Category Archives: Uncategorized

Trucking Industry Trends to Watch in 2021

2020 was a challenging year for both shippers and carriers as the COVID-19 pandemic created extreme freight rate and capacity uncertainty. Now, however, all eyes are on 2021 outlooks to gauge which direction the freight market will turn this year.

Red Kite’s team of logistics experts is monitoring key metrics and expected trends to keep our customers informed and ensure they receive fair, competitive rates based on current market conditions. Here are some key metrics that we will be closely watching this year.

Fuel Prices

In 2020, we saw diesel fuel prices sharply decline as the COVID-19 pandemic halted vehicle traffic across the U.S. and crude oil production slowed. Last year, the U.S. average retail price for diesel fuel was $2.55/gallon, according to the U.S. Energy Information Administration (EIA).

This year, however, diesel fuel prices will be on the rise. According to the EIA’s Short-Term Energy Outlook report, we can expect the U.S. retail price for diesel fuel to average $2.71/gallon. This report states that we can expect diesel fuel prices to mirror the direction of crude oil prices, which are forecast to increase as oil production ramps up.

Diesel fuel prices directly impact freight rates, as carriers typically include fuel surcharges in their rate to help cover operational costs. Red Kite will closely monitor 2021 diesel fuel price outlooks to determine the implication for freight rates.

Truck Capacity

Truck capacity was extremely volatile in 2020 as demand for essential goods skyrocketed and demand for materials used in manufacturing plummeted, creating low capacity for some trucking services and high capacity for others.

Truckload dry van services, in particular, had tight capacity last year, and experts say we can expect this trend to continue through at least the first half of 2021. Analysts believe that we can also see an uptick in LTL loads as infrastructure and construction projects that were placed on hold proceed, which could tighten capacity for those services.

Slow trailer production and a shortage of truck drivers will also contribute to tighter capacity for all trucking services. This is a trend that experts say could last until well into 2021 as carriers struggle to hire new drivers and supply chain disruptions impact trailer manufacturers.

Truck capacity is another key metric that influences freight rates. When capacity is fuller, rates typically go up, and when capacity is less full, rates typically go down. The Red Kite team will monitor trucking capacity throughout 2021 to see how capacity could impact rates and shippers’ ability to secure load coverage.

Freight Rates

In 2020, we saw freight rates follow volatile patterns, spiking and ebbing as freight demand rapidly changed.

Spot freight rates were on the rise near the end of 2020, however, and industry experts say we should expect to see rates trend upwards for the majority of 2021. While rates are predicted to stabilize after the widespread distribution of the COVID-19 vaccine, growing freight demand as businesses re-stock their inventories will keep pushing upward pressure on rates.

Construction & Infrastructure Growth

Construction and infrastructure projects were widely delayed in 2020 but are expected to resume and even increase in number amid economic recovery.

As 2020 came to an end, we saw a record-high increase in construction spending as mortgage rates remained low. Demand for private and residential projects, in particular, skyrocketed as more people look to move to suburbs or low-density areas. This trend in construction is expected to continue, meaning we will likely see increased demand for building materials and steel and metals and – therefore – the trucking services that transport them, including flatbeds.

Infrastructure investment could also boost demand for flatbed truck services. Prior to election, President Biden stated in his “Build Back Better” economic recovery plan that we can expect to see the government invest over $7 trillion on infrastructure initiatives, beginning this year. If this recovery plan passes through Congress, we could see even more demand for flatbed trucking services.

Red Kite closely watches industries tied to the markets we serve to ensure we are finding the best freight solution for each of our customer’s specific industry needs, which is why we are monitoring construction and infrastructure sector outlooks.

Navigating the 2021 Freight Market

Monitoring trends like capacity and fuel prices is crucial to understanding how shippers may be impacted by the current freight market. It is especially important to monitor these trends in volatile markets, where rates and capacity can rapidly change.

It can be challenging, however, to find the time to monitor all the different metrics that impact truck freight. Logistics experts like Red Kite are constantly watching market trends, and by partnering with a 3PL, shippers benefit from their expertise and get important guidance on how to strategically coordinate transit for their loads within a particular market.

Contact us or request a quote today to see how Red Kite’s team can help you plan your truck freight in 2021’s market.

Preparing Your Supply Chain for Shipping Disruptions

Unexpected circumstances or disasters, such as severe weather, can have devastating impacts on supply chains and disrupt the shipping process, leading to delays.

While shipping disruptions are difficult to predict – and sometimes unavoidable – being prepared and having a plan in place can help shippers better avoid extremely long delays or slowdowns that could impact customer supply chains. Partnering with a third-party logistics company, such as Red Kite, can also help shippers be better prepared for potential obstructions.

Here are some key things that shippers can do to prepare their supply chain for shipping disruptions.

Schedule Shipments Ahead Of Time

Under typical shipping circumstances, providing carriers with shorter lead times usually means that truck capacity will be fuller, making it difficult for shippers to find the truck they need for their load.

Under unusual shipping circumstances, such as those complicated by natural disasters, truck capacity becomes even tighter, making it much more difficult to secure load coverage, especially with short lead times.

When the COVID-19 pandemic was first declared in March of 2020, for example, dry van truckload capacity was extremely limited as consumer demand for goods deemed essential skyrocketed. Severe weather, such as snowstorms and hurricanes, can also reduce capacity as truck drivers try to re-route around forecasted storm areas.

