There is no doubt that we cannot guess what will happen in the future, but thanks to valuable data, market conditions, and expert interpretations, we can have a better understanding of both the current trends and the trends that will fizzle out in early 2022.
Many of the challenges the industry faced in 2021 are predicted to continue in 2022. Covid19 and its variants, high demand, labor shortages, and port congestion will remain, and it is difficult to know for how long.
We will give you timely and valuable information collected from reputable sources, so you stay informed and make better decisions to manage your current supply chain challenges.
This month’s video
Ryan Petersen, Flexport CEO, shares his opinion about how supply chain disruptions will continue in 2022, and how investing in technology will be key to improving productivity by using automated processes. Watch the video to learn more about the 2022 supply chain outlook.
Spot Market Insights
According to DAT, spot load posts in the first part of this year rose 95% compared to the same period in 2021. On the other hand, truck posts decreased 7.6%. Overall, we are seeing more demand and less capacity compared to the same period last year.
According to Freightwaves’s SONAR, the Outbound Tender Volume Index (OTVI), which measures the volume of loads offered by shippers to trucking companies on a given day, happens to be surprisingly strong at the beginning of this year. Accepted volumes are over 4% higher than last January. See graphic below.
Source: Freightwaves Sonar
Easing conditions are usually the norm in the first weeks of any year, but this year has been different, because many drivers extended their vacations and took more time to return to their jobs. Also, weather issues such as repeated storms have been challenging for carriers, thus delaying the entire logistic operation.
As seen in the graphic below, the Outbound Tender Rejection Index (OTRI) is defined as the percentage of loads rejected compared to total loads offered by shippers under contract terms rates. The OTRI has remained elevated for the first part of this year. Aligning supply and demand is still a pain point in balancing the marketplace.
Source: Freightwaves Sonar
What to Expect from 2022?
“Shipping industry officials say the factors that triggered big bottlenecks earlier in 2021 persisted through December and have continued into 2022. Ships can’t unload quickly because terminals are full of containers. Truckers can’t pick up loads due to a shortage of drivers and a shortage of steel trailers to pull boxes. Warehouses near the ports and at nearby logistics hubs have few workers and don’t have space for more deliveries.” (Berger, 2022)
Congestion is expected throughout much of 2022. The port of Long Beach and the Port of Los Angeles delayed consideration of the container “dwell fee” until February 4 due to the number of containers that are staying at docks for more than nine days. This measure of aging freight stuck in ports has shown a decline of 62% in 2022, but it is still not enough to solve all the pressures causing supply-chain problems.
Trucking is likely to continue to experience driver shortages in 2022. According to The American Trucking Association, the industry needed approximately 80,000 more drivers in December, and this year the number is higher. Additionally, there’s a new federal policy that mandates all truckers who cross the border from the United States into Canada must be vaccinated. Some drivers do not seem to be happy about this, and they are rolling through roads protesting.
There are reports of another possible convoy coming from California to Washington DC, expressing nonconformity with the Covid rules for cross-border truckers in the United States. Unless something changes, capacity will continue to be tight.
Source: The New York Times
Warehousing capacity is a major pain point for 2022
There is a lack of warehouse capacity due to the number of goods landing in the United States. In addition, transportation delays due to a lack of workers are keeping goods stuck at facilities longer than expected. Many of these facilities don’t have space for more deliveries. As a result, the warehousing prices index hit its highest point last year, and according to experts, will not be decreasing in the short-term.
“U.S gasoline prices have been on the rise since the end of 2021” (Bloomberg, 2022)
Prices are creeping back up for the first time in about two months amid gains in crude oil and still-strong demand from consumers. National average retail gasoline prices hit $3.303 per gallon, the highest since December 2021 and it may hit $4 per gallon in 2022. This increase in prices may directly affect transportation rates.
Inflation rose to its highest level in nearly 40 years, up by 7% over 2021. The United States has had six consecutive months with inflation above 6%, and gas and grocery goods are notably high. Because of high prices, credit card usage will increase. The government is working on slowing the rate of price increases, but there is still a lot of work to do.
For all these reasons, economic trends show that inflation will still be a significant factor especially in mid-2022.
Chinese New Year
China is celebrating the Lunar Year. There will be even more pressure on ports and inland transportation as Chinese companies pause operations. The effects of this holiday started two weeks ago and may extend for two to four more weeks, as carriers deal with the backlog. Capacity remains tight and factories will be closed. We recommend having a strong plan for your shipping during this time.
After the storm comes the calm, all these challenges have made companies, countries, and governments reinvent themselves and think of new ways to mitigate the crisis. With a strong market, innovative ideas, and consistency, transportation logistics can succeed in 2022.
Remember GLT is always committed to offering the best service despite all pressures, for all your logistic needs, including FTL, LTL, Drayage, Heavy Haul, Reefer, Expedited & Guarantee shipments.
Check out our new tool to visualize and rapidly analyze the performance of top carriers and what’s going on with pick-ups all around the United States. We will provide you with the information you need to make well-rounded decisions before you move forward.