ALEXANDRIA,
Virginia – Shipping costs are rising, and freight volumes are outpacing the
supply of available trucks. In fact, empty trucks are so hard to come by right
now that Dean Foods, a Dallas-based
dairy supplier, has cut its full-year earnings outlook in part because it can’t
move goods for anything close to what it expected to pay this year, according
to Fooddive.com.
Dean
is just one of many U.S. businesses struggling with the tightest freight market
in years. Distribution channels that transport goods to retailers, factories
and consumers are straining to keep up with the fast-growing U.S. economy, and
many companies are cautioning that transportation problems are having an impact
on their ability to grow.
In
response, some businesses are reshaping their supply chain, and others,
including Kraft Heinz, Sealed Air
Corp. and Coca-Cola, are raising
prices to offset higher freight expenses. Tyson Foods expects “freight to be
about $270 million more this year compared to last year,” the company said in a
recent earnings call.
The
concern over trucking marks a big reversal from recent years, when truck
capacity was plentiful and retailers and manufacturers rushed
to lock in low rates. Many carriers reduced their fleets, and orders
for new trucks plunged. Carriers now are ordering new equipment at record
levels, but many report trouble hiring additional drivers.
A
new federal rule requires drivers to track
their hours behind the wheel with electronic logging devices, which
contributes to the problem. Some routes now take two days instead of one
because of stricter timekeeping. Plus, e-commerce is pushing companies to ship
more goods in smaller loads as they rush to meet consumer demand.
Last
year transportation costs rose 7% for U.S. businesses, far ahead of the 4.2%
average growth rate over the five years ended in 2017, according to the Council
of Supply Chain Management Professionals’ annual State of Logistics Report.
Now,
trucking companies are raising contract rates by 10% or more, with further
increases expected next year. Many are boosting pay to recruit drivers in a
tight labor market and say the price increases are justified after rates
remained stagnant for many years.