Shippers can prevent or mitigate shipping delays caused by unexpectedly tight shipping capacity by securing the transit needed for their load well in advance of delivery dates. By scheduling shipments ahead of time, shippers have a truck secured for their load should something disrupt the shipping supply chain.

Shippers who do not know exact delivery dates should also provide their carrier of choice with an expected shipment schedule so their carrier can plan on having a truck available for them during the specified period of time.

Monitor Market & Seasonal Trends

While it is not always possible to predict when events that disrupt shipping will occur, monitoring seasonal trends and market trends can help shippers be better informed and prepared for when these events could occur and how they will impact freight.

Severe weather typically occurs in seasonal patterns. For example, hurricanes will typically occur in the fall months, and snow and ice are more likely to impact certain regions during winter. By being aware of the seasonal weather patterns within their shipping regions, shippers can create a plan and prepare for potential shipping disruptions that could occur during those seasons.

Monitoring the freight market can also indicate how supply chains may be affected by certain events. If a natural disaster increases demand for food and beverage products, for example, dry van and reefer truck availability could decrease within the region in which the disaster occurred. Shippers could monitor market trends such as truck capacity, freight rates and shipping news to gauge how their supply chain could be impacted by this event and determine whether they need to make adjustments to avoid delays.

Shippers can also partner with 3PLs to gain valuable freight market insights from logistics experts. The Red Kite team, for example, understands which market factors are the most important to shippers and passes those insights along so shippers can adjust their freight plans as needed.

Build Strong Carrier Relationships

Having strong relationships with a few key carriers is important in navigating disruptive shipping markets, as these relationships mean that carriers will work with their trusted partners more closely to find a truck for their load.

Carriers can also help keep shippers they regularly work with more informed about any expected shipment delays as a result of a supply chain interference. This information is crucial for shippers to have so they can keep an open line of communication with their customers about delivery delays and maintain these important relationships.

3PLs like Red Kite can also use their strong carrier connections to secure load coverage for shippers within tight capacity markets and enable shippers to build strong relationships with reliable carriers.

Develop A Back-Up Plan

Even if a shipper secures load coverage in advance and is generally well prepared, extreme circumstances could cause their initial freight plan to fall through and hinder their supply chain, such as an unexpected driver shortage that leaves a shipper without a truck for their load.

Developing a back-up shipping plan allows shippers to avoid catastrophic delays that could result from their initial plan failing. When developing a back-up plan, shippers should consider a variety of different factors and scenarios, including the following:

  • Alternate carriers, in the event that their primary carrier is unable to deliver their load
  • Alternate shipping routes that could be used to deliver a load
  • Alternate delivery dates and times, if a customer has delivery flexibility
  • Alternate modes of truck transportation

If shipping plans get disrupted, shippers could also work with an experienced 3PL to find a shipping option for their load. 3PLs like Red Kite have extensive carrier networks and experience in solving logistical challenges.

Partner With A Trusted 3PL

Partnering with a trusted 3PL can also help shippers prepare for potential shipping disruptions and delays. 3PLs have teams comprised of logistics experts that understand how unexpected events can disrupt supply chains and know how to best prepare for the impact of those events on shipping.

3PLs also take the time-consuming process of finding a new carrier or trying to secure load coverage during market disruptions away from shippers as well, which allows shipping coordinators to focus on more important tasks, such as communicating any expected delays with their customers.

With over a decade of experience in logistics and a strong carrier network that spans across North America, Red Kite can help shippers find load coverage during market disruptions and navigate the supply chain challenges that come with them. Our expert team is ready to assist shippers using our carrier connections to find a cost effective, reliable solution for their trucking freight needs.

Contact us or request a quote today to see how Red Kite can help you successfully navigate shipping disruptions.

Tips For Preventing Cargo Theft and Fraud

Cargo theft can occur at any stage of the shipment process and can create in devastating supply chain disruptions. Stolen cargo can also result in great monetary loss, particularly when valuable goods such as electronics or pharmaceuticals are taken.

While it is difficult to completely prevent cargo theft, taking precautionary measures can be key in reducing the risk. Shippers should always prepare for theft before it happens, or partner with logistics experts like Red Kite who are knowledgeable about shipment security.

Here are some key actions that shippers can take to better protect their cargo and help prevent devastating shipment loss.

Verify Driver & Truck Information

“Seasoned” cargo thieves often observe a warehouse for days – or even weeks –to better understand its schedule. Once they recognize common staffing and shipment patterns, these thieves may use their own trucks to impersonate a driver, hoping the warehouse employees will load the truck.

As soon as a driver arrives to pick up freight, shippers should verify that both the driver and truck match the information provided by that shipment’s carrier. If any information does not match, shippers should call their carrier to confirm that the right driver is there for the shipment. It is better to be extra cautious than risk a shipment getting loaded on the wrong truck and stolen.

Utilize Tracking Technology

Using tracking technology, such as a GPS attached to freight containers, can be key in helping shippers spot cargo theft along their delivery route. If shippers notice their freight is no longer on the set delivery route – and the driver did not call to alert of any changes – they should contact their carrier immediately. If anything seems unusual or the shipment was, in fact, stolen, shippers should then report it to the authorities.

