Kenny Lund Gives an Update on the ELD Challenges
UNITED STATES - Transportation continues to face challenges as produce purveyors look to get fresh fruits and vegetables, and more, to customers. While still elevated, a steadier level will hopefully come soon according to Kenny Lund of Allen Lund Company.
“Loads are up across the board and across sectors, not just in fresh produce, but it looks like things could calm down a bit in the near future,” Kenny shares.
This would be ideal, as some of the busiest transportation of the year is in March. As we previously reported, a perfect storm of severe winter weather on the East Coast, complications from the recent implementation of new electronic logging device (ELD) regulation, and holiday rate hikes have led to significant increases in transportation rates.
“We need the base transportation pricing to come down a bit more in the coming weeks before things take off in the springtime. March is traditionally one of the biggest shipping months, and ELD enforcement starts kicking in March/April. I am still seeing a lot of organizations pushing for some relief from the ELD mandate. If we are operating from an already elevated base it will ramp up from there,” Kenny tells me.
It’s not just the challenges presented by the ELD mandate and weather that he credits with the spike in transportation need, either, but the economy.
“November was a huge surprise when prices to transport went way above norms. Many thought it was due to Thanksgiving, but it seems like the cause was that the economy is just booming. We saw this too, in early December at length–my theory was we came in so heavy because we had the best Christmas shopping year ever,” he says. This has then continued into January, according to Kenny’s educated guess, exasperated further by the ELD mandate moving in. “When you are at 0% availability, the 5% that ELD moved the needle affected the marketplace much more than usual.”
The result has been a shockingly busy January, which is usually the slowest month for transportation. The Wall Street Journal’s Jennifer Smith recently reported that the nationwide affects were so pervasive that HelloFresh SE recently enlisted one of its produce suppliers to help move shipments to the airport in a snowstorm.
WSJ, too, noted freight volumes in December hit near-record levels for that time of year on the back of a strengthening economy. According to the report:
- Diesel prices are near a three-year high, adding to transportation costs
- Spot-market prices for dry vans are up more than 20% year-over-year
Allen Lund Company also saw a leap, with the company alone seeing 280,000 truck loads a year, up 17% from its previous year.
His father is one to look at the class eight trucks sold, Kenny said, as an indicator for the market. “That's the best predictor of what will be available down the road. 2017 saw a tremendous sales year for class eight trucks with over 300,000 units sold. As that equipment comes online and we get drivers in the seat the capacity will improve, but that takes time.”
Currently, analysts expect long-term contract rates that shippers negotiate with carriers to rise by between 5% and 8% this year, according to WSJ. Continue to follow AndNowUKnow as we keep you up to date on the latest.