Every mode of transportation—from the road, railway, ocean, and sky—is combating challenges testing the supply chain in new ways. Understanding the industry’s current climate and what lies ahead is the best way to navigate this rough road.
What goes down, must come up. Bouncing back from the many disruptions of 2020, the logistics industry is working to make up for lost time. Yet many headwinds are creating a new normal, at least for the first part of 2021. Continued capacity limitations and disrupted supply chains paired with increased shipping demands have rates surging.
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In 2020, Langham Logistics was tapped by a Fortune 500 pharmaceutical company to fast track a new GMP warehouse in Phoenix with the capability of storing and distributing pharmaceuticals and other products requiring chilled, frozen and ultra-low temperature ranges. The 151,000 square foot facility, at 7200 W. Roosevelt Street, is within one day’s drive from 35 million consumers and the Port of Los Angeles, making it an ideal location for supply chain business continuity planning strategies.
Langham Logistics, a temperature-controlled third-party logistics, warehousing and freight management company, has published Rates on the Rise: Updating Expectations for 2021 and Beyond in Logistics. The report provides key insights on the challenges and opportunities for the most common modes o transport and logistics used by life science companies.
The report provides a review of current conditions and provides insights on what to expect.
PARCEL – CURRENT CONDITIONS:
Volume is creating major volatility in the small package delivery space. Online consumer spending grew 44% with U.S. merchants in 2020. Amazon alone represented 31.4% of ecommerce sales. The top 100 retailers outside of Amazon grew their ecommerce share
by 24.7% from 2019. This double-digit ecommerce growth created demand exceeding capacity by three million daily packages during the peak holiday season. While growth will slow in 2021, ecommerce is expected to expand by another 15% this year. In addition
to the ecommerce boom, COVID-19 vaccines increasingly are competing for capacity with parcel carriers.
View the report to view to read what to expect in 2021 and beyond.
LESS THAN TRUCKLOAD (LTL) – CURRENT CONDITIONS:
Two major headwinds for LTL in 2021 are lack of drivers and equipment. The year started with a 2,000-plus driver shortage compared to capacity needs. Driver exposure to COVID-19 is compounding the problem and causing regional terminal shutdowns for quarantines and cleaning. LTL also is feeling the effects of the ecommerce explosion. Retailers are holding trailers longer while also requiring more deliveries by appointment. This is causing widespread service problems with LTL customers reporting extended shipment times of one to three days. Shippers are shopping around for better service and carriers are taking advantage of the moves by increasing rates. Capacity is very limited and it will be important that shippers and customers be flexible with their LTL service partners.
View the report to view to read what to expect in 2021 and beyond.
Storage racks at the Langham Logistics’ new facility in Phoenix, Ariz. on Dec. 10, 2020.
Langham Logistics
TRUCKLOAD – CURRENT CONDITIONS:
Goods orders and shipments have surged past pre-pandemic levels. Carriers usually experiencing significant freight volume declines in January and February largely are running at full capacity. Truckload providers closed out 2020 with about 67,500 less drivers
than the year prior. Like LTL, truckload carriers are struggling with equipment utilization due to shipper delays. Dry van carriers generally get a boost in the winter months from available refrigerated trailer capacity. That has been limited this year and will go away sooner than usual as vaccine production ramps up leading right into produce season. Plus, freight volumes will continue to climb in the warmer months as analysts predict 2021 to be a strong year for housing starts. Early indicators show permits increased by 10.4% in January. One of the biggest cost factors hitting carriers this year is insurance increases averaging 20-30%, even for providers with superior safety ratings.
View the report to view to read what to expect in 2021 and beyond.
EXPEDITED – CURRENT CONDITIONS:
As LTL and truckload carriers experience volume and service limitations, shippers are turning to expedited carriers to get freight delivered on time. Yet these carriers also are competing for drivers to keep up with demand. Investments in real estate, equipment, and technology are driving up operating costs prompting general rate increases as well as surcharges and new accessorial fees. Excess volumes have carriers paying more to brokerage services for capacity. January spot rates were nearly 25% higher than a year ago. Almost half the country closed out the month with a load-to-truck ratio of more than 5.5 which is highly unusual for this time of year.
View the report to view to read what to expect in 2021 and beyond.
Langham Logistics assisted with expanded Cold Chain capacity in Phoenix, AZ
COLD CHAIN TRANSPORTATION – CURRENT CONDITIONS:
Pharmaceuticals will be the headline for cold chain transportation in 2021. Analysts estimate a 10% annual growth rate for pharmaceuticals in cold chain logistics through 2024. COVID-19 vaccine distribution is currently concentrated to a limited group of carriers. That may change as new vaccines enter the market with less strict temperature requirements. With more than 100 million doses expected to drop in just a few months, the influx will have a capacity ripple effect. Non-pharmaceutical cold chain providers will be left to pick up the slack. The year started strong with refrigerated load-to-truck volumes up 54% from 2020. January closed with more than one-third of the country having 12 refrigerated loads for every one truck available. This trend likely will continue right into produce season.
View the report to view to read what to expect in 2021 and beyond.
INTERNATIONAL AIR – CURRENT CONDITIONS:
The transportation sector yet to bounce back from the pandemic is air. Decreases in air travel forced companies to ground huge portions of their fleets. First to go were large, less fuel-efficient cargo planes in exchange for smaller jets. Declines in passenger travel further limited shipment space in the belly of those planes. Overall capacity is down more than 25%. Hong Kong-based Cathay Pacific recently implemented 14- day hotel quarantines for pilots and flight crews further limiting available cargo capacity. Other carriers out of Europe are following suit. Lane imbalances on key ocean shipping lanes are sending more freight to the skies. Plus, the short lifespans of COVID-19 vaccines outside of deep freezes makes air transportation ideal for quick distribution.
View the report to view to read what to expect in 2021 and beyond.
OCEAN CONTAINER – CURRENT CONDITIONS:
Ocean freight rates are at a historic high while schedule reliability is at a new low. Lane imbalances started as China mandated lockdowns at the start of the pandemic in 2020. Those lockdowns have progressed to various countries across the world at different times creating a year of inconsistent outbound and inbound volumes. Many Chinese factories remained open during Lunar New Year further straining container availability. As with all other modes of transportation, ecommerce is driving ocean freight volumes up as well. The Ports of Los Angeles and Long Beach currently are buried under containers with 23% and 26% loaded import increases year over year, respectively. The ports already are considered full with more record volumes ahead. Ships spent an average of 7.3 days anchored at the ports in January, which equates to millions of dollars daily in lost revenue.
View the report to view to read what to expect in 2021 and beyond.
About:
Langham Logistics is a woman-owned, door-to-door 3PL and freight management company based in Indianapolis established in 1988. Langham offers supply chain management, airport logistics services, and domestic and international cold chain and non-cold chain freight, warehouse, and fulfillment services across the United States. Their reputation for calm, cool, and delivered echoes throughout all of Langham’s services, giving their clients the freedom to stay focused while their goods are stored and arrive on time and in perfect condition. www.elangham.com
Contact
Jeff James
Director, Langham Life Science Services
jeffjames@elangham.com
267-218-1699
Cathy Langham
President and CEO
cathylangham@elangham.com
317-506-4573