Even if cargo does happen to be stolen, tracking technology can help authorities locate and recover it. Stolen freight is typically very difficult – or even impossible – to find, but a tracker can provide key information as to where a shipment is and increase the chance of it being recovered.

Be Aware of Routes & Wait Time

Even though cargo theft can occur anywhere and during any delivery, some routes and wait times place freight at greater risk of theft.

Cities that serve as major shipping hubs, such as Los Angeles, Chicago, Dallas and Atlanta, often experience higher rates of cargo theft. Because these cities have many trucks regularly traveling in and out of the area, it is much easier for cargo thieves to find a victim and travel undetected.

Longer wait times also put freight at greater risk for theft. If cargo is sitting unattended for a long period of time before being loaded or unloaded, cargo thieves have more opportunities to strike. Weekend or off-peak deliveries, for example, typically have less staff on hand to help with a shipment, which increases loading wait times and the risk of theft.

If shippers have freight that will be routed through a high theft area or likely to experience extended wait times, they should take extra precautions and work with carriers experienced in navigating higher-risk deliveries. 3PLs – like Red Kite – can also use their large carrier network to partner shippers with drivers experienced in deliveries that are at higher theft risk as well.

Secure Your Warehouse

Trucks tend to be the most common target of cargo thieves, but warehouses – particularly those that are un-secure – can also be targeted for break-ins.

Shippers should have several security measures in place at their warehouses to help deter thieves, including the following:

  • Well-lit parking lots and walkways
  • Controlled access into shipping areas
  • Surveillance cameras
  • Locked entrances to inside the warehouse
  • Secured locations for keys
  • Regular security audits to identify areas that need to be improved

While there is no security measure that can completely eliminate the risk of theft, having a secure facility will help deter thieves looking for a warehouse that is an “easy target.”

Watch for Fraud in the Freight Arrangement Process

Cargo theft not only happens within a warehouse or during a delivery – it can start as early as the process of coordinating freight.

Some scammers pose as legitimate carriers or brokers and trick shippers into trusting them to transport their freight. Then, when the shipment is picked up, it is stolen and never delivered to its destination, or a truck never actually arrives to pick the shipment up.

When working with a new carrier, shippers need to watch for potential fraud “red flags,” such as being given vague company information or freight rates that are much lower than the market average. It is a good idea to independently verify a new carrier’s company address, website and other contact information to ensure they are legitimate.

Working with a trusted 3PL can also reduce the risk for fraud in the shipment arrangement process. 3PLs like Red Kite have extensive carrier vetting and monitoring process in place to ensure they are connecting shippers with only legitimate, trustworthy carriers and drivers.

Partner with a Trusted, Experienced 3PL

Partnering with a trusted, experienced logistics provider – such as Red Kite – can serve as a great defense to cargo theft.

3PLs have strong relationships with fully-vetted carriers that hire professional, trustworthy drivers who are trained in best practices on how to prevent cargo theft. 3PLs are also comprised of logistics experts who understand the importance of keeping loads secure and safe throughout the entire supply chain.

With decades of combined experience, Red Kite understands the important of protecting cargo and takes great care to help shippers reduce the risk of cargo theft. Red Kite also has a strong network of trusted, professional carriers who understand the devastating impact of cargo theft and place load security as a high priority.

Contact Red Kite or request a quote today to see how Red Kite can help you safely transport your next shipment.

Shipping Temperature-Sensitive Freight in Summer

As summer approaches, manufacturers of temperature-sensitive goods are preparing for the logistical challenges that come with protecting their freight in warm weather. These goods must be kept at specific temperatures, and even a slight temperature change could result in spoilage, product loss and major supply chain disruptions.

Shipping coordinators who work with cold supply chains during the summer must make freight decisions that ensure loads arrive to their destination safely – or partner with an experienced 3PL like Red Kite who can.

Here are some important factors that all shippers need to consider before coordinating refrigerated – or “reefer” – transit for temperature-sensitive goods in the summer.

Plan Ahead

Reefer trucks are in high demand during the summer. Many businesses, such as pharmaceutical and food manufacturers, require reefer trucks to safely transport their freight in warm temperatures. Additionally, produce – which is commonly harvested during the summer months – requires reefer trucks to prevent spoilage. This high demand causes reefer capacity to tighten and makes it more difficult for shippers to secure load coverage, especially when providing carriers with short notice.

Shippers should coordinate reefer transit for temperature-sensitive freight well in advance of deliveries to ensure they do not miss key deadlines and can keep their supply chain running smoothly. If shippers are unsure of exact delivery dates at the start of summer, they should provide carriers with their forecasted reefer needs so carriers can plan ahead for transporting their loads.

Some goods, such as beverages, can withstand warmer temperatures. However, during extreme heatwaves, manufacturers of these goods may need reefer trucks to keep their products safe. Rather than waiting to coordinate reefer transit during a heatwave – when capacity is more likely to be full – shippers should monitor weather forecasts using resources like the National Weather Service and be prepared to coordinate reefer transit as soon as a temperature spike is predicted.

While shorter lead times make it more challenging to secure reefer transit, 3PLs – like Red Kite – can use their extensive carrier connections to partner shippers with a reefer carrier, even within tight markets.

Use LTL Shipping Cautiously

LTL can be a cost-efficient solution for many shippers, especially those with smaller or irregular shipments. However, LTL transit can put temperature-sensitive freight at greater risk for spoilage. Multiple delivery stops, paired with freight loading and unloading, means freight will likely be exposed to warmer, unsafe temperatures.

