the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
The Current State of Freight: What You Can Expect
08/31/2021 — Leah Palnik
To say the freight market is strained right now might be an understatement. If you’ve experienced significantly higher rates and less reliability from your carriers, you’re not alone. As someone who is shipping freight, it’s critical to keep your finger on the pulse of what’s happening in the market in order to navigate the challenges that are coming with it. Let’s break down the factors that have led us here and what we can expect moving forward.
Key factors that have led to challenges in the transportation industry
Like so many other industries, freight transportation has been rocked by the COVID-19 pandemic and all of the cultural shifts that have come along with it. The pandemic not only created new challenges, but also exasperated existing pain points in the market – leading to the perfect storm. It all boils down to a case of supply vs. demand.
- Consumer buying is strong and is driving up demand. While the world was locked down, we weren’t spending money on vacations or going out to eat. In many cases those spending dollars went towards buying goods instead. Retailers are doing what they can to keep up with demand and as a result, have an increased need for trucks to deliver their much needed inventory.
- There is a truck driver shortage. The driver shortage is old news, but it is still very relevant now. Sometimes there just simply aren’t enough drivers available to take on new loads. For years, there have been more drivers retiring and leaving the profession than there have been new drivers entering the market. Unfortunately, the open road hasn’t been as attractive to this generation of the workforce as it once was.
- Building new tractors are constrained by parts availability. Not only is it hard to move freight with less available drivers, but now we are also seeing a limit on new trucks on the road. Supply chains for many goods have been seriously disrupted thanks to the pandemic, and parts that are needed to build new tractors are no exception.
How LTL carriers are responding
With such volatile market conditions, LTL carriers are forced to respond. As no surprise, a major course of action they’ve taken is to increase rates. Simple economics tells us that an increased demand means they can charge more for their services.
Not only are they increasing rates, but they’re also looking to shed less desirable freight from their networks. Loads deemed less profitable, or more trouble than they’re worth, are harder to get covered because carriers want to prioritize loads that allow them to work efficiently and profitably.
LTL freight observations from the front lines
Many of our customers are exhausted dealing with carrier issues. In a survey we conducted earlier this year, 78% of respondents cited rising shipping costs as a challenge they were currently facing. Along with that, 47% noted they were experiencing longer transit times and 36% were dealing with poor carrier performance.
Our team has also noticed several concerning trends pop up with freight carriers. As if raising base rates wasn’t enough, we’ve seen them put in extra effort to collect on everything they can. Accessorial fees that you may not have seen on your bill in the past are now showing up for services you’ve always received. The carriers just aren’t as lax as they may have been in the past for charging for these extra services.
Because freight networks are so strained, we’re also seeing an uptick in missing shipments. If this has happened to you, you know how stressful it can be. The carriers are also doing everything in their power to deny claims for both missing and damaged shipments. They’re wanting to see them filed sooner than ever before and are requiring a great deal of evidence.
Estimated transit times for LTL freight has never been guaranteed, but now more than ever, we’re seeing shipments miss that predicted window. Unfortunately, longer transit times and missed pick-ups are becoming extremely prevalent, again due to how ill equipped carriers are to meet the current freight demand.
What can you do?
You may want to live by the old adage about how you can’t change others, only yourself. It’s not within your power to control carrier performance or consumer demand, but you can educate yourself and act accordingly.
- Use a quality broker, like PartnerShip. While brokers have no control over what a carrier ultimately does with a shipment, a quality freight broker will provide the communication and creative solutions you need when caught up in an issue.
- Follow the tried-and-true best practices for overcoming capacity challenges. Expand your current carrier network, build in extra time at every step of the shipping process, consolidate your shipments, and consider alternative services. While it’s not always possible to implement these strategies, following them any time the market is experiencing tight capacity can be very advantageous to your operations.
- Become a shipper of choice. This means making your freight desirable to carriers. You probably aren’t able to change what you’re shipping, but there are some factors you can control. Being flexible with pick-up and delivery times, ensuring ease of access for the truck, and avoiding long detention times are all things carriers ultimately appreciate.
Back to school season is upon us and the holidays are right around the corner. In short, demand is not expected to drop anytime soon. Will the supply side be able to catch up? Not likely. Recruiting and retaining the needed labor force will continue to be one of the biggest challenges in the industry. And as we enter hurricane season and another COVID-19 surge, we could see even more network disruptions.
At this point, it’s important to manage expectations. You’ll want to budget for higher freight costs and be mindful of potential delays, so you’re not caught off guard. For everything in-between, our team has the expertise to help you navigate these challenges. Contact PartnerShip today and lean on us when you need it most.
