2021 Transportation Year in Review & 2022 Outlook
2021 tested the transportation industry’s bandwidth, flexibility, and speed. Here are some key trends from the past year – and what to look out for in 2022.
With the ongoing COVID-19 pandemic, port congestion for overseas shipments, inclement weather, and more, 2021 posed another year of trials and tribulations for the trucking and transportation industry.
International shipping rates hit an all-time high in 2021, driving the cost of goods up, as well as domestic shipping. Additionally, a national truck driver shortage only fueled the industry’s volatility and competition.
Supply chain disruptions will likely continue throughout 2022, emphasizing the need for visibility and increased leadtime, planning, and more to help mitigate the backlog. Changing vaccine mandates, continued consumer demand, and more will likely impact the outlook for the coming year.
An Earlier-Than-Expected Peak
As the year came to a close, many were surprised at an earlier peak in market volatility throughout October – rather than the usual peak of November and December.
Despite this discrepancy in forecasting, demand throughout the end of 2021 remained high – a trend that will likely continue at least throughout the beginning months of 2022.
According to a recent FreightWaves report, “Perhaps the most surprising occurrence in the truckload sector this November was the lack of volatility in SONAR’s national Outbound Tender Rejection Index (OTRI) around Thanksgiving.”
This occurrence is likely due to increased lead times, decreased tender volumes (possibly due to shippers attempting to avoid traditional peaks), and – the key factor – increased contract rates.
The report notes, “It is likely that the biggest factor in keeping rejection rates from spiking at an aggregate level were contract rates. They increased as much as they ever have over the past year. The gap between spot and contract rates shrunk over the past few months, meaning carriers were less enticed to divert capacity to the spot market than before.”
What to Expect in 2022
In the FreightWaves report, the authors note that consumer demand will likely slow throughout the coming year as stimulus packages expire and inflation continues to drive prices skyward.
“There are a few measures to watch closely in 2022 to anticipate consumer demand and trends. Stimulus packages boosted the momentum for consumer demand many quarters ago, but those are now over and substantial tapering will go into effect at the federal level in 2022.
“The inflationary pressure will make its way well into 2022 and will be a variable that will ease consumer demand. Credit card utilization is another factor to take into account in 2022.”
“There are real question marks around what happens early next year as inflationary pressures continue to erode consumer confidence – something that was not present last year when demand took off unexpectedly in the winter months. There is sufficient backlog to keep carriers busy for several months, but the sense of urgency is what drives most of the market rate volatility.”
Navigate Transportation Volatility with an Experienced Partner
With such uncertainty still on the horizon, planning has never been more important to ensure on-time deliveries and keeping trucking costs in check.
Working with a transportation partner such as LiVe Logistics can help do your planning (so you just need to review it), alleviate your supply chain challenges, and overcome obstacles that arise.
With a team of industry veterans, best-of-breed technology that provides 24/7 tracking and supply chain transparency, and vetted drivers, LiVe can help you navigate 2022 for continued transportation success.