Before coordinating LTL services for reefer trucks, shippers should see if the carrier has measures in place to protect freight during unloading at delivery stops, such as refrigerated docks or the use of thermal blankets. While these methods can help protect some goods, loads that are particularly sensitive to temperature changes may not be able to ship safely with LTL services.

Be Prepared for Reefer Trailer Failures

While not common, it is important for shippers to prepare ways to keep their freight safe in the event of a refrigeration system failure.

Refrigeration systems use fuel to keep internal trailer temperatures at a controlled level, which requires drivers to refuel frequently. While reefer drivers are typically attentive to their fuel levels and trailers, untrustworthy carriers may have untrained drivers who do not monitor refrigeration equipment or who even turn off the refrigeration system to conserve fuel.

Shippers should prepare for potential equipment failures by discussing a plan with the carrier to protect products if the refrigeration system malfunctions. Requesting an electronic log of trailer temperatures for the duration of the delivery can also help shippers catch and notify carriers about any unusual temperature changes.

Working with a professional, trusted carrier can reduce the possibility of equipment failures as well, since these carriers have drivers trained to haul temperature-sensitive loads and closely monitor reefer trailers. 3PLs like Red Kite, for example, have diligent carrier vetting and monitoring processes to ensure they are partnering shippers with reliable carriers.

Provide Detailed Shipment Requirements

Providing details about a shipment’s requirements up-front will help inform carriers about the temperature range necessary to keep the load safe, as well as any special handling or equipment required. By providing these requirements in advance of a delivery, carriers will have the necessary information to keep freight safe.

These details should also be included in a shipment’s bill of lading so drivers can reference load requirements during their delivery as needed.

Partner With A Team of Logistics Experts

Between securing load coverage, finding a trusted carrier and keeping loads damage-free, navigating the logistics of temperature-sensitive freight during the summer can be challenging. This process is also time consuming and can take shipping coordinators away from other important tasks.

By partnering with a 3PL for reefer transit, however, shippers can utilize a team of logistics experts who offer the following benefits:

  • Extensive carrier networks that can be used to secure short-notice reefer transit on a variety of lanes.
  • Knowledge and expertise of temperature-sensitive freight transit, which allows 3PL teams to provide shippers with supply chain suggestions that can protect their cargo and help shippers communicate load requirements to carriers in a detailed manner.
  • Strong carrier monitoring process to ensure shippers are partnered with trustworthy, knowledgeable reefer truck drivers.

With a dedicated team of logistics experts and a reliable carrier network that spans across North America, Red Kite can use its connections and expertise to find reliable reefer transportation solutions that will allow your temperature-sensitive shipments to be delivered damage-free and on-time during the summer months.

Contact us or request a quote today to learn more about our reefer freight solutions.

Truck Driver Safety Tips for National Safety Month

Every year, the National Safety Council recognizes June as National Safety Month to build awareness about key topics impacting safety both inside and outside of the workplace.

Driving, one key focus area of this year’s National Safety Month, is a particularly important safety topic for truck drivers. With jobs centered entirely around driving, truck drivers must watch out for common road hazards while also operating large, heavy trucks.

Brushing up on driving safety is important for all drivers – even those with years of experience – to ensure they have the knowledge necessary to do their jobs safely. Here are some of Red Kite’s driver safety tips for carriers to practice during National Safety Month and beyond.

Avoid Distractions

Driving requires full focus on the road, and distractions like eating can take attention away from driving, increasing the risk of an accident.

One of the most common – and dangerous – distractions that drivers face is cell phones. While it is illegal for drivers to text and drive, drivers should avoid the temptation to send a quick message by putting their phone away. Drivers should also use hands-free device to take phone calls so they can keep both hands on the wheel while driving.

Before heading out on a delivery, drivers should place anything that could potentially distract them out of sight. If drivers find themselves in a situation on the road where they need to do something that would distract from driving, they should pull over or stop at the nearest exit so they can safely do so.

Monitor Weather Conditions

Hazardous weather conditions like heavy rain or snow can make roadways dangerous. To prepare for inclement weather in advance, drivers should check weather reports before heading out on the road so they know what to expect. Drivers should also monitor forecasts when traveling to their destination in case conditions change.

Drivers who encounter severe weather during their delivery should slow down and leave extra space between themselves and the vehicle in front of them so they can safely stop if roads become slick or visibility is reduced.

Drive Defensively

While important for all drivers, defensive driving is especially crucial for truck drivers. Trucks are large and difficult to stop, so it is important that truck drivers drive defensively and be aware of their surroundings to better prepare for roadway hazards.

Truck drivers should regularly check their truck’s surroundings – including blind spots – and scan ahead by 15 seconds. Drivers should also try to avoid driving directly next to other vehicles so they have space for an “escape route” in case of an emergency.

Check & Maintain Your Truck

Equipment failures are unexpected and can be dangerous if they occur on the road. Regular truck inspections, however, can help drivers be proactive in spotting signs of equipment problems. Before driving, drivers should inspect the following parts for any malfunctions:

  • Tires
  • Underneath the truck’s cab, for signs of leaking oil or coolants
  • Fluid levels
  • Brakes
  • Horn
  • Mirrors
  • Load securement

If a driver notices anything unusual during their inspection, they should contact dispatch immediately and wait until the equipment problem can be addressed before driving.