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04/06/2020 — Leah Palnik
While you’ve been burdened with adjusting to the new normal that the coronavirus (COVID-19) outbreak has created, know that we are committed to supporting you and keeping your shipments moving.
Though this is an ever-changing situation, we will remain open. We are taking every possible measure to ensure the safety of our staff while also providing you with the same level of service you’ve come to expect from PartnerShip. Our goal is to minimize any further disruptions to your business.
We continue to monitor the situation and will make any changes needed to continue to serve you. If you have any concerns, we are here to help.
- Service guarantees for all UPS Freight LTL services from and to all locations are suspended, with the exception of UPS Freight Urgent Services. Read more.
- UPS Freight is prioritizing freight that is deemed essential in areas impacted the most by COVID-19.
- All YRC Worldwide companies, including YRC, Holland, New Penn, and Reddaway, have suspended reimbursement for service failures on both guaranteed and time-critical shipments. Read more.
- FedEx is suspending its Money Back Guarantee and has adjusted signature guidelines. Read more.
- UPS has suspended the UPS Service Guarantee for all shipments. Read more.
- Effective April 5, UPS implemented a temporary surcharge on UPS Worldwide Express, UPS Worldwide Express Freight, and UPS Expedited shipments originating from China Mainland or Hong Kong SAR to North America and Europe regions. As of April 12, that surcharge has increased. Read more.
- Effective April 6, FedEx implemented a temporary surcharge on all FedEx Express and TNT international parcel and freight shipments. As of April 27, that surcharge has increased for shipments originating from China. Read more.
- Effective May 31, UPS implemented temporary peak surcharges. Read more.
- Effective June 8, FedEx implemented temporary peak surcharges. Read more.
- To avoid redelivery fees or returned shipments, check with your recipient and confirm the delivery location will be open and available to accept your freight.
- Many manufacturers are switching their production lines for the common good, making ventilators, face masks, and other essential items that are in high demand right now. If what you’re shipping has changed, make sure you’re using the right freight class and noting the proper weight on your BOL to avoid reclassification and reweigh fees.
- Transit times for standard LTL shipments are never guaranteed, but now more than ever they’re less predictable. If your shipment is time-sensitive, you may benefit from using partial truckload services. Contact our team to determine your best options.
- Make sure you’re following social distancing best practices with drivers by communicating more over the phone and not relying on driver assist services.
- How coronavirus could affect supply chain and freight shipping
- Market updates in response to COVID-19
- FMCSA waives HOS nationwide for COVID 19-related movement
- Dry van demand rises as stores restock empty shelves
- Will coronavirus change trucking demand and rates? Watch these 4 factors
- Cargo handling continues at US ports despite coronavirus spread
- Airlines begin pulling passenger seats to make room for cargo
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2020 FedEx and UPS Rates Explained
12/10/2019 — Leah Palnik
If you’re planning to budget for your costs to go up 4.9% in the next year, you better think twice. The announced average doesn’t paint a complete picture. The rates for some packages will be increasing less than 4.9%, but that means that the cost to ship other packages is increasing far more. What you’re shipping, where you’re shipping it to, and what service you’re using will ultimately determine how much you should budget for your shipping costs in the new year.Here are the released rates for 2020:
FedEx and UPS surcharges
The rates, however, are only one part of the equation. You also have to take into account the additional fees that UPS and FedEx tack on. It’s more important than ever to be mindful of what could qualify your packages for these surcharges. Not only do the costs increase year over year, but the carriers also make adjustments to how the charges are defined – making it more likely that your packages will be hit with them.
A prime example of this is the change both FedEx and UPS made to their Additional Handling fee for 2020. They’ve lowered the weight threshold to 50 pounds from 70 pounds, which means your costs could go up significantly if you ship packages within that window.Here are all of the announced surcharge changes:
Online shopping has had a profound effect on the parcel industry and the way that FedEx and UPS operate. The carriers are moving more residential deliveries and an increased amount of larger packages, as consumers have become accustomed to being able to order almost anything online and receiving it in 2 days or less.
The changes FedEx and UPS have instituted in recent years and are making in 2020 are a direct response to these industry trends. In the past several years, they’ve broadened the use of dimensional weight pricing, added new peak surcharges, and drastically increased the surcharges for larger packages.
Understanding the 2020 rate increases
We know how daunting it is to analyze the 2020 FedEx and UPS rates, so we’ve done the hard work for you. In our free white paper, we break down the new rate charts and simplify some of the complicated changes. It’s the best way to find out what will cost you the most in the year ahead. Looking for ways to offset the rate increases? We can also help with that. Contact us to find out if you qualify for one of our discount shipping programs.
