Fracking companies in the Permian Basin, construction companies in the heartland, and oversize shipping requirements for heavy equipment and products are all experiencing shipping delays and can only exercise patience as demand increases. There are many reasons why the level of freight requests and available trucks is so far out of sync.
To capitalize on stronger oil markets fracking companies have increased production requiring more transportation for materials needed to increase this production. Areas of Florida and Texas are still rebuilding from the hurricane related damages requiring an increase in materials needed to repair this damage. In the Midwest early winter weather in 2017 was responsible for trimming a month off usual shipping schedules causing this schedule to be accomplished in a shorter time period.
Flatbed Shipping Demand Surges in 2018
Capacity for flatbeds is increasingly slim and seems to be even tighter during this year. These large imbalances have created panic freight purchasing. Earlier this year rates increased ten to fifteen percent as early as May. Contract rates seem to be settling at a five percent increase to lock in a guaranteed freight schedule. Keep in mind all these rates exclude freight surcharges. These rates with fuel surcharges have been settling at a whopping $2.72 per mile in May. DAT reports spot rates increasing at times by 30%.
Shippers are waiting up to two weeks for available flatbed trucking companies.
Transportation executives claim that they have never seen anything like this in more than 30 years. Last year volume and rates were very manageable, but this year it’s hard to keep up. Last year and before the weight for a shipper was three days and earlier on 1 day, now its averaging 1 to 2 weeks.
Rates overall are at a steady 15% increase and expected to persist into next year causing a direct increase in operating costs. Industries shipping freight on flatbeds will continue to grow as shown by economic data reports. A manufacturing index over 50 indicates economic expansion. Currently we are hovering around 60 which indicates a robust environment.
Flatbed shipping companies will settle in at the end of the year very strong as the amount of freight needed to move will increase and have shippers scrambling to lock in trucks and favorable rates.
Fracking alone estimates over 2,000 trucking round trips per day just for frac sand in the region, a figure that is expected to grow substantially in upcoming years. Even though the oil is moved primarily in tankers there are many other subsequent flatbed shipping needs such as, bits, piping, casings, tubing, blowout preventers, motors, drilling equipment, steel coils and bars. When there is more freight required to shore up the oil industry, freight markets tighten and then drive up rates in all our other primary markets.
Many drivers are relocating their business hubs to Texas and Florida to keep up with the hurricane relief and to be closer to the ongoing high demand of these rebuilding sectors. Unfortunately, this reduces the truck supply to other state