WINTER 2024

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THE DISTRIBUTOR’S LINK
CHRIS DONNELL THE GLOBAL SUPPLY CHAIN REMAINS MURKY from page 114
Intermodal/Rail
This might come as a shock, but troubles are brewing
in the intermodal and rail industries. We’re seeing growing
concerns with rail / slot car availability at multiple ports,
none more so than Tacoma with critical delays of up to
9 days to get on the rail. These delays are caused by
the lack of available equipment at the ports - so they
just sit. We all know what happens when containers sit;
they end up getting buried. As more and more vessels
call on the port each day, the bigger the que gets for
IPI cargo. The same can be said for export cargo. The
volume of containers arriving at the ports creates a
massive bottleneck throughout the West Coast. These
delays, as well as how long they will last, are solely on
the rail carriers - companies like Burlington Northern and
Union Pacific. If these issues aren’t resolved quickly,
importers and exporters can expect further delays at
critical rail ramps like Minneapolis, Chicago, Kansas City,
Indianapolis, Cleveland, and others. Another issue to keep
in the back of your mind: with winter coming, many carriers
will adapt their yearly weight restriction for rail movement.
This will be more prevalent out of Canada but will also
impact cargo entering the United States. This restriction
will remain in place until early spring 2024.
Drayage, OTR, And Local Trucking
As I mentioned in my previous columns, this industry
remains without question the most difficult to forecast.
Volumes are all over the place; from one month to another
we’ve seen volume swings of more than 4% up or down.
This is not due to development. This is due to local,
regional and national carriers succumbing to bankruptcy,
local and regional displacement, or corporate buy-outs.
With this industry still reeling from lack of available
drivers, each closing, resulting in even less drivers,
puts a lot of stress on the current handlers of domestic
and international cargo. As a result, we are seeing a
growing trend of rejections increasing. There is some
positive movement though. There used to be a shortage
of 170,000 drivers. Our current calculation indicates
a shortage of 80,000. Drivers are still needed but the
numbers are trending in the right direction.
Another issue this industry is facing is the cost of
diesel fuel across America. As of November 10th, the
average cost of diesel is $4.366 cents per gallon, almost
$2.00 higher than regular gas, and $2.00 per gallon
higher than in 2021. With the winter coming we forecast
that rates will continue to go up and down until spring.
The high costs of fuel continue to be one of the major
factors in rising costs, as well as companies going out of
business.
Economists are predicting a substantial growth in the
truckload sector over the next 3 to 5 years including an
increase in total revenues of almost 1 trillion US dollars.
We are also seeing more emphasis by our government
in growing and revitalizing the long haul, over-the-road
industry. The industry is slated to receive upwards of 3
to 8 billion dollars in local and regional funding, as well
as over 50 billion from the infrastructure bill passed last
year. When those funds become available or what they
will be used for is anyone’s guess, but it’s a step in the
right direction. Another benefit the industry is seeing today
is the advancement of freight execution and booking
software which is providing drivers with more flexibility
based on their needs and wants. This software also takes
away a lot of the risks involved with moving cargo and
getting the drivers paid.
In closing, the global supply chain continues its
march forward, albeit with multiple issues on both sides
of the pond. Forecasting what the transportation and
logistics industry is going to do next has become much
more difficult as the issues at the moment are more
isolated but are taking on a lot more outside involvement.
Make no mistake about it, we will not see ocean, air or
domestic rates increase like we did during the pandemic,
but we will continue to have hiccups that make it difficult
to effectively manage and support a smooth global supply
chain. Just remain diligent in your quest to keep up on
current events and their impacts and I assure you, you will
be fine.
CHRIS DONNELL