2021 Mid-Year Trends in Logistics
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Over the last 18 months, the COVID-19 pandemic forced supply chains to adapt rapidly and continuously. Although problems like capacity and employment linger, supply chains are continuing to evolve and make headway. Here are five mid-2021 logistics trends to watch.
1. Shipping volume for June remains strong
The Cass Freight Index reported a 1.231 shipment reading for June, representing a year-over-year increase of 26.8%. Although May’s reading of 1.269 and 35.3% set a record (second only to May 2018), June’s volume remains among the highest volumes of the last decade. The May-to-June dip in volume is likely due to tapering federal stimulus, as well as supply chain constraints caused by driver and truck shortages.
2. Capacity constraints and soaring rates extend seller’s market
The semiconductor shortage continues to limit new truck production while supply chains struggle to hire truck drivers and warehouse labor. Every mode in the truckload market is experiencing significantly elevated load-to-truck ratios. As a result, both contract pricing for longer-term contracts and spot market rates have reached an all-time high. The dearth in trucks, drivers, and distribution center workers is also causing less-than-truckload pricing to surge.
3. Driver shortage compels shipper-of-choice mentality
Although the driver shortage currently restricts capacity across the supply chain, the tides are turning. After a long period of decline, driver applications grew 13% in June. Drivers are responding to carrier offers of pay increases and driver-friendly policies, many leaving longtime employers for competitors.
To improve retention, some carriers are avoiding shippers that do not offer a positive experience to drivers. This underscores the importance of keeping truck drivers happy. More than ever, shippers must adopt a shipper-of-choice mentality that prioritizes partnerships, pre-planning, flexible shipping hours, attractive payment terms, and more.
4. Warehouse labor shortage requires mitigating steps
Even with increased vaccine availability, many warehouse workers have not rejoined the manufacturing workforce. Older generations that made up the foundation of the manufacturing workforce are retiring and younger generations find less appeal in manufacturing careers. This compounds the industry’s projected labor shortfall of more than 2 million jobs by 2030.
To keep up with e-commerce and demand for logistics, employers are adjusting recruitment and compensation models, improving employee engagement, and taking other critical steps to combat the warehouse labor shortage.
5. Last-mile technology drives down costs
Investments in supply chain technology startups reached $7.7 billion in the first quarter of 2021 alone—nearly double the investment in the previous quarter and an increase of more than 355% year-over-year. Innovations in last-mile delivery are helping to drive this growth and meet consumer expectations for fast and free delivery.
With 53 percent of overall logistics costs going to last-mile delivery, the current trend and thinning margins are unsustainable. Investing in technology like Capstone's proprietary MileZero software platform is helping businesses improve margins by streamlining and automating the last mile, from pickup through delivery. In addition to reducing costs, MileZero offers them total visibility, control, and workforce management across the last-mile journey.
Solutions for Supply Chain Challenges
The trending logistics challenges of today will persist long after the pandemic, and the steps you take will determine your success as a shipper or carrier for years to come. Whether you need a partner to help you find capacity, bridge staffing needs, or streamline last-mile delivery, Capstone Logistics can help you find the right solution.
Contact us to learn more.