Slow Down

Trucks are high-profile vehicles and susceptible to turning over, particularly on turns and curves. If a truck driver goes around a curve too quickly, they risk tipping the truck over.

To ensure their truck does not tip, drivers should approach all turns and curves slowly. While this may require drivers to go slower than posted speed limits, it is better to be cautious than to risk an accident. Drivers should always follow the posted truck speed limits on highways as well, especially in work zones, where lanes are often narrow and can suddenly shift.

Take Breaks & Get Adequate Rest

Truck drivers spend hours on the road each day, which can be mentally fatiguing. Once drivers become fatigued, their ability to stay focused on the road diminishes, and the risk for an accident increases.

When drivers start to feel tired or find they are having trouble focusing on driving, they should pull over and take a break to boost their energy by taking a quick nap, stretching or eating a light snack. Healthy lifestyle habits can also help truck drivers feel more energized and prevent fatigue on the roadway, such as getting adequate sleep, eating healthy and exercising.

 

These are just some of the practices that truck drivers can implement and follow to be safer on the road. For more resources on driver safety awareness and training, visit the National Safety Month website.

Strategies For Reducing Freight Costs

Controlling freight costs is a priority for many businesses. However, it can be difficult for shipping coordinators to identify areas of their shipping process that can be changed to reduce costs, especially those at smaller businesses who may not have the time or resources to do so.

It is important that shippers understand the key areas of their supply chain that can be adjusted to maximize cost savings – or partner with a 3PL like Red Kite who does – to successfully lower their freight costs. Here are some of the key strategies that shippers seeking to reduce freight costs need to consider.

Build Strong Carrier Relationships

Having strong ties with a few key carriers is important when negotiating freight rates. Carriers are more willing to reduce surcharges or accessorial fees for shippers they regularly work with, and good carrier relationships give shippers greater leverage when negotiating rates.

Shippers who use different carriers for each load are less likely to build these important relationships, making it more difficult to negotiate freight costs. Therefore, shippers should identify a small group of trusted carriers and build those key relationships.

Partnering with 3PLs like Red Kite – who have strong connections with a network of carriers – may also help shippers reduce their freight costs. Due to these relationships, 3PLs have strong bargaining power with carriers and can negotiate lower freight rates.

Consider Contract Freight

Many shippers – especially smaller ones – elect to use the spot freight market to find coverage for their loads. However, contract freight can offer freight savings for shippers who send regular volumes of freight on a specific lane.

Unlike spot rates, which rapidly change depending on market conditions, contract rates are locked in for a set period of time, typically a year. Contract freight can protect a business’s primary shipment volume from unexpected rate increases and reduce freight costs in the long run.

Related: The Difference Between Spot Freight Rates and Contract Freight Rates

Increase Shipment Lead Time

Lead times have a major impact on freight capacity, and therefore freight rates. Providing carriers with shorter lead times means capacity will tighten, and shippers will pay more for freight. Providing carriers with advanced notice for a shipment, however, means shippers will likely be booking a load when capacity is not yet full and pay less for freight.

Even if a shipper is unable to increase their lead time due to manufacturing materials that require JIT shipping or short lead times, such as building materials, 3PLs – like Red Kite – can use their carrier network to find affordable coverage in tighter capacity markets.

Optimize LTL Shipping

While LTL shipments can result in lower freight costs for smaller loads, LTL services are complex. Shippers who are inexperienced in LTL shipping or who make a freight classification error can end up paying extra.

Before arranging LTL freight, shippers should ensure they do the following to fully utilize the cost savings LTL can provide and avoid hidden fees:

  • Maximize load weight. Heavier shipments typically have lower base rates than lighter shipments.
  • Ensure freight is classified correctly. Incorrectly classifying a load means the carrier will need to re-classify the freight. If the load falls under a different freight class, shippers face extra expenses.
  • Consider negotiating freight all kinds (FAK) with a carrier. If a load contains freight from multiple classes, classifying as FAK puts the entire load under one class and may result in cost savings.

Experienced LTL logistics experts, such as Red Kite, can also assist shippers with optimizing their LTL load. 3PLs are highly knowledgeable about how LTL rates are calculated and can help shippers maximize cost savings for smaller loads

Related: Calculating Less-Than-Truckload Freight Rates

Ship Off-Peak

Shipping during peak days or times means freight services are in high demand, which will tighten capacity and drive rates up. Shipping off-peak – days or times when freight services are in lower demand – means truck capacity, and therefore freight rates, will be lower.

Carriers often provide lower freight rates for off-peak loads to help fill their shipping schedule as well, which can result in even greater cost savings.  Shippers should factor peak times into their delivery schedules and consider shipping on weekends or overnight if they are able to do so.

Track Market Conditions

Market conditions have a major impact on freight rates, particularly in the spot market. For example, manufacturing activity was very strong in 2018. Most manufacturers require flatbed trucks to transport raw materials – such as steel and other metals – as well as finished goods. This increase in flatbed demand resulted in higher spot market freight rates.

Monitoring market conditions can help shippers gauge the future direction of rates and enables them to make informed decisions about what will offer the most cost savings. For example, if demand for reefer services is weak, food and beverage shippers may choose to frequently use the spot freight market instead of locking into a contract and take advantage of lower rates.