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UPS and FedEx Peak Surcharges Announced for 2019
09/24/2019 — PartnerShip
UPS and FedEx have both announced that they will not apply peak season surcharges on residential deliveries this holiday shipping season. However, both companies will continue peak surcharges on large shipments and those requiring additional handling during the holidays.
During the 2018 holiday season, UPS applied a per package residential peak delivery surcharge of $0.28 for ground and $0.99 for air shipments. This year, the company is leveraging its expanded air and ground capacity, and automated sorting hubs and processing facilities, to pass cost savings on to customers in the form of no residential delivery peak surcharge. More than 75% of UPS's small package volume will pass through these automated facilities in peak 2019.
“We delivered a record-setting 2018 peak season in terms of both on-time delivery performance and operations execution,” said David Abney, UPS Chairman and CEO. “We will build on the lessons learned last year and leverage our new efficient air and ground capacity to make the 2019 peak season another success for customers, investors and other stakeholders.”
This is the third holiday season FedEx has not added additional peak surcharges on residential deliveries. With UPS and FedEx both not applying a residential delivery surcharge this year, it is great news for e-commerce retailers and online shoppers. Online sales are expected to grow 14% to 18% this holiday season, and in the past, these residential delivery surcharges were passed along to shoppers in the form of higher shipping costs.
It’s important to remember that both UPS and FedEx are implementing peak surcharges this holiday season on larger packages and those that require additional handling.
UPS peak surcharges will apply to larger packages from October 1 through January 4:
- $31.45 per package for shipments that qualify as large (a 20% increase from 2018)
- $250.00 per package for shipments that qualify as over maximum limits (a 51.5% increase)
- $3.60 per package for shipments that require additional handling (a 14% increase)
- $37.60 per package for shipments that qualify as oversize (a 36.7% increase from 2018)
- $435.00 per package for shipments that qualify as unauthorized (a 190% increase)
- $4.10 per package for shipments that requires additional handling (a 13.8% increase)
The growth of e-commerce and online shopping for large and awkwardly shaped products such as mattresses and furniture has necessitated these surcharges because heavy and bulky packages can’t move through the automated systems in which UPS and FedEx have heavily invested. Through these surcharges, shippers are paying the price for the loss of efficiency these packages represent.
If you’re a retailer, you should pay close attention to this year’s UPS and FedEx peak season surcharges so you can make any needed changes now to help ensure you remain profitable during the busy holiday shipping (and shopping) season. A good first step would be to look at the large packages you ship and determine which will be impacted by the peak surcharges.
The UPS and FedEx additional handling peak surcharge will be triggered by packages that:
- Weigh more than 70 pounds
- Measure more than 48 inches along its longest side and more than 30 inches along its second-longest side
- Are not enclosed in traditional corrugated cardboard packaging
UPS Over Maximum Limit and FedEx Unauthorized Package surcharges will be triggered by any package that exceeds 150 lbs., 165 inches in length and girth combined, or longer than 108 inches.
Surcharges for these packages are already high; additional UPS and FedEx peak surcharges represent an added dent to your bottom line. When deciding how to ship your small package shipments, or if you should use LTL to ship your oversized or heavy packages, you need an expert on your side. PartnerShip manages shipping programs for over 140 associations, providing exclusive discounts on small package shipments to their members. To find out if you qualify or to learn how you can ship smarter, contact us today.
FedEx and UPS rates will be going up after the holiday season! Make sure you know what to expect so you can mitigate the impact to your bottom line. Our free white paper breaks down where you'll find the highest increases and explains some of the complicated changes you need to be aware of.
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Why Shippers Should Care About the CVSA Roadcheck
06/03/2019 — Leah Palnik
Coming to a highway near you, the Commercial Vehicle Safety Alliance’s (CVSA) International Roadcheck will take place June 4-6. On average, 17 trucks will be inspected every minute in Canada, the United States, and Mexico during the 72-hour period. The CVSA-certified inspectors will primarily conduct the North American Standard Level 1 Inspection and could render trucks out of service or place drivers out of service for violations. In fact, nearly 12,000 trucks and buses were placed out of service last year.
Both the drivers and their vehicles are put through a 37-step inspection which includes checking items such as the braking system, securement of cargo, exhaust system, frame, fuel system, lights, tires, wheels and rims, and other critical components. Each year, the CVSA places special emphasis on a specific category of violations. This year’s focus will be on steering and suspension systems due to their importance to highway safety.
Drivers and their trucks are subject to these same inspections year-round, but the International Roadcheck event brings a significant increase in inspections that has a notable ripple effect.
What can shippers expect?
- Capacity will tighten which will likely increase freight rates. Many smaller carriers and owner operators will take the days off to avoid the potential hassle. This can make it more difficult for shippers to find trucks during this time – driving up the load-to-truck ratio and therefore driving up rates.
