How to Conquer the Capacity Crunch
Freight Shipping Trends in 2022 — Tips to Survive the Top 7
Congratulations, you've made it through 2021 — another tough year in freight shipping. In the last few years, you've faced disruptions never seen before, mostly due to COVID-19 and its ripple effects. While great for some businesses, the rise in consumer spending caused shipping issues across the country, and beyond . Well, sorry to say, COVID is expected to stick around in 2022. The long-term outlook shows more of the same challenges as 2021, with lengthy delays at ports, truck capacity and labor shortages, and rising rates and fuel costs. Brace yourself for another stressful year — but know you don't have to face them alone.
It's smart to stay on top of freight trends for 2022, even if you can't control them. You can build on the resilience and agility gained in the past year and lean on resources that can help you navigate these issues.
Trend 1: Inflation and shortages continue to affect LTL and TL rates
Expect higher shipping rates.
2022 is going to be another tight year for less-than-truckload (LTL) freight and truckload (TL) rates. Inflation, an unrelenting demand for capacity, fuel surcharges, and the labor shortage could raise shipping rates by 3% to 5% in 2022. Some predict LTL rates will initially increase by 15% in 2022 then drop slightly later in the year.
Tip: Get quality service at negotiated rates.
Prepare your supply chain for the uncertain environment in 2022 and maximize your transportation spend by partnering with a logistics provider with proven experience. A 3PL with strong connections will give you access to a broad network of qualified carriers at discounted rates.
Trend 2: Port congestion and container shortages create bottlenecks and high prices for freight shipping
Shipping backlogs will continue into 2022.
Ships are still clogging the ports while waiting their turn to be unloaded and loaded, and trucks are stuck in lines waiting for those shipments. All this traffic at a standstill created a shipping container shortage that remains a problem. Indeed, companies are using containers for storage while they wait for trucks to pick up their shipments — that means fewer containers are available for other shippers anxious to get their products delivered.
Tip: Consider alternative shipping options.
Some carriers have a tight rein on shipping containers or have resources to get them. But if your carrier isn't one of the lucky ones, air freight might be a viable mode for your shipments.
Trend 3: Truck production is slow moving but plans for advancement are in place
The U.S. is reducing reliance on China.
Semiconductor shortages in China will continue to slow truck manufacturing and raise sticker prices, at least for now. Eventually, we'll be less reliant on China and more self-sufficient. The U.S. Innovation and Competition Act, passed in June 2021, supports semiconductor research, design and manufacturing in the U.S., so we may see a shift in development.
Tip: Use freight carriers with a full fleet.
While waiting for truck production to ramp back up, put your shipments in the hands of carriers with reliable cargo capacity. A 3PL provider will help narrow down your selections and guide you to the carriers in their portfolio who are best suited with equipment for your commodity and geography.
Trend 4: Plans are in place to close the gap in freight truck driver shortages
The number of trucker drivers continues to decline.
Driver shortages are nothing new. You've been hearing about that for years. To recruit and train new drivers in 2022, the Biden-Harris Administration created the Truck Action Plan. Among other initiatives, the plan calls for reducing barriers in the commercial license process for truck drivers, lowering the age for commercial drivers, supporting development of driver apprenticeship programs and recruiting women, military veterans and the formerly incarcerated to become truck drivers.
Tip: Use carriers with a wide network of dependable drivers.
It's not possible to know which drivers will stick around for the long haul. Aging drivers retire and younger, disenchanted drivers leave the industry. But you can ask about turnover when you vet carriers. And, if you work with a 3PL provider, they should have a good relationship with their network of carriers and should consider driver retention when adding carriers to their portfolio.
Trend 5: Shipping challenges disrupt traditional warehousing approach
Far-traveling freight shipments are at greater risk of delay.
Truck and driver shortages impact the delivery of long-haul shipments more than local shipments. That's not great news for companies shipping from a single warehouse to areas across the nation.
Tip: Open warehouses closer to your customers.
Regional distribution centers (DC) are giving way to smaller DCs closer to urban areas. These micro-warehouses make it easier for shippers to rapidly replenish store shelves, ship last-mile directly to consumers and offer in-store pickup. Your 3PL provider can look at your overall shipping reach and let you know if investing in micro-warehouses makes economical and time-saving sense.
Trend 6: Restructuring inventory management will create a better inventory balance
New buyer habits are challenging the just-in-time structure.
Companies practicing just-in-time inventory management were caught off guard with insufficient product quantities when the pandemic hit, and online consumer spending skyrocketed. While inflation may slow purchasing power in 2022, cargo capacity issues will continue to wreak havoc with near-empty shelves in stores and warehouses.
Tip: Combine inventory strategies for a just-perfect fit.
Consider complementing just-in-time with just-in-case inventory management. You'll have inventory for immediate fulfillment and enough for unanticipated orders. If you have multiple facets to your business (brick-and-mortar, e-commerce, big box sales), a just-in-case inventory strategy will help balance omnichannel inventory needs. It's a trend to pay attention to this year. Stay agile, be prepared for unpredictable disruptions and pivot as needed.
Trend 7: Technology advancements lead to simpler freight shipping
Make data-driven supply chain decisions.
Here's some exciting news for 2022. Technology trends in logistics management will make shipping easier and more data driven. Custom enterprise resource planning (ERP) systems, intuitive transportation management systems (TMS), access to real-time data and easy-to-use technology tools will help you see and understand your supply chain more clearly. You can learn where to adjust for improved efficiencies and cost-savings. A definite bright spot in 2022.
Tip: Choose logistics partners with high-performing technology.
Sure, innovative technology will help simplify and strengthen your shipping process, but only if you have access to that level of technology. When vetting 3PL partners, put shipping technology near the top of your list of interview questions.
2022 Hot Tip: Choose a 3PL provider to help manage freight shipping issues
Feel confident shipping freight.
The past two years have been stressful, to say the least, and 2022 is looking to be much of the same. To combat uncertainty, turn to a 3PL provider that has experience handling difficult shipping issues and solving challenging problems. Worldwide Express has a firm foothold in the logistics industry. We'll connect you to top-notch LTL and TL carriers that offer discounted rates for small and mid-sized businesses. Plus, you'll gain deep insights from our technology to help you make better informed decisions about your shipping strategy and processes. And on top of it all, you'll have a Worldwide Express logistics expert who will get to know your business and provide personalized direction and advice on your shipping.
Request a consultation and learn how we can help you navigate freight shipping challenges in 2022 and beyond.