Do we have any real control over the mighty Mississippi, and what happens if it floods? To a significant degree, you can only react to the Forces of Nature. In a very similar manner, the ELD mandate in December of last year has created a very unique chain reaction in the transportation market. Some market forces are almost like an act of God. You can’t control the Memphis Intermodal market, and we sure can’t stop the mighty Mississippi from flooding.
The ELD Mandate of December 2017 seemed to set off a very unique transportation market event. We saw historic market high rates as we experienced very unusual capacity restraints in January. The ELDs are basically forcing carriers to operate within DOT rules, and the ripple effects seem to be changing all kinds of ways that the transportation industry has run for years. We still have the April enforcement deadline approaching, so it will be interesting to see if we have further market disruption.
Any market like Memphis Intermodal and Drayage can only respond to the forces that are exerted upon it. For the most part, the transportation market pricing is fairly stable because the forces of the market move in a relatively steady (or at least predictable) cycle. We have carriers on one side providing supply while shippers create demand, and market prices are just a reaction to all the variable forces impacting these two major price drivers. In the transportation market, demand is often the biggest price driver as a capacity cannot typically adjust quickly to the market forces.
So in January 2018, we had this very unusual market disruption being driven most likely by a significant ELD enabled capacity change. For instance, in the Memphis Intermodal and Drayage market, we seemed to experience significant shifts in carrier capacity. Many of our customers were struggling to get their freight moved, and we saw unusually high demand especially for intermodal services. Our best educated guess would be that the ELD mandate had a stronger effect on the Memphis Intermodal and Drayage market because it tends to be serviced in large part by owner-operator based carriers.
Will we experience a March Madness in Memphis as 1st Quarter draws to a close, or even more disruption in April as the ELD enforcement takes effect on April 1? Maybe the market will play an April Fool’s Joke on us, and something crazy happens. There is one thing that we can predict with certainty. Almost every March Madness, some scrappy, small, underdog school (perhaps the Alpaca’s?) writes their own story through a combination of smart strategy and superior execution. At Easley, we’re attempting to write a similar story, and we’d love for you to write it with us!