- Delivery times will be affected. Not only do all of these inspections take time, but some loads may be delayed if drivers are pulled out of service due to violations. Even something as simple as a cracked windshield could cause a vehicle to be pulled out of service. In general, it’s a good idea to allow for some extra time just to be on the safe side.
Finding a truck during Roadcheck week is easier when you’re working with a quality freight broker like PartnerShip. We’ll help you find the best option and let you know what you can expect. Get a free quote today!
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Your Guide to the 2019 FedEx and UPS Rate Increases
12/17/2018 — Leah Palnik
FedEx and UPS rates will be going up in 2019, and it’s more important than ever that shippers know how to mitigate the impact to their business. In November, FedEx announced that its small package rates will increase an average of 4.9% as of January 7, 2019. In December, only a few weeks before the change is set to take place on the 26th, UPS announced the same average increase.
If you’re thinking that means you can budget your costs to go up by 4.9%, you are sorely mistaken. There is a lot to unpack with these rate increases. For starters, some services are increasing at a higher rate than others – meaning that depending on the services you commonly use, your costs could go up significantly more than the announced average.
Other factors determine how much more you will pay for your FedEx and UPS shipments in 2019. You will need to look at the new rates based on your package characteristics, as well as how far your shipments are being sent. Here are the released rates for 2019:
FedEx and UPS surcharges
The announced average increase only covers the base rates. You’ll also need to consider what fees and surcharges apply to your shipments. Many of these surcharges are increasing quite a bit. Here are the announced changes:
One surcharge to take note of is the Third-Party Billing fee. A couple years ago, UPS introduced this in response to the growing popularity of drop shipping. Right now if you use third-party billing, you will incur a charge of 2.5% of total cost. Beginning December 26, UPS will be increasing that charge to 4.5%. FedEx is leaving its Third-Party Billing charge unchanged at 2.5% for 2019. This is just one example of why it’s important to evaluate the changes that come out each year from UPS and FedEx. One small difference can have a huge impact on your costs.
The most costly surcharges continue to be those that apply to shipments that qualify as “Unauthorized” or “Over Maximum Limits.” If you send a package with UPS that weighs more than 150 lbs., exceeds 108 inches in length, or exceeds a total of 165 inches in length and girth combined, you’ll be looking at a $850 charge on top of your base rate. That same package will incur a $675 charge if you ship it with FedEx. Either way, you’ll be paying a huge premium to ship larger, bulkier packages.
Peak season strategies
It’s also important to note that ahead of the 2019 general rate increase (GRI), FedEx and UPS both announced peak season surcharges. For those larger packages, the carriers applied additional surcharges during the busiest time of year. A huge difference between the two, however, was an additional charge on residential shipments. UPS applied a $0.28 peak surcharge on residential ground shipments, while FedEx decided that for the second year in a row, it wouldn’t follow suit. If you’re a retailer that delivers a large amount of customer orders over the holidays, that charge can add up fast.
Trends in the small package industry
If you zoom out on all of these changes from FedEx and UPS, there are a few insights to glean.
- FedEx and UPS tend to institute similar pricing strategies. The carriers have a habit of matching each other when announcing average increases, and when one introduces a new charge or a different way to account for something, the other tends to do the same down the road. That doesn’t mean that it doesn’t matter which carrier you use. Instead, it’s important to stay on top of the changes and evaluate your options on a regular basis so you’re always using the service that works best for your budget.
- Many of the changes over the years have been put in place as a result of the ecommerce boom. With more shipments coming from online orders, comes more trends that strain the carriers’ networks. For example, ecommerce has led to more residential deliveries and more deliveries of oversized packages. That’s why you’ll see the carriers making changes that help them to recoup some of the costs associated with these trends.
- Both carriers have been making changes throughout the year, instead of just during the GRI. For example, FedEx and UPS both increased their Additional Handling surcharges ahead of the new year – in September and July respectively. When UPS first introduced peak surcharges for residential ground shipments, that was also done outside of the annual announcement. This just highlights how important it is for shippers to stay aware throughout the year.
We know you don’t want to comb through every tedious page of the 2019 FedEx and UPS service guides and compare them to your current rates. That’s why we did the leg work for you. In our free white paper, we break down where you’ll find the highest increases and explain some of the complicated changes you need to be aware of. If you’re looking for ways to offset the rate increases, we can also help with that. If you’re a member of one of the many associations we work with, you can get access to exclusive discounts. Contact us and we’ll find a way to help you save.
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ELD Enforcement: Are We There Yet?
