Guest: Chris Jamroz on the LTL market; Forecasts for holiday shopping; Supply chain threats in the New Year
Nov 22, 2024
auto_awesome
Chris Jamroz, CEO of Roadrunner, shares valuable insights on the challenges facing the less-than-truckload (LTL) market, including economic pressures and overcapacity. He highlights cautious optimism among businesses in anticipating a boost during the holiday shopping season, despite ongoing supply chain hurdles. Additionally, Jamroz discusses potential disruptions expected in early 2025, like those from Chinese New Year and upcoming tariffs, recommending proactive strategies to navigate these challenges.
The less-than-truckload (LTL) sector shows resilience amid industry challenges, with many expecting a market turnaround as conditions improve.
Proactive strategies and efficient operational management are crucial for navigating anticipated supply chain disruptions and increasing costs in 2025.
Deep dives
Challenges in the Trucking Industry
The trucking industry has faced significant challenges in recent years, characterized by a freight recession caused by an imbalance of too much capacity versus insufficient demand. This has led to consistently low rates, particularly affecting the less than truckload (LTL) sector, which operates with a different demand pattern compared to truckload shipping. Notably, while LTL services are impacted, they experience less severe downturns than full truckload operations during economic downturns. The cyclical nature of the sector means that many in the industry are hopeful for a turnaround as the market adapts to these persistent issues.
Impact of Inflation on Trucking Costs
Inflation has emerged as a critical economic driver affecting the trucking industry by increasing various operational costs, including wages, insurance, and equipment. Despite these challenges, some companies, such as Roadrunner, have successfully managed to mitigate the impacts on customers by improving their operational efficiency and service quality. They have been recognized for maintaining competitive rates even in an inflationary environment, highlighting the importance of effective management strategies in navigating cost pressures. This ability to absorb some inflation-related costs positions them favorably in a market where many other players struggle.
Upcoming Supply Chain Disruptions
As the supply chain gears up for the new year, several potential disruptions could arise, posing challenges for the industry. Factors such as the upcoming Chinese New Year, which often leads to factory shutdowns and heightened freight demand, could cause significant delays and increased costs. Additionally, the possibility of new tariffs under an incoming administration and unresolved contract negotiations at East and Gulf Coast ports could further complicate shipping operations. Proactive strategies like early ordering, maintaining inventory buffers, and effective communication with logistics providers are recommended to prepare for these challenges and ensure smoother operations.
Our guest on this week's episode is Chris Jamroz, CEO at Roadrunner. It is no secret that the trucking industry has had a challenging couple of years. In addition to economic factors, like higher interest rates and inflation, truckers have also had to face too much capacity in the market and disruptions from several natural disasters. How has the less-than-truckload market weathered these storms and what are prospects for 2025? Our guest shares his insights.
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases despite continuing to battle challenging supply chain conditions. That’s according a report from DHL Express U.S. released this week; it’s DHL’s 2024 Peak Season Shipping Survey. The company surveyed small and medium-sized businesses to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
It seems like there’s always a new supply chain disruption right around the corner. This week a new report from trucking and logistics provider Averitt predicted the first month of 2025 could have more turmoil than usual. The Averitt report tracked three potential supply chain hurdles as we head into 2025: the disruptions caused by Chinese New Year (CNY), the looming threat of potential tariffs on foreign-made products that could be imposed by the incoming Trump Administration, and the unresolved contract negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX).
Supply Chain Xchange also offers a podcast series called Supply Chain in the Fast Lane. It is co-produced with the Council of Supply Chain Management Professionals. A series of ten episodes is now available on the "State of Logistics." The episodes provide in-depth looks into the current states of key transportation modes, such as trucking, rail, air, and ocean. It also looks at inventory management, 3PLs and more. All ten episodes are available to stream now. Go to your favorite podcast platform to subscribe and to listen to past and future episodes. The podcast is also available at www.thescxchange.com.