To help shippers keep track of the market conditions influencing the freight market, Red Kite publishes a monthly market report that discusses the latest shipping indicators and trends. Sign up to receive the report below.

Utilize Carrier Backhauls

When a driver delivers a load, but does not have a backhaul – a load that can be transported from a driver’s destination back to their origin – carriers still need to cover fuel expenses, driver wages and other operational costs. For this reason, carriers will charge lower freight rates for return loads to ensure they avoid having an empty truck.

Shippers can utilize backhauls by partnering with a carrier based near their load’s ship-to point, as this means that the load is likely a return load for that carrier. Shipping on a lane that a carrier regularly services also makes that carrier more likely to find a backhaul. When a carrier does not have a backhaul load, they may charge higher rates to offset the time and resources used to drive to their next destination without a load.

3PLs can also assist with utilizing carrier backhauls. Red Kite, in particular, was founded on the principal of utilizing backhauls to benefit both the shipper and the carrier.

Read more about Red Kite’s founding

Partner with a Trusted 3PL

3PLs are comprised of logistics experts who coordinate shipping for businesses. With their supply chain expertise and strong carrier relationships, 3PLs can negotiate lower freight rates and identify areas within the supply chain where shippers can streamline costs.

When seeking a 3PL to assist with your freight needs, it is important to consider 3PLs who are trustworthy, knowledgeable and have a wide, reliable carrier network. Red Kite Freight Solutions has decades of combined experience in logistics and a trusted carrier network that spans North America. The Red Kite team uses its expertise and connections to find cost-effective freight solutions for a variety of loads, from raw materials to finished goods.

Contact Red Kite today or request a quote to see how our team of logistics experts can help you find cost-effective freight solutions.

In the News: COVID-19’s Impact on Shipping

As the COVID-19 pandemic continues to disrupt supply chains across the globe, shippers are keeping a close eye on the latest headlines to gauge the pandemic’s impact on freight.

Red Kite Freight Solutions is actively monitoring COVID-19 news to keep shippers informed on how capacity or freight rates could be impacted. Here are the top trends our team is currently watching that all shippers need to be aware of.

Trucking Volume, Capacity on the Decline After Peaking in March

When COVID-19 cases started increasing in North America during March, we saw trucking volume spike due to the increased demand and manufacturing of essential goods, such as paper products and medical supplies. However, as manufacturing activity and consumer buying patterns begin to slow, we see that trucking volume is on the decline.

According to data from FTR, trucking volume for reefer, dry van and flatbed services fell in late March and early April. In particular, we saw a sharp decline in flatbed volume as manufacturers who use these services slowed production in response to economic impacts of COVID-19. A survey conducted by CCJ also found that 55% of carriers reported seeing declines in freight volume over the last month. At Red Kite, we closely watch trucking volume because the number of loads shipped impacts freight capacity, and therefore the ability for shippers to find load coverage.

We have seen declining load-to-truck capacity as a result of falling trucking volume as well. Capacity data form DAT – shown in the chart below – found that load-to-truck capacity steadily declined for flatbed services from mid-March to early April. Even though we saw load-to-truck capacity for dry van and reefer services increase in late March as demand for essential goods skyrocketed, capacity levels are now beginning to fall.

Monitoring freight capacity is important because capacity influences the direction of spot rates. If there are more loads than trucks available, rates will rise, and if there are fewer loads than trucks available, rates will fall. With truck-to-load capacity beginning to decrease, shippers can expect freight rates to drop.

Freight Rates Continue to be Volatile, but Show Signs of Stabilizing

We watched freight rates fall and rise in March as freight demand and capacity rapidly changed. When COVID-19 cases began spreading across the US in early March, we saw demand for dry van and reefer services increase as consumers stocked up on essential goods like paper products, tightening capacity and driving freight rates up.

After this initial increase in demand, we watched freight rates drop before rising again in mid-to-late March as states began announcing stay-at-home orders in response to COVID-19. This created a spike in consumer demand for essential goods and shipper demand for freight services that transport these goods.

In early April, however, we saw freight rates drop as manufacturers slowed or halted production of goods deemed non-essential. This led to decreased demand for dry van, reefer and flatbed services.

The chart below shows the national average rates for each of these services so far this year, as calculated by DAT. Rates have a major impact on the freight decisions shippers make – such as whether to use spot freight or contract freight – which is why Red Kite keeps a close eye on the current market rates.

Even though freight rates were volatile in March, industry experts believe we can expect to see spot rates begin to stabilize. After the initial slowdown of manufacturing activity and consumer purchases steadied, experts say we can expect to see rates hold at a consistent level over the next couple of months.

Oil Price Feud, COVID-19 Create Volatile Fuel Prices

Starting in early March, we watched crude oil prices across the globe begin falling as an oil price war broke out between Russia and Saudi Arabia. Lower crude oil demand due to the COVID-19 pandemic also contributed to falling diesel fuel prices, which decreased nearly 30 cents per gallon from early March to early April, according to the U.S. Energy Information Administration.

While diesel prices are expected to remain relatively low amid soft demand, we could see prices go back up as the crude oil pricing feud ends. On April 9, Saudi Arabia and Russia reached a tentative deal to decrease oil output to about 8.5 million barrels per day, following the path of other OPEC members who announced production decreases.

