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U.S. Trucking Market Update: Winter 2018

An update on U.S. port drayage rates and constraints in early 2018.

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This winter, many importers are feeling the impact of the drayage situation at certain U.S. ports: slowdowns, delays, and higher costs.

Some of this is weather-related: Winter weather conditions are notoriously difficult on port and trucking operations. Snow, ice, and storms can cease port operations for a day or more, which leads to backlogs that take a week (or longer) to work through.

This year, there are other factors exacerbating the issue: import volume growth, chassis shortages, the ELD mandate, and driver shortages.

Increased import volume means busier ports and more congestion

U.S. ports saw significant growth in import volume during 2017, with growth of 7 percent at major container ports. Though it’s too early to forecast precise numbers for 2018, growth is expected to continue.

In addition to the strong economy, this growth is also due to the widening of the Panama Canal, which allows larger vessels -- and more total TEUs -- to move via that route. In general, carriers are sailing larger vessels, with more total capacity.

More volume, more demand for chassis

With more containers coming in, there’s a higher demand for chassis. At many ports, chassis pools are stretched very thin; there simply aren’t enough chassis to service all of the containers coming in and out. Since chassis are required to pick up and transport ocean containers, this leads to delays and fees.

Less trucking capacity after the ELD mandate

The ELD mandate, which took effect in December 2017, is resulting in less trucking capacity (by some estimates, up to 10-15% less).

The law requires drivers to log their hours electronically, which means stricter enforcement of driving limit requirements (drivers may only drive for 11 hours per day and be on duty for 14).

Truckers are incentivized to accept shorter, faster loads, so that they can fit more than one delivery in a day. This is difficult if they’re picking up from a busy port, and those valuable daily hours are being eaten up by waiting at the port, and unloading at the warehouse.

Nationwide driver shortage

The industry has already been struggling with a severe driver shortage as many drivers age out of the profession. The factors mentioned above are contributing to an already difficult market. Currently, there is a shortage of about 50,000 drivers, and drayage is one of the most affected areas.

Tip: Consider alternate ports and routings

Talk to your Flexport team about alternate ports (the most heavily impacted ports are listed below).

For example, if you usually discharge at Savannah, consider routing to an inland ramp like Atlanta, Greensboro, or Charlotte -- these rail ramps are busy, but not as backed up as Savannah. Or, consider a West Coast routing, then transload and truck your cargo to its cross-country destination.

Below, a summary of the problems impacting each port.

Savannah

Major growth = severe congestion

The Port of Savannah has seen significant growth in import volume over the course of 2017, due in part to the expansion of the Panama Canal.

Additionally, the governments of Georgia and South Carolina have begun offering attractive tax incentives for companies that create jobs in manufacturing, warehousing, and distribution, so some companies have relocated facilities into the region.

Chassis shortages

Chassis are in high demand with the additional volume. Plus, with larger BCOs moving warehouses to the area (to take advantage of those tax incentives), we see more chassis tied up with dedicated BCO pools at the port.

The ELD mandate is hitting Savannah particularly hard

In Savannah, the impact of the ELD mandate is especially noticeable. This is because a large number of containers discharged at Savannah are drayed more than 100 miles from the port to inland facilities. Drivers are less likely to be able to complete 2 round trips within the strictly enforced limits, especially if the port is congested and they’re forced to wait.

Charleston, Jacksonville, Norfolk, Atlanta

Other ports in the Southeast are seeing the same sorts of issues as Savannah, but the impact is not quite as severe. Notably, drivers from these areas are being redirected to support Savannah cargo, which is exacerbating driver shortages here.

Chicago

Congestion and chassis shortages remain significant in Chicago, especially at the CN Harvey ramp. Trucking wait times can stretch into hours, and there’s a backlog of containers that require a chassis. Across Chicago rail ramps, there are delays.

Houston and Dallas

Houston first saw its capacity seriously affected by the hurricane, and has recently experienced port closures due to winter weather conditions. Capacity is very tight.

The ELD mandate has had a major impact in Texas, for reasons similar to what we’re seeing in Savannah -- longer round-trip drays are no longer possible in a day. Rates are increasing throughout the state to compensate for these changes.

Newark

This is generally one of the worst-hit ports during winter, due to the one-two punch of winter weather and high import volume.

During this season, we see terminal closures, containers and trailers snowed in, dock doors snowed in, truck breakdowns, and trucks not starting (especially when the weather dips below 20 degrees Fahrenheit). Delays happen frequently, and backlogs can pile up quickly.

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