“Springtime is almost here”. This reliable refrain for residents of the northern part of the country may not actually be prophetic, but it is never wrong. Eventually the snow melts, the trees blossom, and of course, trucking capacity starts to tighten. Every year around Mid-March ,shippers in every industry start to feel the pressures of reduced capacity and increased rates.
Carriers struggle through the first few months of the year when freight is scarce. Barely scraping is considered a win by many and while many are celebrating the rebirth of spring, carriers are working out how they are going to execute a plan to recoup their losses from the first quarter. The two main factors that will garner most attention will be construction markets and produce.
Flatbed carriers are primarily focused on construction projects. As the weather breaks, constructions beings. Production facilities see an increase both inbound and outbound. Warehouse transfers become more prevalent and warehouse transfers rise. Job site deliveries require longer wait times and present unique challenges. All of this leads to more revenue being pumped into the market and carriers want their fair share.
Dry van and refrigerated carriers have an entirely different focus. March marks the annual beginning to the notorious produce season. From now through July, fervent carriers will be running their trucks as hard as their logs allow attempting to take advantage of the produce shippers that have the capital to secure these trucks to ensure timely movement of their product. The shear volume that is present only in this three-month window presents another challenge to capacity. Shippers find themselves either scraping the bottom of the barrel or paying a premium to get their freight moved. That is unless they planned ahead.
The welcome aspect of a cyclical conundrum for shippers is that they know it is coming and they can prepare. There are two approaches that shippers can take. The first is to ride the wave. Freight comes easy and cheap (relatively) in the first quarter. Being aggressive with your partners and staying sharp on rates can help offset the higher costs come Q2. This approach can be effective, but is also a bit of an uncertainty. Many shippers prefer to take a safer approach. Securing capacity commitments with carriers year-round can alleviate the pains from capacity, price, or even both. Carriers are willing to forgo the extra money in the peak season to prevent the valleys in the off seasons. This helps reduce the overall volatility in transportation costs for the shipper.
Regardless of the approach, the market is already starting its change. March 20th at 5pm marks the official start of spring,and with it the campaign to secure capacity begins as well.
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