With unprecedented times during the COVID-19 pandemic that continue to bring rapidly changing standards, capabilities, and restrictions, you may be wondering what the current and potential upcoming changes are within drayage and other shipping and logistics processes. Among the top questions and concerns, you may have is whether or not drayage rates are changing and what the current and upcoming changes may be. In this article, we’ll discuss if drayage rates are changing, what those changes may be, as well as if there are changes to container drayage service and other shipping rates.
Changing Drayage Rates
Inclement weather, the holiday season, and a continually ineffective supply chain system for current statuses and changing needs continue to be among the top affecting factors in the first quarter of 2022 that are contributing to increases in drayage rates. Disruptions at ports as well as market fluctuations continue even as the holiday season produced an increase in consumer spending overall. November 2021 brought inclement weather to British Columbia, producing flooding and delays in clearing port congestions with ports, railways, and roads all underwater. At peak, the port experienced congestion of over 60 shifts at anchor or adrift.
Vancouver is currently one of the most congested ports with around 18 ships at anchor or adrift as of January 2022. Consumer spending combined with this inclement weather during the holidays continues to increase the drayage rates and port congestion. In general, drayage rates in the U.S. were 51% higher in 2021 than in 2020. Given these increases, low availability, low carrier capacity, and drayage rates will likely continue due to consistent port bottlenecks. Long Beach, CA, and Los Angeles, CA are among the most congested ports in the U.S., as around 40% of imports come through these two terminals.
Responses to Changing Drayage Rates
With rates likely to continue increasing into the second quarter of 2022, carriers that have more capacity control have some leverage to use. Also, given the widespread shortages of labor and consistent employment across logistics, managers, and leads are likely to continue struggling to regain and maintain footing. As a result of changing logistics rates, you may also be wondering what the various responses are to the changing drayage rates. Different mindsets are set to potentially transform the culture of strategic planning and freight transport as a whole.
As never before, the last two years revealed some fatal flaws in the current supply chain system. In response, the California Department of Transportation is increasing investments in its ports, giving Long Beach and Los Angeles around $57.5 million for improving the terminals, with the hopes of increasing sustainability and efficiency. The range of forecasts for oil prices reflects the unanticipated circumstances due to the COVID-19 virus as well as its increasing number of variants and the different cultural, governmental, and personal responses to these. Responses such as these continue to have wide impacts on the U.S. and global economy.
What Are the Changing Rates?
GDP growth will rise by up to 7.1% in 2022 as a result of unanticipated strength in inventory investment and exports as well as a rebound in the production of vehicles. The transition from COVID-19 is also set to support various continued expansions in 2022 despite fiscal support fluctuations from the pandemic era. Near-term cost and price pressures will likely increase inflation to around 3.7% in 2022. Still, not enough information is currently known regarding the Omicron strain of the coronavirus to precisely adjust projections of inflation and growth. Predictions do continue to affirm oil prices and asset values having new uncertainties. A prediction from Goldman Sachs reports that oil prices may rise to $150 a barrel in 2022.
A principal at Mercator International still posits that too much uncertainty remains about both global oil demands, (a base function of economic activity), and supply, (which is increasingly subject to forces outside the market). As of January, drayage rates are 32% higher than they were this time last year. Northeastern and Southeastern rates may rise 10% higher than current levels and carrier availability may be three weeks out with low chassis and capacity availability. Midwestern rates may rise by 5% with one-week-out availability. Southwestern rates may rise by 15% with five-weeks-out availability. Western rates may rise by 25% with 6-weeks-out availability.
Steps to Decrease the Negative Effects
For your effective response to the changing rates of container drayage service, you may also be wondering what you can do to further combat or decrease the various negative effects on your business. One of the top steps you can take to decrease the negative effects due to changing drayage and logistics rates toward your business is to book shipping services sooner to provide loads with more time to reach you. Sooner booking can also result in cheaper costs overall. Heavy Weight Transport is also ready to help you with a few different options and available tools, including cost-efficient transport, overweight drayage rates, and drayage rate calculation.
With the ability to more effectively calculate your drayage rates, you can increase and better maintain control over your budget and spending during these unprecedented times. Heavy Weight Transport also provides some more comprehensive services for inbound container management, with cross-dock and trans-load services for consistent cargo movement. The cost-efficient transportation options help decrease terminal demurrage and container charges. Another top focus of Heavy Weight Transport is overweight cargo, specializing in transporting overweight cargo with an up-to-date fleet of equipment for transportation across the country.
Support From Heavy Weight Transport
As of early 2022, much remains unknown about how logistics and shipping processes may continue to change and grow, but the support of Heavy Weight Transport remains steadfast. Even as others may be increasing rates or taking advantage of rate increases, Heavy Weight Transport continues to provide you with competitive pricing and transportation. For the most cost-efficient transportation, consistently cost-competitive pricing, and valuable overweight drayage rates you can continue to count on, choose Heavy Weight Transport today.