05/07/2018 — Jen DemingIt's been just over a month since the "soft enforcement period" has ended for ELD regulation, and while the shipping industry is seeing huge improvements with compliance, there are still a number of challenges facing shippers. While most of the crunch was felt at beginning of the year, when the initial ELD deadline went into effect, it's going to take some time before we see the industry normalize. As we head into the summer and a heavier shipping season, what can shippers and carriers expect to encounter along the way?
According to several reports, it appears that the majority of carriers are now using electronic logging devices to track their hours of service, with as many as 95% becoming ELD compliant. While many small carriers originally insisted that they would not comply and figured it was time to make their exit, the capacity crunch and need for experienced drivers has boosted the trucker's market, outweighing the inconvenience of switching over. According to a DAT Solutions survey, over 60% of these carriers have added the compliant devices within the past three months, following the deadline date.
Survey respondents are, however, confessing that the ELD mandate has a huge impact on day-to-day business, with 87% reporting that the mandate is changing the way they prioritize loads. The most significant factor impacting carriers? A significant increase in detention time – basically any time taking over the given 2 hours. Many shippers fail to recognize that time for loading/unloading freight counts as active "on duty" hours for the driver. The strict HOS (Hours of Service) rules can decrease an already limited amount of hours available for transit time.The good news is, with trucker time being more accurately logged, drivers can now prove exactly how long they were held up during loading. Carriers then have leverage to choose precisely who they want to ship with, and determine who may create problems for them on future loads. While this creates a positive environment for truck drivers, it can leave shippers in the backseat. But don't fret, there are several things shippers can do in order to to create appealing loads for carriers, which we will get into a bit later.
The data taken from the ELD devices can actually help shine some light on existing safety issues within a fleet. Predictive modeling can determine safety concerns that may arise in the future, such as probability a truck may be involved in a roadside accident. By looking at historical data, it will be easier to determine potentially dangerous routes, trucking equipment, hours of operation, and operators. So far, utilizing data in order to better determine areas of opportunity for increased driving safety is the most positive application of the new mandatory ELD technology.
So what's to come? As expected, with drivers spending less time at the wheel in one run, transit times will continue to lengthen. This means that drivers have to take less loads per week as well, with 67% stating that they drive fewer miles than they did before the devices. Parking space is in a crunch as well, with more trucks spending mandatory rest breaks at stops. This is also related to yard congestion, or several trucks arriving on time for delivery within a small window. Proper warehousing protocol and smooth receiving and loading procedures is crucial. It may be a good idea for shippers to extend their warehouse hours to offset the congestion. Having properly staged freight ready and waiting with an adequately sized team can also help decrease time spent at the loading dock, freeing up hours available for your driver to be on the road. Another option for shippers is to consider drop trailer freight programs. A carrier will haul a tractor to a shipper's loading dock and pick up a previously loaded and left behind trailer. This can increase efficiency by decreasing detention time and likelihood of deadhead.
One thing is clear: the initial push-back from owner-operators to make changes in order to become ELD compliant has mostly disappeared. Those originally looking to leave the industry are adapting to new policies and procedures, but there is still a significant learning curve. The biggest take-away is the impact of detention time and a newly invigorated intolerance for running into overtime. Drivers are vigilant, and shippers need to be even more prepared for a smooth and quick load time. PartnerShip can help businesses manage LTL freight moves and connect you with vetted, reliable truckload carriers. Stay competitive and ship smarter with PartnerShip – get a quote today!
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ELD Updates: From Exemptions to Enforcement
03/12/2018 — Jen DemingAs we enter mid-March, we approach the three-month mark since the Electronic Logging Device (ELD) mandate deadline passed in December 2017. While the mandate has been "softly enforced" since the deadline, full enforcement will kick in beginning April 1. A stricter enforcement will include steeper fines, CSA points and subsequent out-of-service citations. That all adds up to tighter capacity and limited available truck drivers. So what does that mean for both carriers and shippers and what's been going on in the meantime?
As a review, several industries and specific groups have extensions and exemptions that are currently in effect, or will be approaching an expiration date. Most carriers will be required to adhere to the mandate, unless qualified by a series of standards set by the Federal Motor Carrier Safety Administration (FMCSA). If you are not currently required to keep a record of duty status, you do not need to equip your vehicle engine with electronic logging technology. Additionally, if you keep RODS (Record of Duty Status) less than 8 days in a 30 day period, you are exempt as well. If you are a "driveaway/towaway" driver, or your vehicle's engine (not body, cab, or chassis) was made prior to 2000, the new ELD mandate does not apply to you. Rental truck drivers and those covered under the 90- day agricultural extension also are exempt for now. Agriculture and livestock haulers will have to file again, or install approved ELD devices by March 18. If they do not, fines and citations can be issued, but drivers will not be put out-of-service until April 1.
