The recent strikes by the International Longshoremen’s Association (ILA) at key East Coast and Gulf Coast ports have created significant disruptions in the logistics and transportation sectors. The trucking industry, as a critical link in the supply chain, is feeling the ripple effects in numerous ways, including reduced availability of loads, increased wait times, and rising operational costs. This blog explores how these port strikes are impacting truckers, freight brokers, and the entire logistics ecosystem.

Table of Contents

1. Disruptions in Cargo Flow and Delays
2. Rising Costs for Trucking Companies
3. Impact on Freight Rates and Broker Relationships
4. Changes in Cargo Routing and Increased Distances
5. Driver Shortages and Labor Challenges
6. Supply Chain Bottlenecks and Ripple Effects
7. How TransCredit Can Help

1. Disruptions in Cargo Flow and Delays

One of the most immediate effects of the ILA port strikes is the disruption in the flow of goods. The strikes have led to container backlogs at the ports, which causes delays in loading and unloading cargo. For truckers, these delays mean longer wait times at ports, reduced productivity, and fewer trips completed within a specific timeframe. When truckers are stuck waiting at ports, they lose valuable time that could otherwise be spent transporting goods, affecting their ability to earn and meet contractual obligations.

Impact on Drayage Trucking: Drayage truckers, who handle the short-haul movement of containers between ports and nearby distribution centers, are particularly affected. With containers piling up, drayage operations face significant delays, which disrupts scheduling and affects the availability of trucks. This, in turn, leads to increased costs as truckers may need to remain on standby for extended periods, waiting for their turn to access the port facilities.

2. Rising Costs for Trucking Companies

The uncertainty created by the strikes has led to increased operational costs for trucking companies. Costs related to fuel, labor, and equipment utilization all increase when operations are delayed or disrupted. For instance, trucks idling at ports waste fuel, and drivers spending time waiting rather than hauling loads require compensation for that idle time, leading to higher payroll expenses.

Furthermore, the strikes have led to increased congestion on roads around ports, particularly as trucks queue up for access. This congestion not only results in higher fuel consumption but also contributes to wear and tear on trucks, adding to maintenance costs.

Chassis Shortages: A critical issue exacerbated by port strikes is the availability of chassis. When containers are left sitting at ports due to strikes, chassis become unavailable for other truckers to use. This shortage leads to a domino effect, creating inefficiencies and forcing trucking companies to incur extra costs to locate and secure available chassis.

3. Impact on Freight Rates and Broker Relationships

The reduction in available freight due to port slowdowns also affects freight rates. When there are fewer goods moving, competition among truckers increases, often pushing rates down in a race to secure whatever loads are available. This scenario places financial pressure on small and mid-sized trucking companies that rely on consistent rates to maintain profitability.

Freight Brokers' Role: For freight brokers, the strikes create challenges in finding available trucking capacity and maintaining service levels for their customers. With truckers facing uncertainties at the ports, brokers must work harder to ensure that commitments to shippers are met. This may involve paying premium rates to secure trucking capacity or dealing with last-minute cancellations, both of which can strain broker relationships with shippers and trucking partners.

4. Changes in Cargo Routing and Increased Distances

In response to the port strikes, some shippers are opting to reroute their cargo to lessaffected ports or even entirely different regions, such as the West Coast. This shift has led to an increase in the average distance that truckers need to travel to move goods to their final destinations. While longer hauls can sometimes mean higher pay per load, they also come with increased costs in fuel, driver time, and potential regulatory complications, such as hours-of-service (HOS) compliance.

Diversion to Inland Ports: Another consequence of the port strikes is the increased use of inland ports and intermodal transportation. Trucking companies are finding themselves making longer trips to inland locations where containers are sent for deconsolidation. This shift adds another layer of complexity to routing and scheduling, requiring trucking companies to adapt to new lanes and delivery schedules.

5. Driver Shortages and Labor Challenges

The trucking industry is already facing an ongoing driver shortage, and the port strikes exacerbate this issue. Drivers who face repeated delays and unpredictable work hours due to the strikes may choose to leave port-related hauling altogether, opting for more predictable routes and schedules. This shift not only reduces the available pool of drivers willing to service port areas but also places additional strain on trucking companies that need experienced port drivers to manage the complexities of drayage and intermodal transport.

Driver Retention Issues: The uncertainty and frustrations related to port congestion and delays can make it challenging for trucking companies to retain drivers. Drivers prefer routes where they can maximize their earnings with minimal delays, and the port strikes undermine their ability to do so. As a result, some companies may need to offer higher wages or other incentives to keep drivers on port-related routes, further increasing operational costs.

6. Supply Chain Bottlenecks and Ripple Effects

The port strikes not only affect truckers directly involved in drayage but also contribute to wider supply chain bottlenecks that impact the entire trucking industry. Manufacturing companies that rely on timely shipments of raw materials and components may face production slowdowns, leading to fewer finished goods that need to be transported. Retailers waiting for imports to restock their shelves may also face inventory shortages, reducing the overall volume of goods requiring transportation.

Impact on Warehousing: The delays caused by the port strikes have also led to increased demand for warehousing space, as shippers and importers need temporary storage for goods that cannot be moved efficiently. Trucking companies involved in the final leg of transportation may find themselves dealing with changing schedules and increased wait times as they navigate the complexities of warehousing delays.

7. How TransCredit Can Help

In times like these, maintaining financial stability and mitigating risks are essential for trucking companies and freight brokers. TransCredit offers services that help the transportation industry manage credit effectively:

Credit Monitoring and Reporting for Brokers: TransCredit allows freight brokers to monitor their own credit report, ensuring they are aware of any changes that could impact their ability to do business. This helps brokers stay in control of their credit health and maintain trust with partners.

Access to Shipper Credit Checks: Instead of manually verifying each shipper’s financial stability, freight brokers can use TransCredit to run credit checks on shippers, allowing them to work with reliable partners and avoid potential payment issues. This is particularly important during periods of economic uncertainty when financial stability can fluctuate rapidly.

By leveraging TransCredit’s tools and resources, trucking companies and freight brokers can navigate challenges more effectively, ensure the stability of their operations, and capitalize on emerging opportunities while minimizing risks.

For more information, please reach out to us.