Are you a flatbed shipper? Are you finding it hard to get a truck under your loads? So are many other flatbed shippers.
As reported in JOC.com, many shippers without contracts in place with carriers are waiting 12-14 days from ordering the truck until the truck arrives for loading. Shippers with long standing relationships with carriers and brokers are waiting too, with some consistent flatbed shippers reporting delays of two to four days for trucks to appear. The only shippers not having a capacity issue are the ones that have dedicated or private fleet operations, and they are having issues covering overflow loads.
The causes behind the high demand are many. While it is simple to say “improving economy,” there are specific factors creating increased demand in specific areas of the country.
• Florida and Texas are still rebuilding after the Fall 2017 hurricanes. While the storms are long gone, the rebuilding efforts continue. This is volume above the normal residential construction demand.
• Higher oil prices encourage oil exploration companies to drill for more oil, in both the Bakken and Permian ranges. This activity draws more flatbed activity for hauling steel drill pipe, compressors, connections and other oil field equipment.
• The cold and wet Spring in the northern parts of the US pushed back the start of the construction season by at least a month, compressing timelines. Lumber and building materials shippers face more challenges getting materials moved from rail depots to wholesale and retail yards accessed by truck only.
• Industrial demand for shaped metal and manufactured materials is up because of the stronger economy. More companies are pulling the trigger on capital expenses for storage racking, platforms, conveyors and other material handling systems that use materials too big to ship by van. Pallet racking factories report delays in shipping, where the material is sitting in the yard waiting for a truck.
Demand is just one part of the equation. The supply of flatbed trucks is tighter because of limited growth in the sector and the mandate for Electronic On Board Recorders (EOBR) tracking driver on-duty and driving time. With the mandate, the market is now feeling how much gray area there was on driver hours capacity, how much capacity slack the paper logs provided the freight network. EOBR removed that slack. Add in the driver shortage and the constraints on the supply side become clear.
Spot market rates reflect the imbalance between supply and demand. $2.00 per mile rates plus fuel are prices of the past. Spot rates are approaching $2.35 per mile, plus fuel, according to DAT, and spot rates with fuel are $2.72 per mile, a new record according to Morgan Stanly and DAT.
If you do not control the shipping on the transaction you have few, if any options for dealing with the delay. We recommend that our clients plan on delays of flatbed deliveries by one, even two weeks, based on what we hear from the market. Few equipment system manufacturers maintain good relationships directly with carriers, choosing to work through freight brokers who may or may not have consistent carriers.
Typical of many capital equipment projects, the decision of when to ship and who to ship a load on is left to the shipping clerk at the plant. The clerks follow guidelines set up by the plant management staff or the parent company transportation departments. For example, most pallet rack manufacturers do not have contracts with carriers but have a general service agreement with a freight broker. Brokers put more people and distance between the customer and the seller of the goods.
Unless the paperwork at the plant is clearly marked "expedite," the shipping clerk calls a broker with the load, and then waits for the broker to call back with the information about the carrier picking up the load. What used to be a same day or next morning call-back, brokers are now taking days to respond to shipping clerks with the pick-up information. To many factory shipping departments, delays like this is not only unusual, it is rare, and they have not put into place methods and processes to track the loads tendered but not accepted. Loads go overlooked, and when discovered (after the consignee is screaming about the late load) the loads again wait in a new batch of freight looking to be loaded.
Other than padding the schedule for the inevitable delay of delivery, there are a few other tricks that a buyer can use in this hammered market.
• When contracting with an integrator or dealer, encourage the integrator to validate their schedule – including the assumptions they made for shipping in the schedule. Have the integrator’s project manager go over the schedule in detail, with special attention to the time allotted for shipping. If the integrator uses phrases like “typically, the transit time is a week,” ask the integrator to follow up with the factory to find out how the factory ships via truck. If you hear more of the work “typically,” add more time into the delivery schedule.
• After going through the schedule, put a delay penalty clause into the contract. The integrator may resist but stand firm. If they have worked to assure that they have freight accounted correctly in the schedule, there should not be a delay. If you still encounter resistance, suggest that the integrator have a conversation with the manufacturer about sharing the risk, or revising the schedule to reduce the risk.
• If your company has good relationships with freight carriers, contact your carriers to see if they have flatbed capacity, either in their own fleet or through a co-load sharing agreement. If your carrier can't make the commitment to the capacity when you need it, change the terms of the contract with the integrator and insist that the factory call your carrier to tender the load. This path has some risk, as many factories are sometimes sloppy with the timing of loads out of manufacturing. However, with the capacity “pre-booked,” you reduce the risk of your materials marinating in the manufacturers' shipping yard waiting for a truck.