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October 1 2018

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October 1 2018 | The Journal of Commerce 11 www.joc.com Cover Story the shapes of our supply chains to have them make more sense for our times?" Lynch asked. "Our times" means this "new normal" world of tight truck capacity, longer transit times, higher transportation rates, and more stringent customer demands. That last factor can be blamed on fulfi llment expectations set by two-day Amazon Prime service. Logistics managers are likely to get some relief in 2019: The meteoric rise of spot market and contract truck rates in 2018 is expected to slow, though rates won't actually drop. US contract truckload rates could rise by single-digit percentages in 2019, according to fore- casts from research groups, economic analysts, and conversations with ship- pers and truckers. Five percent rate hikes on average appear to be a benchmark right now. That wouldn't be "a shipper's market," but it would be a huge improvement over the rapid contract rate increases reported for 2018. Contract rates have climbed double digits this year, resulting in shippers spending up to an additional 25 cents per mile or about $100 to $300 more per load. Also, consider diesel prices are higher than at any time since 2014. As of Sept. 10, the US average retail price of diesel, the basis for trucking and rail fuel surcharges, was up 16.4 percent year over year. West Texas Intermediate crude oil was priced at nearly $70 a barrel. This is the second consecutive year of fuel price hikes, and a third would push freight bills higher. All that means shippers can't af- ford to stay on the sidelines and hope for rate relief. The storm is here Transportation managers need to act, while dealing with intense pressure and often some pushback. CEOs and CFOs have fi nal approval on a budget. For publicly traded com- panies, CEOs and CFOs also answer to shareholders. The transportation de- partment might request a 5 percent budget increase, but the CFO might only authorize 2 percent, or none. "The conversations usually end with 'here is the number. Find a way to do it, get it done,'" the Midwestern retail domestic logistics manager said. In an August webinar, Mike Regan, chief relationship o cer at TranzAct Under pressure To placate C-Suite, US logistics managers scour ways to mitigate 2019 trucking costs

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