TAKEAWAYS
FREIGHT FORECAST: MIXED MESSAGE Intense price competition among parcel carriers and stagnant truckload rates has yielded good news for shippers, according to the Q3 2024 TD Cowen/AFS Freight Index , released by AFS Logistics and TD Cowen. However, a favorable market for shippers isn’t the only takeaway from the Index, which provides predictive pricing for truckload, LTL, and parcel transportation markets. Here are some key highlights: • Uneven demand and capacity imbalances in the LTL segment. LTL carriers maintain pricing discipline, while parcel carriers engage in aggressive discounting, and truckload rates have remained flat for the sixth consecutive quarter. • After establishing a floor in Q2 2023, truckload rates are projected to remain low in Q3 2024, with a slight decline expected. Despite some upward pressure from spot market increases, contract rates continue to decrease slightly. • Parcel carriers are caught in a cycle. They are bouncing between frequent surcharge hikes and heavy discounting to compete for limited volumes, leading to a decline in the ground parcel rate per package index. The express parcel index is also expected to fall, driven by seasonal trends and ongoing discounting. • LTL carriers show discipline in maintaining elevated rates, despite a decrease in cost per shipment due to lighter weights and lower fuel surcharges. The LTL rate per pound index is projected to see modest growth. • Shippers are capitalizing on cost-saving opportunities by shifting lighter freight to LTL networks and consolidating heavier freight into multi-stop truckloads.
DISRUPTIONS KEEP DISRUPTING If it seems like supply chain disruptions are the new norm, that’s because they have been this year. Resilinc, a supply chain resiliency solutions provider, has unveiled new data showing that the overall number of disruptions from January through June 2024 is up 30% over the same period last year. Resilinc’s EventWatchAI platform, which monitors disruptions globally by analyzing nearly 5 billion data feeds annually, reported 10,629 supply chain disruptions in the first half of 2024. The life sciences, healthcare, general manufacturing, high-tech, and auto industries bore the brunt of the impact. The top 10 reported disruptions in the first half of 2024 were: 1 Factory fires 2 Labor disruptions
3 Mergers & acquisitions 4 Leadership transition 5 Factory disruption
6 Business sale 7 Legal action 8 Recall 9 Extreme weather 10 Cyber attack Key takeaways include the following: • Major disruptions stemmed from compliance and ESG issues, labor unrest, and extreme weather events. • Regulatory changes and ESG legislation drove year-over- year increases in fines, legal actions, and labor violations. • Economic pressures led to surges in bankruptcies and force majeures. • Labor disruptions rose 42% and extreme weather notifications jumped nearly 130%. • Over half of these disruptions were severe enough to activate WarRooms on Resilinc’s platform, facilitating swift responses.
18 Inbound Logistics • August 2024
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