Choose a 3PL that owns their trucks & drayage
Why is it critical that your 3PL owns their trucking?
Since Covid struck the world in 2020, the supply chain crisis has been felt across the world. With so much uncertainty in the transportation industry, having a 3PL (third-party logistics) that owns their own trucking is monumental.
With their own trucks, your 3PL can ensure that your goods are transported in a timely, reliable manner whereas other 3PLs may be fighting amongst themselves to secure drayage for you, the client. Especially in the current economic climate where eCommerce is king, being able to get your goods into the hands of your customers couldn’t be more important.
What could be worse than falling behind demand because you can’t secure shipping to move your products?
The Current State of California Ports:
At this point, there are no secrets surrounding the supply chain crisis that has been especially present in California ports. Bottlenecks have cargo waiting and waiting offshore to unload, causing shortages and delays that are felt all the way down to the consumer.
Generally, in 2022, the bottleneck has lessened. Since the container dwell fee was temporarily put on hold on October 25, 2021, the ports of Los Angeles and Long Beach have reported a 49% decline in aging cargo sitting off the coast as the cargo is being processed more efficiently (3).
However, not everything about California ports is on the up and up. More Covid lockdowns in China are threatening to cause surges as reopening factories try to make up for lost exports. Industry experts predict that the peak-season for shipping in June will also provide a surge in ships coming to port.
These factors are further complicated by the labor negotiations that are ongoing as dockworkers’ labor contract expires on July 1st of this year (2). In the worst case scenario, the supply chain might be facing a labor strike that could cause untold delays on imports; however, nothing is set in stone as both sides still have time to come to terms.
Naturally, the situation in California ports is very fluid and must continue to be monitored as cargo surges come and go.
The Current State of the Trucking Industry:
A crucial reason for the bottleneck at ports is a lack of truck drivers to transport the cargo. The trucking industry has been volatile since the pandemic started. The nature of long-haul trucking exposes drivers to danger as they interact with many people from different locations. This, with a lag in increasing wages to compensate, has left many trucking companies short on drivers.
There are two market types in trucking:
First is the contract market. Here, a contract is reached with a haulage firm that agrees to a cost for transportation weeks if not months ahead of time.
The other is the spot market. Spot markets can be compared to ride-sharing apps like Uber in that the service is provided at the moment of transportation. The agreement is not premeditated like the contract market is. Thus, the spot market, understandably so, is subject to major swings in pricing. These rates reached a peak in January 2022 where they were up about 60% (4). Such high rates have caused some contracts to be neglected as those companies are jealous of the profits in the spot market.
But just as easily as the rates in the spot market can increase, they can rapidly decrease as well. Since the peak in January, spot market rates have declined 15% now in May 2022. These rates will continue to ebb and flow, but these are the circumstances at this moment. According to experts like Kendra Tucker, the CEO of Truckstop.com, this change is a warning that a recession may be on the horizon, though Tucker generally agrees that this decrease is merely a market correction back to normal (4).
What are my options if my 3PL provider doesn’t own their own trucks?
Given the state of the drayage industry, having a team of reliable truck drivers is more important than ever before. But what if my 3PL doesn’t own their trucks?
Without their own trucks, a 3PL is tasked with setting up the logistics for your goods with other companies. This, naturally, subjects you to the volatile trucking market that we just discussed.
Depending on what you require for transportation, a 3PL without their own trucks may still fill your requirements. Generally, they may be able to secure drayage deals for less and may be able to reach a greater variety of locations. However, just the nature of 3PLs needing to reach agreements with another party makes their service less reliable and more subject to the volatile situations in ports and within trucking organizations.
Contact NextGen3PL to secure reliable trucking
With so much uncertainty in the supply chain, having a reliable, affordable, experienced, flexible 3PL that owns their trucks has never been more important. For the best freighting and fulfillment service around, look no further than NextGen3PL. Equipped with a fleet of trucks and drivers, strategically placed offices and drop sites near major ports like the port of Los Angeles and the port of Long Beach, NextGen3PL is capable of handling all of your freighting needs.
Owning so much of the freighting and fulfillment process, we can guarantee reliability and flexibility to your goods while providing competitive rates. All of this plus a focus on environmentally friendly transportation makes NextGen3PL the premier choice for shipping, both internationally and domestically. Contact NextGen3PL today to get started!
Resources
- https://www.freightwaves.com/news/is-this-the-calm-before-california-ports-next-cargo-storm
- https://calmatters.org/newsletters/whatmatters/2022/05/california-ports-supply-chain-labor/
- https://www.portoflosangeles.org/references/2022-news-releases/news_050622_dwell_fee
- https://www.npr.org/2022/05/05/1096809705/an-economic-indicator-sheds-light-on-the-trucking-industry
- https://www.forbes.com/sites/forbestechcouncil/2022/03/30/a-forecast-of-the-trucking-crisis-as-we-head-into-2022/?sh=37d51d654475