Freight rates forecast for 2021: What can we expect?
Freight rates have increased during the last year. Why did this happen, and what can we expect for the rest of 2021? Three main situations are changing this year’s forecast:
1. The container problem
Freight transportation prices increased up to 80% in the late months of 2020. The reason for this was that there were drastic changes in demand, people stopped going to theaters and restaurants, instead, they spent their money on clothes, electronics, and furniture.
All of this caused bottlenecks on all supply chains, from factories in China to ports in North America. The container flow imbalance has been especially harmful to enterprises that work under the “just in time” method”. In their case, merchandise turns out to be stored on ports without a delivery date.
This situation got even worse when companies got desperate and started to pay premium spot rates, and next, prices went up quickly. After all this, speculations also increased, and rates for the first month of 2021 were higher.
The container imbalance will be a problem while the COVID-19 pandemic exists and ceases operations. Nevertheless, the way to fix it is simple: the flow will begin again after we return to normality.
2. Driver shortage
Even though freight transportation had already increased due to driver shortage before COVID-19 started, the pandemic made it worse. Restrictions supported local deliveries which meant fewer trucks on the roads.
This problem enhanced the need of changing the freight transportation face to attract new drivers. The matter has already been noticed by the government of Canada, Mexico, and the United States. Even the White House thinks about designing a program to incorporate young people with a military background to interstate merchandise transportation.
The driver shortage is a global matter and solving it will not be simple.
3. Oil price volatility
Fluctuations in oil prices have been crucial on the freight rates increase during the last couple of years. Pandemic, politics, economy, globalization, technology development, and climate change have caused rises and falls in gas and diesel prices throughout North America, which also have caused higher transportation costs.
These changes were normal in 2020 and the first month of this year. However, some suppliers and analysts think that somewhere in the second trimester of 2021, when more people are vaccinated, the container problem will be solved and consumption will be back to normal, only then, the demand for oil and gas will increase, which would stabilize freight transportation prices.
Mexicom Logistics is a 3PL dedicated to offering reliable terrestrial freight transportation at affordable prices through North America. Find out more about our services here.
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