6 The Journal of Commerce
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April 2 2018 www.joc.com
Spotlight
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Tight truck capacity
squeezes European shippers
European trucking is on a roll, with
freight rates at a decade high and set to
climb higher in the coming months as
the $240 billion industry profits from a
shortage of drivers that is cutting capacity
against a backdrop of rising demand as
economic growth gathers pace across the
continent. But even as trucking dominates
the transportation market, it's facing a
further flurry of attempts by the European
Union, its member governments, and
shippers and ports to force or lure traffic
to rival modes, particularly rail. For now,
however, the business is basking in a bull
market, with freight rates jumping 14
percent year over year in the fourth quarter
of 2017 to the highest level in a decade,
according to the latest Transport Market
Monitor from Capgemini Consultancy and
Transporeon, a Dutch logistics software
company. "Transport companies managed
to get good prices for their services in
2017, but (the fourth quarter) is really
unique," said Erik van Dort, Capgemini's
supply chain director. "In the 11 years that
we've tracked transport prices, we never
recorded such high prices." This was in
sharp contrast to the first quarter of 2017,
Ocean carriers try
to recoup higher
US surface costs
US beneficial cargo owners (BCOs) scrambling to
manage their supply chains amid intermodal rail
delays and rising truck prices are paying an extra
$300 per container under existing contracts, with
some ocean carriers seeking to recoup their higher
costs in the tight surface transport market. The
truck capacity pressure, exacerbated by the federal
electronic logging device (ELD) mandate, is trickling
down to all modes of inland cargo transportation:
railroad, drayage, and transloading and long-haul
truckload. Ocean carriers are responding with
a mixture of actions consisting of emergency
surcharges, raising tariffs, and suspending or
restricting store-door deliveries in the US. Higher
surface transportation costs also are factoring into
BCO and carrier negotiations of service contracts,
which generally run from May to late April. Some
carriers are working to reduce their exposure to
store-door contracts where they have responsibility
for inland moves to and from the port. Cosco
Shipping, for example, told The Journal of Commerce
that hopefully "a lot of this can be addressed in one-
on-one negotiations with our (customer) accounts"
rather than a widespread action. Trucking costs are
expected to rise aer April 1 when law enforcement
will place drivers out of service for failure to oper-
ate a working ELD or for violating hours-of-service
regulations. Daily truck productivity also is expected
to drop with ELDs, and when coupled with rail ramp
delays, ocean carriers are worried the speed in
turning around chassis will slow, increasing rental
charges.
The Journal
of Commerce
