What Is the Outlook for Rates for Each Shipping Mode?

Outlook for Rates for Each Shipping Mode

Surviving 2020 presented a unique challenge for many. Making it to 2021 encompassed the primary goal for many in the transportation and shipping industry. As the new year arrived, the question became how to best prepare for what the shipping mode options and TMS solutions hold for the year ahead?

Parcel Rates Will Increase as E-Commerce Continues Growing

Normal fluctuations in rates hover around the 4-5% mark for the shipping industry. But 2021 stands poised to be anything but an average year for shipping mode rates. According to Transportation Insight, “Beyond the average increase on standard services, it is also important to recognize that surcharges, accessorials, new fees and tweaks to the carriers’ terms and conditions could require you to budget a 2021 cost increase closer to 8.5%. Capacity pressures created by exponential e-commerce growth during the pandemic and uncertainty about mid-year or peak surcharges for 2021 creates an environment of unknowns.” Watching and monitoring shipping rates and trends must remain a key focus in 2021.

Truckload Shipping Mode Rates Will Begin to Settle, Though They May Still Remain Somewhat Unpredictable

Those who rely on truckload shipping modes can expect the traditional cycle of a five percent General Rate Increase with most major carriers in the year ahead. However, with many smaller contract shippers, carriers, and transport managers in the mix, the real cost increase will be much larger and more difficult to predict without accurate data analysis.

Ocean Freights Will Sway Based on the Continued Developments of the New COVID Variant

Some indications at the end of 2020 pointed towards the possibility that negotiated ocean freight rates would continue to rise and be higher than those seen in the 2019-2020 season. For instance, the rise in blanked ocean sailings toward the end of the year resulted in some carriers’ profit margin losses. As a result, carriers are likely to recoup those costs through higher-than-typical ocean rates. Early indicators seem to point to the fact that many freight managers are focused on shipping mode rates and are willing to pay higher rates to secure cargo space. Moreover, the renewed lockdowns and uncertainty created by the spread of the new COVID-19 variant will add tension and generate added pressure to increase rates.

Airfreight Rates Will Continue to Fluctuate and Hinge Largely on COVID Distribution Across the Market

Mitigating the effects of these increases and fluctuations in shipping mode rates will require vital networking and cooperation across the supply chain. Coupled with a continued focus on the COVID pandemic and how responses are managed and monitored across the global supply chain network, logistics trends in 2021 will likely see airfreight rates vary throughout the year.

LTL Rates Will Rise as Will Demand, Allowing Higher Rates and Costs to be Enforced by Carriers

As the industry slowly recovers from everything 2020 brought with it, the need for LTL will continue to rise. When loads get sent out more quickly and more efficiently, it allows greater flexibility from start to finish. This shipping mode may become the most in-demand option for most freight managers in the year ahead, giving LTL carriers greater control over rates.

Stay Apprised of 2021 Shipping Mode Rates With the Right TMS

Surviving 2020 was the end goal for many over the past year, but now the focus is on making 2021 a recovery for the transportation industry. Freight managers, transporters, and carriers across the network need to have a watchful eye on shipping mode rates so they can prepare for whatever the new year brings. That’s where a transportation management system with advanced shipping mode rate indices can help.

Get started and make the best possible freight management strategy for 2021

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