on pallets. High prices and shortages of white wood pallets will drive many manufacturers to rental companies and recyclers. Costco’s plastic pallet mandate may further complicate the logistics of the pallet. This is a good time to solidify relationships with suppliers and lock in services.
Port congestion: We can’t expect decongestion at the Ports of Los Angeles and Long Beach any time soon. Chassis are the lynchpin and there’s no sign the shortage of them will end soon. American production isn’t able to meet domestic demand. Until then, containers won’t flow and ships won’t move in and out of ports efficiently. Smart retailers are doing what it takes to avoid stockouts that drive consumers to other brands. That means increasing lead times and turning to air if necessary. Delays are unavoidable and all shippers have been impacted in one way or another, but the retailers and manufacturers who continue to excel are the ones who constantly update customers—both the good and bad news. Visibility over the road and on the water is essential, and the carriers and brokers who have the technology to enable that will do best.
Alternate ports: On a related note, manufacturers will continue to ship to alternative ports on the West Coast and in growing numbers on the East Coast. Delays off the California coast make traversing the Panama Canal to get to ports like Newark, Savannah, and JAXPORT a potential time saver. Making the switch isn’t as easy as changing the address on the box, though. There’s a rush by many importers to alternate ports. Working with a freight broker like Tucker who has relationships across the country and in every port in America, facilitates agile inland transit that creates viable opportunities.
Never-ending peak is here to stay: With the cargo delays, importers, manufacturers, and retailers are ordering earlier. Planning ahead by increasing lead times and securing both ocean and land transport with reliable carriers is essential. For nearly 10 years, we’ve warned our customers that the freight industry is changing. Truckers are becoming smaller. Big carriers are losing the driver recruitment war to owner-operators and micro-fleets. Equilibrium between supply and demand has been razor-thin, with even an unexpected one-point GDP uptick enough to create a capacity shortage. Add a pandemic and a global shutdown of manufacturing, as China shuts down entire cities at a time, and an accelerating revolution of consumer buying—we simply must recognize we are living through a global commercial revolution and do what’s necessary to adapt.
Tight capacity continues: The Infrastructure and Jobs Act has thoughtful provisions for increasing the driver pool, starting with the pilot program for apprenticing 18-year-old drivers. Similarly, the Act has a big section on measures designed to attract more women to the trucking industry. However, the vaccine mandate at cross borders is causing disruption. Our prediction for 2022: the reliable carriers will be the ones who treat their drivers right. Look for ones with strong driver appreciation cultures and innovative programs for providing quality of life for their truckers—or a freight broker, like Tucker, who has strong relationships with these types of carriers.
The untapped capacity opportunity remains with small trucking companies. We call them micro-carriers. According to the U.S. Department of Transportation, 51% of the 3.5M truck drivers in the for-hire fleet work for fleets of 1-20 trucks. For over a decade, the small carriers have continued to grow and increase driver count. Believe it or not, we have added over 1 million net drivers to the nation’s truck driving fleet in a decade—but they’re not where you need them. Brokers can find them.
Beware of rising temp-controlled freight costs thanks to rising insurance premiums. Temperature-controlled cargo insurance premiums are rising rapidly on everything. Some of the costs affected include the cargo insurance trucking firms carry, shippers' interest forms on a transactional basis, and broker and forwarder policies. The likely cause is a combination of insurers exiting the freight industry, higher risks due to changes in truck service providers, and an increase in the propensity by shippers to destroy an entire load simply because of a broken seal. These factors have caused premiums in the temperature-controlled space to double and even increase in some cases ten-fold. The increases come on top of increased pay to drivers, increased fuel and equipment costs, and the increased demand for trucking. Expect higher freight costs for temperature-controlled freight in 2022 and beyond.
Autonomous will stop being a punchline, but will (never) be fully autonomous: Autonomous vehicle (AV) technology is real and we’re going to be seeing it sooner than any of us expected. Truck manufacturers, Daimler and Navistar are partnering with leading autonomous vehicle (AV) technology partners to develop Class 8 AVs. In addition, the recently-passed Infrastructure Act has $65 Billion in it to install 5G coast to coast—an essential ingredient for operating AVs over the road. That said, it will be a long time, if ever, that we should expect to see trucks without drivers in the cab in a significant way.
Manufacturers are going to start wanting electric trucks (EVs). Pepsi has committed to 100 Tesla semis and was scheduled to start receiving them in Q4 of last year. Sustainability is huge with manufacturers. EVs are a natural addition to a trend that includes using recyclable packaging, lowering emissions and employing solar panels. We expect to start seeing EVs on RFPs.
Oil and gas companies—secure your flatbed capacity. National capacity of flatbed haulers is pinched and getting more so. DAT reports that the flatbed load-to-truck ratio rose over 27% from December 2020 to December 2021. On top of that, reports indicate critical parts for wind and solar are backlogged. The implementation of large-scale renewable projects is sure to be delayed. That means there will be gas and oil to pump and machinery to move. Keep the lines of communication and committed relationships alive with your flatbed trucking providers—and add a freight broker that specializes in flatbed trucking and refinery requirements, like Tucker, to your mix if you don’t already have one.
Life science manufacturers—strengthen your lifeline. Reefers move so much of the freight in this industry, and it’s more than just vaccines. The products of pharma companies, medical equipment makers, and medical supply manufacturers all have to be protected from temperature changes that can destroy simple products or contaminate sensitive drugs. The reefer capacity shortage is severe, and temperature-controlled is not the place for unproven partners. Now is the time to ally tightly to reefer carriers or a freight broker like Tucker who understands the essential standards of care and provides vetted, committed, reliable service.
Food manufacturers drastically reconsider distribution strategy: From the first days in March 2020, when the pandemic shut down production nationwide and the hotel and restaurant industries were hit hard for the next two years, we’ve seen incredible swings in food consumption, production, and distribution. Restaurants shut down; nearly all food was consumed at home via grocery channels; then drive-throughs opened; then restaurants opened—but not fully in many places. Home delivery apps emerged, as in other areas of consumption. Beneath all these massive systemic changes, carrier commitments were forced to change, as freight disappeared, or slowly reappeared. Adaptability, flexibility, and innovation are required to survive today, and predictable volumes have been temporarily reimagined. As a provider for some of the world’s biggest brands, we’re helping in exactly that capacity. This space absolutely requires brokerage as a key component of that flexibility.
So there you have it: our predictions for what promises to be a very interesting and hopefully, very profitable, 2022 for shippers. If you’d like us to provide more industry knowledge to help face the challenges ahead, we’re here and happy to help. Reach out to get something on the calendar.