Since the official implementation of the mandate in December, many additional groups have filed for further exemption requests. The Owner-Operator Independent Drivers Association (OOIDA) has been very transparent in its opposition of the mandate, and has asked for an oversight hearing in order to express its concerns over the mandate and it's implementation. The organization's main issue with the mandate concerns technical issues and malfunctioning, which is an ongoing concern with many of the approved devices. System failures and crashing, issues with GPS tracking and reporting, and mechanical difficulties linking to the truck engine are all cited challenges with the current ELD devices being used. On top of that, the current FMCSA list of approved ELD vendors includes many "self-certified" providers who are NOT actually compliant with requirements. It's a complicated vetting process that leaves many questions and lots of confusion for both truck drivers and law enforcement officials.
Enforcement of the mandate up until this point has been spotty as well, due to the technical issues with the devices and insufficient training of both drivers and enforcement personnel. In fact, 17 states have decided not to enforce at all until April 1, with the remaining states leaving it up to the individual officer's discretion. The FMCSA has given direction to use a specific code, 39522A, in order to report violations in order to track ELD compliance, but to this time, the code has not been showing up in reports. Namely, this is due to the complicated nature of the devices and the wide range of types being used. Put simply, both drivers and enforcement officers are finding it difficult to recognize whether a carrier's chosen ELD is truly compliant. As a result, drivers are required to carry cards indicating proof they are compliant, as well as instructions on how to operate their software, report device errors, and alternative options to record their hours of service.
With less than 3 weeks away to a more strict enforcement period, many carriers and truck drivers have yet to move ahead with becoming ELD compliant. Some are battling training issues or troubleshooting their current ELD technologies. Many small enterprises are simply waiting out the soft enforcement period and then find it easier to leave the industry entirely. Either way, it's safe to say that major changes will be occurring in the next few weeks and that the crunch in capacity will continue to affect shipping rates. PartnerShip can help make sure your shipments are covered at a competitive rate. Ship smarter with PartnerShip, get a quote today!
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High Freight Rates and Tight Capacity: What You Can Expect
01/22/2018 — Leah Palnik
If you’ve been experiencing sticker shock from unpredictable freight rates lately, you’re not alone. Shippers are seeing a lot of volatility in the truckload and LTL market, with no end in sight.
2017 ended with tightened capacity and record rates. By December, the average van rate was $2.11 per mile (DAT) – an all time high. The load-to-truck ratio was also breaking records at the end of the year, with 9 load postings for every truck posting in December.
Coming off of a record high December, capacity continues to be tight in January – particularly with reefers since they’re needed to keep freight from freezing in the coldest parts of the country. DAT reported that the national load-to-truck ratio at the beginning of the year was the highest ever recorded at 25.2 reefer loads per truck. During which, the reefer rate was at a high $2.71/mile. Van rates have also been breaking records. According to DAT, they were at $2.30/mile on January 6.
So what can shippers expect going forward? Let’s look at the trends. We saw a bit of a recession in 2015 and 2016 with rates and load-to-truck ratios declining, but that appears to be over. Rates climbed throughout 2017 and we can continue to expect increases in 2018.
Overall, the U.S. economy is healthy right now and is growing, increasing freight demand. In contrast, the trucking industry is dealing with the aftermath of the ELD (electronic logging devices) mandate. Not only do they need more drivers and more equipment on the road to handle the same amount of freight, but they are also contending with a long running driver shortage. All of this equals tightened capacity, which is becoming the new normal in the industry.
Recent weather events have been driving up rates as well. Areas of the U.S. that don’t typically experience extreme cold or snow have been hit by treacherous weather that has led to dangerous conditions including low visibility and icy roads. In a tight capacity market, these conditions drive up rates even more.
In February we can expect to see capacity loosen some (barring any winter storms or other troublesome events), as this is typically the slowest time of year for freight. However, you’re likely to see higher rates than you have in years past, because of the long-term trends.
In April, drivers not complying with the ELD mandate will be put out of service. Up until then, inspectors and roadside enforcement personnel are simply documenting and issuing citations if a truck isn’t equipped with the required device. As a result, we may see some ripple effects. There could be fleets that have held out or hoped to fly under the radar until April. There could also be another wave of trucking companies exiting the market, which will leave a void in the already tight market.
Now it’s more important than ever to find ways to mitigate the impact of this tightened capacity. Plan ahead so you can be flexible. Providing more lead time and giving your carrier a longer pickup window rather than a specific time can lessen the strain on its network. Planning ahead can also help you shift to more committed freight and away from the spot market. The spot market is more sensitive to disruptions and subject to reactionary pricing spikes.
