- December is usually a hectic month in trucking goods.
- But freight haulers are expecting this December to be particularly frenzied. Freight rates might be higher in December 2018 than ever before.
- That’s thanks to the truck-driver shortage, e-commerce, the holiday season, and the US-China trade war.
December tends to be a lucrative month for freight haulers as the holiday season comes to a crest.
And this December is going to be wilder than ever. In 2018, there have already been record highs in freight rates because of an expanding truck-driver shortage and an increased demand to move goods. Adding to that, companies that operate in China are freaking out over a bevy of tariffs that will be implemented in January 2019 thanks to President Donald Trump’s trade war with China.
„We are looking forward to a very big December, probably the biggest December ever,“ Yan told Business Insider.
Yan said her clients, who are matched with truck drivers via NEXT, are shipping over as much as possible before January 1, when an import tax of 25% on $200 billion of goods from China will go into effect. The tariff will affect a third of all containerized imports to China, according to the Journal of Commerce.
Particularly for those in the Port of Los Angeles or Port of Long Beach, where much of China’s imports are shipped across the ocean, logistics folks are handling huge amounts of goods. Already, Yan said nearly all 36,000 warehouses in Southern California are full.
„Most retailers are trying to squeeze in as much volume as possible to avoid the tariff in 2019,“ Yan said.
DAT Solutions, the go-to for freight rate information, doesn’t have a solid estimate for how much prices will spike in December. But Peggy Dorf, a market analyst at DAT, told Business Insider that shipping rates, which reached record highs this year, will continue to climb in December.
Along with tariffs, Dorf said e-commerce is helping to push up rates. Online ordering is expected to jump 16% this holiday season.
„The demand is constant and it’s constantly growing,“ Dorf said. „Free shipping makes it even more intense.“
While convenient for customers, free shipping and online shopping can be nightmarish for those on the supply chain side. Companies can’t predict exactly how many people will buy online and people often don’t consolidate their orders. So, retailers have to get last-minute, often pricey trucking service to ensure orders arrive on time.
Read more: The US has a major truck driver shortage — but the cofounder of a trucking startup that’s attracted $80 million in funding says there are 3 other issues that are making the shortage seem worse than it is
And thanks to the general chaos of transportation in 2018, many retailers haven’t even ensured that their goods are in warehouses, distribution centers, or stores. In June 2018, there were 9.9 van loads for every available truck, compared to 5.6 van loads per truck in 2017 and 2.9 in 2016.
„It used to be everything was already in position long before the end of November,“ Dorf said. „There’s a lot of stuff that isn’t on anybody’s schedule and somebody has to move it.“
One good thing for retailers who have had transportation costs eat into their budgets this year, Dorf said rates will drop again in January.
Then, they’ll likely spike up again in March.
Source: Business insider