Freight Capacity Shortage? 5 Tips to Find Trucking Capacity

March 23, 2022

Sourcing freight capacity is always subject to market conditions and the balance of both spot and contract freight rates. However, periods of extreme turmoil, like an explosion of e-commerce amid pandemic, lead to a massive strain on resources and a freight capacity crunch.

While there is evidence of trucking rate declines, overall market insiders expect transportation rates to continue climbing through 2022. Specifically, expect truckload contract rates for 2022 to be 4% higher than 2021, and spot rates are likely to be even higher. In general, contract rates are only a few percentage points behind the market spot rates. All freight is bought and paid for on the spot, so even the contract market will respond to the influences of spot market demands despite the best-laid plans.

Rising and elevated freight rates indicate two things: limited capacity and higher demand. That’s why it is helpful for shippers to know what’s causing limited capacity, so they can use that information to build a clear strategy for overcoming any freight capacity shortage.

The Causes of a Freight Capacity Shortage

Any strain on trucking capacity comes from simple supply and demand. Either demand is higher than expected, or available supply (drivers and trucks) is lower than expected. Each side of the conversation is rooted in market disruption and affected by differing dynamics.

And capacity fluctuates widely from month to month based on overall market volatility.

In some geographical areas, capacity may be extremely tight. In others, it may be manageable. Of course, it helps to have a clear set of reasons for why capacity may tighten::

Strikes or pushback from laborers and truckers.
Global lockdowns or political instability.
Harsh weather conditions.
Declines of available raw materials for the manufacturing of new equipment.
Wasted space and transportation due to empty backhauls.

Obviously, this isn’t a complete list. Still, if you are figuring your way out of a freight capacity shortage, these five tips will help.

1. Diversify Your Carrier Network

This is the first and easiest step to overcoming the uncertainty of the trucking market and sourcing capacity during a freight capacity crunch. Working with a limited number of carriers might have worked in the past, but it falls far short of the demand when capacity tightens. Remember that carriers are still business owners. While your existing relationship might be great, they will go where the money is.

Bigger businesses have deeper pockets for freight spend, so your business needs access to a broader carrier pool. It’s not about loyalty but rather ensuring stability if your existing partners are unavailable.

A diverse carrier pool helps keep your shipping rates competitive. At the same time, diversification opens the doors to more carriers with specialty services or expertise that can help your team thrive through disruption.

2. Enable True, Meaningful Freight Transportation Optimization

Alleviate any period of trucking capacity pressure by making the most of available cargo space. In other words, shippers need to reduce the risk of partial truckloads and eliminate the hassle of empty backhauls.

Yes, carriers are ultimately responsible for sourcing capacity and avoiding backhauls, but if shippers can source freight capacity in the form of more full truckloads, carriers operate more profitably.

Furthermore, if shippers can prioritize their transportation needs to ensure their moves are within a carrier’s most frequent lanes for backhaul, overall costs decline. Additionally, this optimizes the entire network to help carriers control their costs, which will, in turn, help lower the shipper’s costs. It’s all about meaningful transportation optimization, and it continues across every mode.

For example, using transport logistics software to manage reverse and forward logistics in tandem helps shippers identify weaknesses and account for total demand to better plan volume needs.

Shippers can also apply the same principle on a street-level basis to optimize every leg of transportation. Ultimately, more optimization means more access to capacity regardless of mode.

3. Think About Performance and Cost of Transportation

A sole focus on the direct cost of shipping or transportation can be an obstacle to finding capacity during a freight capacity shortage.

In markets like 2020 and 2021, costs are well above average rates. Looking at the lowest-cost provider might seem like the best way to get freight to its destination. However, the best rate and the best service don’t always align.

Shippers need to think about securing capacity with both services and costs in mind, ensuring positive customer experiences, and avoiding the pitfalls of damage or late deliveries.

4. Know the Local, Regional, National, and International Freight Capacity Markets

Understanding market conditions is another critical tip to overcoming a freight capacity crunch.

While geographic market dynamics make it feel like hot-zone freight regions have no trucking capacity, it is rarely a blanket scenario. Capacity is somewhere. The trick is using the market dynamics to your advantage to find it. You can avoid tender rejections based on your understanding of such dynamics.

For example, many freight management parties apply a freight rate index to understand the most aligned rates within a given market. This approach ensures shippers tender a load at acceptable rates, reducing the risk of rejection.

5. Use Technology to Source Dense Capacity Where Possible

A final way to overcome limited shipping capacity is to think outside the box. Look beyond the major trucking carriers. Leverage the power of smaller, more localized, and regional carriers. This applies to any OTR mode, and it’s going to be critical as market consolidation continues and newcomers enter the conversation.

In a sense, it’s all about the Gig economy’s evolution and getting more small-business owner-operators involved. Using digital freight technology makes it easier to access a pre-vetted network of mid-market carriers that can help your company when capacity tightens. Additional opportunities for using technology to solve a freight capacity shortage include freight pooling and consolidation. This reduces the burden of moving partial truckloads and helps keep carriers’ trailers full.

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There will always be a strain on transportation capacity. Even in the best market conditions, freight capacity will be tight somewhere.

The informed shipper is well-equipped and prepared to overcome those obstacles by working smarter, not harder. “Smarter not harder” is a good description of the MercuryGate Digital Freight Marketplace.

Start working smarter by putting the power of digital freight to work through MercuryGate TMS. Ready to learn more about the State of Digital Freight Networks?