Luckily you don’t have to navigate the freight market alone. When you work with PartnerShip, you benefit from our large network of carrier partners and our shipping expertise. We help you ship smarter with competitive rates and reliable service. Get a quote today!
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The 2018 FedEx and UPS Rate Increases: A Closer Look
11/20/2017 — Leah Palnik
With the New Year approaching, it’s time to look at the UPS and FedEx rate increases for 2018 and how they will affect your costs. In September, FedEx announced an average increase of 4.9% on Express and Ground services. UPS joined the party in October, announcing that they will also be increasing their rates by an average of 4.9%. The new 2018 UPS rates will take effect on December 24, 2017, while FedEx will be instating them a week later on January 1, 2018.
The averages might be the same, but the rates vary. With higher increases for some services and lower increases for others, you can’t budget based on your costs increasing 4.9%. It’s important to look at what services you use, your package characteristics, and the locations you’re shipping to, and then evaluate the new rate charts to find your biggest cost offenders from the 2018 FedEx and UPS rate increases.
On top of the FedEx and UPS rate increases for 2018, there are additional updates that are likely to affect your shipping costs. First, UPS is lowering its dimensional (DIM) weight divisor from 166 to 139 for domestic packages less than or equal to one cubic foot (1,728 inches) in size. With this change, UPS and FedEx are back in line with each other on how they calculate dimensional weight. Both carriers will now use 139 for all domestic and international packages.
It’s been a wild ride the past few years with multiple changes to which packages DIM weight pricing applies to and how it’s calculated, so this is a welcome stabilization. However, a lower divisor means a higher chance that your package will get billed at your DIM weight, rather than your actual weight. If you ship packages one cubic foot or under with UPS, it’s important to take note and make changes to eliminate any unused space in your packaging or consolidate orders when possible.
Surcharges are also increasing, with some at alarming rates. Most notably, in 2018 FedEx and UPS are coming after larger, oversized packages. Not only are they increasing at a higher rate than most surcharges, they are by far the most costly. For example, the FedEx Unauthorized Packages fee is increasing from $115 to $300 and the UPS Over Maximum Limits charge is increasing from $150 to $500. The shipping trends that have resulted from the rise of e-commerce has taken its toll on the carriers and they’re having to move more and more oversized packages that can’t go through their automated systems. Time is money, so they’re tacking on hefty fees to make up for it.
Ahead of the new FedEx and UPS rate increases for 2018, new holiday peak season charges will also apply. UPS is adding peak surcharges on domestic residential packages during the busiest shipping days of the year – from November 19 to December 2 and from December 17 to December 23. These fees will add up quick when you have an increased amount of orders over the holidays.
In a notable departure from UPS, FedEx decided not to add a peak season surcharge this season. Instead they opted to increase surcharges for packages that are big or bulky enough to require special handling. UPS is also increasing the cost of larger packages by adding additional peak season surcharges on top of the already existing surcharges. The 2018 UPS rate announcement included increases for these surcharges for the next holiday season, so you can expect this trend to continue.
The 2018 FedEx and UPS rate increases are proof that the carriers are getting smarter, hitting shippers where it hurts most. Luckily, you don’t have to navigate the changes alone. The shipping experts at PartnerShip have evaluated the new rate charts and we have completed a detailed analysis, so it’s easier for you to assess the impact on your shipping costs. Download our free white paper today!
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FedEx Announces General Rate Increases for 2018
10/05/2017 — Leah Palnik
You may have heard that FedEx announced its General Rate Increases (GRI) for 2018. In the past few years, UPS has been the first of the two major small package carriers to make an announcement for the coming year, but this time FedEx is taking the lead.
Here are the announced average increases that will take effect January 1, 2018:
- 4.9% for FedEx Express domestic and international services
- 3.5% for FedEx One Rate
- 4.9% for FedEx Ground and FedEx Home Delivery
- 4.9% for FedEx Freight
As it’s important to remember every year, these averages don’t paint a complete picture. The zones you typically ship to and the services you typically use could dramatically affect the actual increase you’ll see on your invoices. Some are much higher than the average, while others are much lower or remain the same. UPS is likely to make its announcement for 2018 rates soon and if history is any indication, the averages will be similar to its competitor.
FedEx and UPS traditionally have similar average rate increases, but in the last few years their base rates have diverged a bit. Ground base rates used to be nearly identical, but in 2017 the two carriers took different increases in different zones, making it harder to compare apples-to-apples. On top of that, they also implemented slightly different approaches to dimensional (DIM) weight pricing, by using different DIM factors. As a result, looking at what would be most cost effective for you and how your rates will change has become more complicated.
