Shippers should expect strained market into 2022
A perfect storm of factors — strong consumer demand, limited production levels and driver availability issues — has led to a historically strained market in the wake of the ongoing pandemic. Shippers have been anxiously waiting for the market to loosen up for months, and they should expect to continue waiting well into early 2022.
“The balance between supply and demand is definitely tilting toward demand. That looks like it will continue to be the case through the rest of the year due to both the strong outlook for demand and weak outlook for capacity,” Arrive Logistics Director of Business Intelligence David Spencer said.
Demand has proven volatile over the past two years, with unpredictable factors like hurricanes and wildfires coupling with pandemic-fueled buying practices and a general uptick in consumer spending. Retail inventories tend to be low right now, and imports continue to flow into the U.S. near record highs ahead of peak season. All these factors combined create a strong outlook for demand for the foreseeable future.
On the capacity side of things, equipment shortages, limited production levels and driver availability issues continue to contribute to the overall strain. Most of these issues do not have quick fixes. Carriers have been working to overcome the driver shortage issue with limited success since well before the coronavirus pandemic spread across the globe. Additionally, once supply chain issues related to production delays are resolved, it is expected to take several months for the backlog of equipment orders to be filled at current production levels.
“I believe that these issues will persist through the first part of next year,” Spencer said. “If we are going to see equilibrium market conditions in the first half of next year, it would have to be a result of declining demand. Demand is poised to continue its strong run, which limits the possibility of balanced conditions given the unlikely scenario that the capacity situation will be resolved in time to make an impact on that timeline.”
Arrive is working to support shippers to operate in today’s difficult market by keeping them updated on condition outlooks. This helps shippers make the best decisions possible for their own customers and supply chains.
Spencer will join Darlene Wolf, Arrive Logistics’ senior vice president of strategic partners, in the company’s upcoming "Metrics the Matter" webinar on Tuesday. The duo will break down current market conditions and give attendees a detailed idea of what to expect in the coming weeks. The webinar will also feature a Q&A segment, allowing guests to interact directly with the experts.
“This is an extension of a service we are already providing, like our free monthly market update” Spencer said. “Part of that offering is trying to increase transparency and be strategic about how we are approaching the market.”
The webinar is scheduled for 1:30 to 2 p.m. EST on Tuesday. While much of the content will be presented with shippers in mind, all members of the supply chain are welcome to attend.