The capacity crunch is hurting everyone these days — no industry is immune. And while it may be impossible to address the causes of the capacity crunch directly, it’s important to understand where it’s coming from and what you can do to stay ahead of it and minimize its effect on your business. Here’s what you need to know:
8 Causes of Low Shipping Capacity
Here are eight causes of low shipping capacity that you need to understand to stay ahead of the capacity crunch and get your freight where it needs to go:
Cause 1: Overbooked Equipment
Many different industries practice “overbooking” to ensure that they’re able to operate at maximum capacity. For instance, airlines and hotels tend to overbook seats and rooms so that they can have a full flight or hotel. As it turns out, overbooking happens in the shipping industry as well — but with a few key differences.
In most cases, overbooking in other industries is intentional. In the shipping industry, it’s less intentional and more coincidental. What happens is that brokers agree in advance to move a load on a certain day at a certain time — assuming that they will have the capacity. Brokers are “yes men” and don’t like to turn downloads unless they absolutely have to.
But when it comes time actually to make the schedule, they may not actually have the capacity and end up overbooked as a result, which then creates issues for the customer and everyone else relying on the timely delivery of the load.
Cause 2: Capacity Shortage or Increased Demand
Features about the current capacity shortage have been all over the news lately. Truckers and resources are in short supply as many of them are retiring early or leaving the industry due to poor work conditions and wages.
Companies are unable to recruit enough drivers to replace the outgoing ones, leading to a problematic shortage of drivers to transport loads. Not even higher wages have been enough to incentivize people to join the industry.
Increased demand can also be problematic for capacity. For instance, at the beginning of the COVID-19 pandemic, demand for items such as masks, hand sanitizers, disinfecting wipes, and toilet paper skyrocketed.
This increased demand totally disrupted the supply chain as manufacturers and shippers alike scrambled to meet demand. Of course, this meant that other items were not able to be produced or delivered.
Cause 3: Delay or Cancellation
Capacity can also be affected by delays or cancellations in loads. For instance, say a load gets delayed by the manufacturer. This delay can affect the rest of the carrier’s schedule that was designed based on the initial timeline provided by the manufacturer. From there, the carrier either has to wait for the load or move on to other loads. Either way, the result is a capacity concern.
Cancellations cause similar capacity issues. Instead of driving consistent loads, a carrier now likely has to either find a new load that works with their schedule or drive deadhead to satisfy the next load request. This last-minute scrambling by brokers and carriers can lead to inefficiencies.
Cause 4: Lack of Equipment Information
When determining capacity, you need to know key pieces of information about the equipment involved. For instance, how much can the truck haul in terms of weight and size? Can the truck adequately protect products that require special shipping and handling?
Does the truck have enough room left over from other loads to fit this one? These factors all need to be known in order to accept and then transport the load.
Cause 5: No Spare Equipment
Sometimes it’s not a lack of drivers that causes a shipping capacity crunch; it’s a lack of equipment. This is also currently an issue, thanks to the global chip shortage. Chips are needed in new vehicles, but production was halted due to the pandemic. As a result, new vehicles are left sitting in lots, unable to be driven until they receive their computer chips.
At the same time, older vehicles are being taken out of commission but they cannot be replaced with new vehicles — leading to an extremely problematic capacity crunch that simply exacerbates other problems due to the driver shortage and increased demand.
Cause 6: The Right Equipment Is Not Available
Other times, the right type of equipment is not available for the load. Say that a load of produce requires a temperature-controlled reefer truck. However, there are no reefers available. Fresh produce cannot be shipped without this type of equipment, so your options are limited here.
At the same time, delaying the shipment of fresh produce to wait for the right kind of equipment could result in spoilage anyway — leaving you with no easy answer or solution.
Cause 7: Equipment Is Not Ready
Equipment has to undergo maintenance on a regular basis in order to run efficiently. Sometimes the maintenance is planned, but other times, it’s unexpected. If a truck has to go out of commission unexpectedly due to maintenance or repairs, this can create capacity issues from its scheduled loads.
Cause 8: Too Short Notice
Finally, shipping capacity can be affected by the short notice. Shipping routes need to be planned out ahead of time to maximize efficiency. However, if a load comes through with short notice, it can be hard to locate a carrier with the capacity to complete the load without impacting the rest of their schedule.
Managing Low Shipping Capacity
It’s possible to manage low shipping capacity with the right approach. Here are some things that need to be implemented both industry-wide and with individual companies to solve this issue and get your shipments back on track:
- Value your drivers and build relationships with them to keep them around — allowing you to take full advantage of your current capacity — knowing that overall capacity is limited and it would be difficult to replace them
- Use technology to help you maximize your current capacity by creating efficient schedules for drivers, also provide drivers with the support and features they need while on the road.
- Leverage the data provided by these technical tools to learn more about your capacity and how you can operate more efficiently, then take meaningful steps actually to make it happen
Conclusion
Companies like RPM Freight are constantly working to stay ahead of the capacity crunch to get your freight where it needs to go. We have an established network of over 30,000 independent carriers that we work with to transport all sorts of loads. Despite the current capacity crunch, we have been able to maintain a 98% on-time delivery rate.
Reach out to RPM today to see how we can get your freight where it needs to go when it needs to be there.
Sources:
Truck Driver Shortage Worsens Supply Chain Backlog | CBS News
Worsening Computer Chip Crisis Shows Supply Chains Are Still at Risk | Forbes
Trucking Strategies to Keep Your Freight Moving | Inbound Logistics
