As the U.S. economy continues to grow, shippers can expect a rate increase in 2015, predicts Patrick Burnson in his article from Logistics Management.
Patrick enlists the insights of some of the leading market analysts to help outline the reasons behind the increase.
“The biggest story in the industry sector has to be the 30 percent decline in oil prices since June to a level not seen since the global recession cut a whopping 6 percent from global consumption back in 2009,” advised Derek Andreoli, Ph.D.c., senior analyst at Mercator International LLC and Logistics Management’s Oil and Fuel columnist.
However, Patrick notes that, “Unfortunately for consumers of diesel fuel, the extreme softening of global oil prices has not translated to U.S. pump prices. The national average price for a gallon of diesel declined by only 5 percent in the Rocky Mountain region and just 7 percent on the West Coast.”
Supply and demand is expected to tighten across the trucking industry as the economy continues to grow. Even with declining fuel prices, trucking rates will continue to rise. As technology such as electronic logging devices and speed limiter regulations are implemented, trucking productivity will be reduce. In addition, with added driver regulations, the driver workforce will continue to shrink.
Intermodal rates have continued to increase, but not by much. “The carriers are more savvy than ever, and are also in need of solid earnings so they can continue to invest and improve network capacity and performance…volume growth is predicted to continue unabated and all reliable forecasts indicate there will be a capital shortfall in meeting demand. This means rates will need to rise and profits need to improve. If they don’t the network congestion we’re currently seeing will certainly worsen.” –Brooks Bentz, supply chain management consultant.
U.S. Port congestion is anticipated to remain an issue that will create cost implications for shippers as well. Larger vessels, chassis shortages and intermodal network service problems will continue to create congestion issues for ports.
These are a few of the factors contributing to the rate increase for shippers. Navigating through rates can be a burden. At Vestra Logistics, our goal is to ease that burden and provide shippers a great price, along with unmatched customer service. We pride ourselves on keeping shippers updated throughout every step of the journey so that they know that their goods have arrived safely and on time as expected.