Q3 Transportation Outlook
October 11, 2023
Once again, the supply chain is staring directly into the eyes of more disruption. This quarter, shippers continue to face tough challenges. Added to an already over-saturated market, there have been a number of hot topics, from the historical agreement between the Teamsters and UPS, to Yellow Freight closing its doors.
Our experts recently released a Q3 Transportation Outlook that shares trends we are seeing in the logistics market and what shippers can expect through Q4 and into 2024. The overwhelming theme is that transportation rates are on the rise again. We hit the market lows earlier this year and rates are expected to continue to rise through Q4 and into 2024 even.
Domestic market forecasts are below:
Over 50% more small trucking company drivers lost operating authority in the first six months of 2023 than in the first six months of 2022. As these small trucking companies continue to get smaller, we are seeing the larger trucking companies grow and expand their fleets. The larger carriers will continue to grow their market share, and in turn, increase the influence they have on market rates, leading rates to rise and smaller companies to exit the market.
The big news here is Yellow closing its doors. How will this affect you? The answer might not be as bad as you think. With Yellow handling about 10% of the LTL market, there may be a short-term negative impact as the market adjusts. However, there is currently enough capacity across the other LTL carriers to handle the volume from Yellow, so the long-term impact is expected to be minimal. However, shippers still need the right tools and resources, potentially pivoting to other carriers who can meet their expectations both operationally and financially.
The UPS-Teamsters historic agreement is the biggest disruption that we have seen in the marketplace this year. It’s not a big leap to know that UPS costs will rise pretty significantly under the new agreement, with these additional costs being passed on to shippers.
UPS originally announced a price increase of 6.9% but with FedEx’s 5.9% increase, UPS was forced to match the FedEx increase in order to retain business. Elsewhere, UPS are expected to have double-digit increases are expected on other surcharges and fees.
The more disruption in the market, the more difficult it is for shippers of all sizes to remain profitable and keep their customers happy. Having a strategic supply chain partner can help shippers navigate these disruptions to mitigate the negative effects on your bottom line.
By David Brosky