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Shaky End to Decade for NA Supply Chain But  Hope Exists

Shaky End to Decade for NA Supply Chain But Hope Remains

Jan. 27, 2020
A new survey concludes that 2020 will be one of the most “interesting and potentially challenging years for carriers and shippers alike.”

While last year was relatively calm for most shippers, as the U.S. economy had a steady growth pace, a new study on the State of The North American Supply Chain Survey by Averitt Express said the “truckload sector experienced a challenging year, marked by abundant capacity in certain markets and numerous high-profile carrier bankruptcies.”

The 800 companies that filed for bankruptcy removing 24,000 trucks from the pool didn’t have a “dramatic effect on the majority of shippers in 2019. In fact, only 12% of respondents struggled with capacity challenges in 2019 compared to 26 that reported issues in 2018

However,  the survey warned that this drop could lead to “challenges in 2020 as the new industry regulations and international trade relations are also taken into consideration.”

When respondents were asked about shipping volumes, 66% expect to ship more in 2020 than in 2019. This number, however, is the lowest in the past five years. In the past two years this number has dropped ten percentage points. One reason for this drop in optimism is the lower GDP growth. While Q1 saw an increase of 3.1%, Q2 moved down to 2% and Q3 was at 2.1%.

Other respondents expect a  5% expect a decrease in shipping, while 28% expect volumes in 2020 to equal that of 2019.

When asked if tariffs had a negative impact on their business plan, 43% said they will. That is just up slightly from 41% in 2018.

Those who saw a positive impact from tariffs, 5%, reported the same number in 2018.

The report sees hope in the resolution of tariff issues. "While the trade was is a major contributing factor that is holding back the U.S.. and global economics from reading higher year-over-year growth, there are positive signs that resolutions could be reached across borders and oceans.”

In January, Congress approved the USMCA to replace NAFTA and could go into effect in the Spring. And the U.S. and China are continuing to negotiate agreements.

When asked about air and rail use, 25% said they planned to use the services in 2020. This was a 3 percentage point decline from 2018.

With regard to the final mile, back in 2017, 33% of respondents were involved in this market and in the 2019  survey, that number moved up to 38%.

Looking at the larger picture with respect to the industry, the survey concludes that 2020 will be one of the most “interesting and potentially challenging years for carriers and shippers alike.”

In addition to global uncertainty, the trucking industry is evolving and will be affected by regulation. The report states that the DAC will have an impact on an “already strained labor pool of drivers, but it’s also a necessary good for the industry and the general public. Carriers will adapt, and so will shippers.”

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