Hard to believe we’re more than halfway through 2021. 2020 seemed to chug along as we were all getting used to our new work environment. Then boom, all of a sudden 2021 is here…we’ve adapted, business has evolved and in the blink of an eye, its almost August.
The first six months of 2021 have been challenging to the US supply chain from both a shipper and a carrier perspective. With that, I’ve analyzed the happenings of the first half of the year and noted the top 6 things I think we all should be paying attention to.
- Rates remain strong …. Carriers have limited capacity and with that supply/demand quotient they are raising prices in an unprecedented manner. Shippers should expect this to last well into 2022.
- Appetite for acquisition …. Knight/Swift stepped out and acquired AAA Cooper. A win win for both companies. Knight/Swift enters the increasingly lucrative LTL space and AAA Cooper now has access to linehaul purchase transportation they didn’t previously have. Similarly TForce acquired UPS Freight earlier this year and has already rebranded to TForce Freight. Expect to see more of this throughout 2021 and 2022.
- Strategy woes …. Carriers are trying to optimize strategies to ensure they’re hauling the most profitable freight possible. In June FedEx Freight told 1400 customers to look elsewhere, giving them a weekend to move their business to other carriers. Less than two weeks later they pulled back on that position and opened their network back up. This move forced other carriers to put checks in place to ensure unprofitable business didn’t bleed into their networks.
- Digitization …. Shippers and carriers working together to take cost out of the supply chain. Long gone are the days where the supply chain information flow can be done with paper. From API’s to digital BOL’s to visibility solutions, it’s evident that digitization is key to efficiency and cost reduction. Both carriers and shippers are relying on companies like Banyan Technology and Project44 to help them get there.
- Electronic trucks …. Large companies started buying more electric trucks. More retailers and shippers placed large orders of electric trucks for beverage routes, last-mile delivery and short-haul distribution. Amazon surprised everyone this year when it announced that it plans to buy 100,000 electric delivery vans from startup Rivian, while UPS, FedEx and DHL have all bought electric trucks, albeit in much smaller quantities. While the numbers were pretty small this year, more electric trucks from the big automakers are supposed to go into production over the next two years. Volvo Trucks North America plans to start selling its VNR electric truck commercially in late 2021. And others such as Daimler North America plans to start significant production in late 2021 into 2022.
- LTL becoming “parcelized” …. LTL carriers are investing in the comprehensive dimensionalizing of shipments in their networks. The end game being the ability to plan their network utilization better, as well as incorporate density based pricing. With the latter, minimizing the cumbersome class based system it’s been using forever. This will continue to develop, but a change in the way carriers price may be coming sooner than later.
I’m looking forward to seeing what the remainder of 2021 brings. One thing for sure and that is we can all expect change. Change is good!
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