Another trend that we’ve seen from UPS and FedEx is the announcements of additional changes throughout the year, separate from the GRIs. The announced averages have gone down in recent years, but these mid-year adjustments can sometimes have a larger impact.
One example of this is the new peak season surcharges that UPS is implementing for the holidays this year. UPS recently announced that it will apply a 27-cent charge on all ground residential packages during its busiest weeks in November and December. FedEx is taking a notably different approach and forgoing any additional holiday residential surcharges except for packages that are big or bulky enough to require special handling.
Both UPS and FedEx attribute charges like this to the rise of e-commerce, which has brought a sharp increase in residential shipments, particularly oversized items like furniture and exercise equipment. These kind of parcel shipments put a strain on their networks and their sorting machinery, and they've been finding ways to make up for these costs.
FedEx is also making a couple of additional moves to address the changing nature of parcel shipments in 2018. It will now apply a surcharge for shipments with third-party billing – mimicking a move that UPS made at the beginning of 2016. FedEx will also begin applying a DIM factor of 139 to all SmartPost parcels, effective January 22. UPS already applies DIM weight pricing to SurePost packages, but uses a higher DIM factor for packages 1,728 cubic inches and under.
Every year, when the new rates for UPS and FedEx are out, PartnerShip does a complete analysis so you can determine what effect it will have on your business. Subscribe to the PartnerShip Connection blog to be alerted when it’s out so you can start planning for the new year and learn how to mitigate the rising costs of small package shipping.
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The Aftereffects of Hurricane Harvey on Shipping – What to Expect
09/01/2017 — PartnerShip
One of the most devastating storms of the past century, Hurricane Harvey, has left its destructive mark on Houston, Texas, and its impact will create a ripple effect on shipping that will be felt for months, if not years.Even if you do not have facilities or do business in Texas, Harvey will affect your business because freight and transportation networks nationwide will need to adjust, and the country’s entire supply chain will need to compensate. Houston is one of the country’s most important and busy freight hubs. It is one of the top inbound and outbound freight hubs and is a main transfer point for freight coming from Mexico and it also is a busy and large sea port.
The entire PartnerShip team holds everyone impacted by Harvey in our thoughts, and we'd like to thank everyone that has assisted in the relief efforts.
Because it is such an important part of our transportation system, the damage caused by Harvey will stress already tight trucking capacity, according to supply chain experts at freight loadboard and data firm DAT Solutions. With the additional influx of inbound relief from FEMA and other organizations, additional stress will be put on capacity, which will likely push rates up in the coming weeks and months.
According to DAT, inbound and outbound freight volume for Houston was down 10 - 15%, and its analysts expect that number to hit 75 or 80 as storm clean-up begins.
Logistics research firm FTR predicts similar countrywide supply chain effects and increases in rates. “Look for spot prices to jump over the next several weeks with very strong effects in Texas and the South Central region,” according to FTR economist Noël Perry. FTR noted that rates gained 7 percentage points in the five months after Hurricane Katrina in 2005 and spot market rates jumped 22% in the weeks following massive snowstorms in 2014.
FTR states that the most immediate effect on capacity is caused by trucks waiting for the area to become passable so they can resume operation. Longer-term effects to capacity will include the relief shipments, additional construction supplies as the area rebuilds, reduced productivity due to freight lane shifts and rerouting, and increased congestion at loading docks caused by these supply chain disruptions.
Other considerations for shippers:
- Harvey has shut show about 20% of US oil refining capacity in Corpus Christi, Port Arthur, Lake Charles and Houston. The disruption will drive up fuel prices and the fuel surcharges carriers charge for every load.
- As noted, carrier capacity is going to get tighter. FEMA and other agencies are putting pressure on the market to move equipment and supplies to the area. This capacity tightening should first affect flatbeds to move heavy equipment, then reefers to move food, then dry trailers for dry goods and other supplies.
- It is likely carriers may struggle keeping their commitments to you in the short-term as FEMA and other agencies will pay a premium to move needed equipment and supplies. You may need to shift your carriers around in order to secure the capacity you need.
- Your transportation costs will increase. Be prepared to pay 5 - 22% more in the short term.
- Your customer demand will change. Your customers or suppliers may cancel shipments, or add shipments, or reroute shipments. Until operations in the Houston area resume and get back to normal, there will be interruptions in every industry’s supply chain.
Working with a freight broker can help you mitigate the service interruptions, capacity issues and rising costs associated with Hurricane Harvey. Contact PartnerShip at 800-599-2902 or use our contact us form to see how we can help you ship smarter so you can stay competitive.
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What You Need to Know About Freight Class Changes
08/10/2017 — Jen Deming