COVID continues to challenge the supply chain industry as rates soar to new heights. Many suppliers find themselves having to rework their procurement budgets to meet the demands of the consumer. Carriers and brokers have struggled under old contract rates that are far off the current market. As these lanes are rejected due to the rates, customers are having to make use of the spot market to secure a truck despite the price tag.
According to Cass Information Systems Inc, domestic shipping rates in the U.S. are up about 23% this year from 2020. Fuel prices and capacity constraints play a big part in this increase but the blame is shared with the suppliers. Many shipping and receiving facilities find themselves short-staffed causing increased loading times and even production issues. Their budgets are pushed to the limit leaving them no choice but to reevaluate their finance allocation to meet the needs of the market.
Is 2022 the year that rates get back in line for shippers’ budgets? Elevated rates are expected to continue due to the turbulence in the market. This does not bode well for shippers and their freight procurement. Shippers are going to have to continue to navigate the spot market for a while longer to get their product off their docks.
Dawn Davenport is the manager of the St. Louis office and has been with the Allen Lund Company for over 20 years. Davenport is an alumna of Truman State University where she earned her B.A. in business administration with a marketing concentration.
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Specializing as a national third-party transportation broker with nationwide offices and over 500 employees, the Allen Lund Company works with shippers and carriers across the nation to transport dry, refrigerated, and flatbed freight; additionally, the Allen Lund Company has an international division licensed by the FMC as an OTI-NVOCC (#019872NF), and a software and logistics division, ALC Logistics.
