The overall transportation industry appears to be in a downturn, but less-than-truckload (LTL) rates remain high, according to the Kuehne+Nagel monthly Road Logistics Market Update.
Dry van contracts have fallen by 7 percent since June and 27 percent since last February. However, LTL prices have increased by 2 percent in the same period. Kuehne+Nagel noted the LTL market is not as sensitive to missing shipments, and, as such there is less urgency to adjust rates when the market turns. Still, the rates are expected to fall eventually as the market catches up – possibly as soon as the end of the year.
One challenge in the LTL industry is the continued prevalence of paper documentation. With more shippers now using LTL services, companies are having difficulties grasping LTL industry processes, Kuehne+Nagel reported. Using a paper system for tracking bills of lading (BOL) is prone to error because of manual input and other visibility issues across the supply chain. Kuehne+Nagel said that moving to full electronic documentation would make the industry more efficient and easier to do business with.
Elsewhere, the truckload market appears to be loosening. National outbound tender rejections fell to 5.05 percent, a level last seen in May 2020 when COVID-19 many lockdowns were still in effect. Additionally, many retailers prepared for the holiday season earlier this year by stocking up on inventory. However, the shoppers have not yet materialized, creating a large amount of excess inventory that may dampen shipping needs and cause transporters to miss out on peak season activity.
Finally, Mexico has surpassed Canada as the United State’s top trade partner. Mexico’s trade with the United States rose to $90.7 billion in Q1 2022, according to a WorldCity analysis, an increase of 17.7 percent compared to the same period in 2021.
To read the full Road Logistic Market Update, please click here.