Factors that influence diesel fuel pricing are important to monitor because the cost carriers pay for fuel is often passed along to shippers in the form of a fuel surcharge. With fuel prices predicted to remain low over the next couple of months, we can expect shippers to see lower fuel surcharges.

Monitoring Shipping Market News and Trends

COVID-19 can create rapidly changing shipping conditions, and it is important for shippers to stay on top of the current news and trends that could impact freight rates or capacity, as these trends could impact their shipping strategy.

To make it easy for shippers to monitor these indicators, Red Kite publishes a monthly Shipping Market Report to keep readers informed about the factors shaping freight rates and capacity. Sign up below to receive future reports.

Red Kite Freight & COVID-19: Keeping Our Partners Safe

To Our Readers,

As the COVID-19 pandemic spreads, the world around us is changing rapidly. Our priority during this time of uncertainty is to balance the well-being of our customers, carriers and employees while continuing to provide products and services to essential sectors.

We wanted to communicate the steps we are taking to maintain operations while cooperating with efforts to reduce the spread of the virus.

Per the guidance provided by the Department of Homeland Security, CISA Department, Red Kite Freight Solutions provides specifically stated freight transportation support services to the below designated sectors (among others):

  • Energy – Oil/Gas/Wind/Solar Generation and Transmission Sectors
  • Transportation Systems Sector
  • Communications Sector
  • Defense Industrial Base Sector
  • Emergency Services Sector
  • Water and Wastewater System Sector
  • Chemical Manufacturing Sector
  • Critical Manufacturing Sectors

We Are Open for Business

First and foremost, Red Kite’s operations are running as normal and our staff still is available to assist customers and carriers via phone and email. Our commitment to providing you with the freight transportation services you need with exceptional customer service remains the same.

Additionally, we continue to publish our monthly Shipping Market Report to keep readers informed of news and indicators shaping the freight shipping industry. Read this month’s report here or sign up to receive the report in the future.

We Are Committed to Protecting our Carriers

Freight carriers play one of the most crucial roles in the fight against this pandemic. They are working hard to deliver the goods needed, when and where they are needed. We are committed to the safety and well-being of our carriers and are working with them to communicate any new policies or procedures our customers have put into place to reduce exposure risk.

We are committed to providing superior service, product quality and support during these uncertain times. We will continue to monitor the situation and communicate any developments as they occur.

Regards,

Lacey Jackson

Founder & Logistics Manager, Red Kite Freight Solutions

The Difference Between Spot Freight Rates and Contract Freight Rates

Shippers have many important decisions to make when coordinating shipments, including whether to use the spot market or sign a contract with a carrier. It can be challenging to determine whether spot or contract freight is best for a particular load, so it is important that shippers understand each method – or partner with experienced logistics experts like Red Kite who do – to help guide their decision.

Spot freight is a one-time rate given to a shipper by a carrier for a single delivery, typically provided near or at the time of the load’s shipment. Spot freight rates are subject to daily change and fluctuation.

By contrast, contract freight is a fixed rate that is negotiated between a carrier and shipper for a specific volume range over a set period of time, typically a year.

Many shippers – especially smaller ones – often default to spot freight, but there are many advantages to contract freight or using a combination of both shipping methods.

How are Spot Rates Calculated?

Spot rates are calculated using the economic principle of supply and demand. In the shipping market, supply and demand is represented by capacity, which is the number of trucks available to carry freight at a given time.

Freight capacity varies between different lanes – a route regularly serviced by a carrier – and trucking services, so rates are typically different across the market. With capacity constantly changing, spot rates can vary from hour to hour as well.

If there are more shippers in need of freight than there are trucks available, capacity will tighten, driving spot rates up. However, if there is an excess of trucks and a lack of shippers in need of freight, spot rates will fall.

Economic and market factors such as GDP growth and manufacturing activity can indicate the future direction of spot rates, but do not always indicate the direction of rates for individual services or lanes.

For example, let’s say that GDP is growing at a rapid rate, but markets that use flatbed trucks – such as lumber or steel and metal materials– are softening. This would increase capacity for flatbed services, causing rates to fall despite a rising GDP.

The opposite can be true as well. Continuing our flatbed truck example from above, if the economy is slowing, but lumber or steel and metal products are in high demand, capacity for flatbeds will likely fall and rates will increase.

How are Contract Rates Calculated?

Unlike spot rates, which can change within a matter of minutes, contract rates are fixed for the entire period of a particular contract. In addition to establishing a set rate, contract freight also sets standards for other factors, including a minimum freight volume the type of freight that is shipped and the lane on which the freight is shipped.

Contract rates are typically higher than spot rates at any given point because they are negotiated to include other variables that factor into freight costs, such as fuel surcharges and additional carrier services. Spot rates do not include these variables, and they are added as a separate freight charge.

Learn more about the variables that factor into calculating full truckload rates or less-than-truckload rates.

Determining Whether to Use Spot or Contract Freight

Now that we discussed how spot and contract rates are calculated, let’s look at which factors should be considered when choosing the best method for your shipment.

Market Outlook

The overall trucking market outlook can indicate whether spot or contract freight offers shippers the most cost savings.

If the market outlook points towards capacity being tight over a long period of time, shippers may choose to lock in a contract with set rates before prices on the spot market increase. However, if market outlooks indicate slowing freight demand in the future, shippers may choose to use spot freight and take advantage of lower prices.

The amount of risk a shipper is willing to take with changing rates also plays a role in the choice between spot or contract freight. Larger shippers with a high freight budget, for example, may be more willing to risk spot market volatility in case rates drop. Smaller shippers who do not have the financial means to risk changing freight rates, however, may choose to go with the consistent pricing that contract freight offers.

Shippers should regularly monitor the key market indicators that influence freight rates and capacity to gauge whether spot or contract offers them the most cost savings.

Red Kite publishes a monthly newsletter that highlights trucking outlooks, fuel costs and more to keep shippers informed about trends that could impact capacity and rates.

Carrier Relationships

With only one dedicated carrier handling all loads, contract freight shippers are able build a strong relationship with that carrier. This is important for loads that require extra attention or care from a carrier – such as fragile loads or just-in-time shipments – as partnering with a trusted carrier helps shippers ensure their sensitive loads are delivered safely and on-time.

It is more difficult for shippers to develop strong carrier relationships through spot freight as they may work with different carriers for each load. Working with different carriers also means service and expertise can vary for each delivery, putting sensitive loads at greater risk of damages or missing a delivery deadline.

3PLs like Red Kite, however, can help shippers find experienced, reliable spot freight drivers, since they have experience working with a deep pool of carriers. 3PLs take out the confusion and difficulty shippers are faced with when buying freight services.

Freight Volume

Since contract freight requires shippers to ship a minimum freight volume over a set time period, shippers who have consistent freight volume may find contract freight more cost-effective than spot. Shippers with infrequent freight needs, however, may have more difficulty meeting the obligations of contract freight and find more flexibility with spot freight.

Combining Spot and Contract Freight

Even though some shippers may find one shipping method to be better suited to their freight needs, most shippers use a combination of the spot market and contracts in their freight purchasing strategy.

For example, shippers who have a particular load that goes over the volume specified in their contract or an unplanned one-off shipment may turn to the spot market to find a carrier that can transport the extra tonnage.

Conversely, spot freight users may find themselves regularly shipping a consistent volume of freight. They, therefore, might switch to contract freight if it allows them to cut freight costs. Experienced 3PLs, such as Red Kite, can also help shippers evaluate their freight needs and determine whether switching to contract freight from spot freight would be more cost-effective.

Finding Cost-Effective Spot or Contract Rates for Your Load

Whether a shipper uses the spot market or a contract for arranging freight, it can be challenging for shipping coordinators to find cost-effective solutions, especially when the process of finding a carrier takes them away from other essential tasks. By partnering with a trusted 3PL, however, shippers can utilize a team of logistics experts to find cost-effective, trustworthy carriers for both their contract and spot freight needs.

Red Kite specializes in finding both contract freight and spot freight for its customers. With a trusted carrier network, Red Kite can partner shippers with a reliable carrier who ensures their loads arrive at their destination safely and on-time.

Contact Red Kite or request a quote today to get a competitive rate for your spot or contract freight needs.

Trucking Industry Insights: February 2020

As supply chain disruptions from the coronavirus spread across the globe, freight capacity and oil demand could be volatile in the near term. During this time of market uncertainty, it is important to partner with a trusted 3PL, such as Red Kite, to find reliable coverage for your load. Here are the top metrics and headlines our team is watching this month.

Industry Indicators

ATA Tonnage Index: 117.4 (January 2020)

Trucking tonnage rose 0.1% in January amid soft manufacturing activity. Tonnage is up 0.8% compared to the same time a year ago and has increased 0.6% over the past two months.

Diesel Fuel Price: $2.890/Gallon (Week of 2/17/20)

The U.S. average retail price of diesel fuel dropped 2 cents a gallon in mid-February. Diesel fuel costs 11.6 cents less than it did the same time a year ago.

DAT Dry Van Spot Rate: $1.87/Mile (January 2020)

Dry van spot rates dropped month-over-month in January. However, experts believe rates may have hit their bottom in the near term and may be on the rise ahead of spring.

DAT Flatbed Spot Rate: $2.17/Mile (January 2020)

Flatbed spot rates increased month-over-month in January as higher oil production and construction of the Keystone XL Pipeline increased flatbed demand.

Trucking Industry News

Coronavirus Impacts on Global Supply Chain

The deadly coronavirus could have a significant impact on freight volume entering the U.S. from China. Wuhan is a major industrial and transportation hub, and production disruptions may cause supply chain disruptions across the globe. Due to both the coronavirus and trade tensions, analysts expect the U.S. to see softer freight volumes in Q1 of 2020.

Oil Demand to Decline for First Time in Decade

The International Energy Agency expects oil demand to fall in the first quarter of 2020, which would mark the first quarterly fall in a decade. Demand in the first quarter is expected to fall by 435,000 barrels per day compared with the same period a year ago.

Trump Signs USMCA Agreement, Ratification Progress Continues

At the end of January, President Trump signed USMCA into law. USMCA, which replaces NAFTA, includes tougher rules on automobile production. While Mexico and the U.S. have ratified USMCA, Canada parliament is still in the ratification process.

Get Key Trucking Industry Insights Each Month

Freight rates and demand constantly fluctuate due to economic and market factors. The Red Kite team closely monitors these factors and publishes a monthly newsletter that highlights shipping conditions, fuel costs, trucking outlooks and other important market indicators to keep shippers informed about trends that could impact freight rates and capacity. Sign up today to receive!