Transportation Capacity Nearly Maxed Out
Last month, we touched on the challenges faced by the global transportation industry. By land and by sea, logistics professionals are being called upon to provide solutions to meet consumer demands. One of the many opportunities ripe for resolution nationally is the truck driver shortage. As consumers expect more for less, we here at American Warehouse have experienced the effects first-hand.
“As the U.S. population grows and the economy increases with it, we will see continued gains in demand for freight transportation,” says ATA Chief Economist Bob Costello. (McNally, 2017)
Consumer trends, like ecommerce and the Amazon-effect, are causing the transportation industry to max out. In FTR’s recent Trucking Conditions Index (TCI) report, they state that they expect “the index to remain elevated and even increase further in 2018.” However, the supply required to meet those needs is coming up short.
On April 1, a new mandate takes effect that will require truckers to use an electronic logging device (ELD) in lieu of a paper record of their hours and routes. The intention behind the new regulations is safety on the roads, though critics believe the new law is misguided. Some feel the mandates limits the flexibility required get the job done. Many industries have fought for an exemption, and won, and some states are even looking to block enforcement of the mandates. For those in compliance, transportation times and costs are expected to rise.
Though the ELD mandate is adding to the transportation industry’s troubles, one of the most pressing challenges is the driver shortage. Trends show that as the economy improves and the demand for trucking rises with it, the workforce it needs most turns to more desirable or lucrative career paths. Recruiters often find themselves competing with the manufacturing or construction industries to keep or bring on a new hire. Though needing to source non-traditional demographics, the younger generations are not particularly attracted to the difficult lifestyle. Further, the demand to lower shipment costs does not support the need to offer more attractive compensation packages. Many logistics companies are turning to other benefits like offering LTL shipment transportation so to limit nights away from home.
What this means for carriers, manufacturers, and third party logistics service providers is that for now: rates will rise, trucks will be harder to obtain and shipment delays will occur. But don’t despair, solutions are in the works.
Tech and labor management
Some innovators are tackling the problem with technology. The same man who launched a Tesla into space with a BFR, is working towards a solution. Though self-driving trucks are still years away, progress is being made to alleviate the strain. In turn, launching a fleet of autonomous trucks will create desirable jobs in mechanics and engineering.
Here in Portland, the start-up Fleet is working to simplify the supply chain by consolidating providers into one system. The technology will help small and mid-sized businesses with exporting and importing products around the globe. Fleet hopes to help minimize waste in the transportation process, saving shippers time and money.
Transportation employers have a few options as well – retention and recruiting outside of their typical demographic. Truckers have options so employers will do well by engaging in proactive retention efforts. Though the ability to reward by monetary compensation is somewhat limited, they are finding additional ways to remain attractive to their drivers and new recruits alike. Scheduling routes that allow the driver to be home at night is one benefit being offered as an incentive.
Shippers are trying to keep up with competing priorities and demands as the market hits them from all angles. As demands rise and resources tighten, logistics professionals are challenged to crack the code. Shippers must balance building the workforce to fulfill demands, create efficiency in the supply chain, and minimize costs. And we always remember to thank our truck drivers.
To learn more about how American Warehouse can help you solve your logistical challenges, contact us today!
McNally, Sean. ATA – ATA Forecasts Continued Growth for Trucking and Freight Economy, 17 July 2017, www.trucking.org/article/ATA-Forecasts-Continued-Growth-for-Trucking-and-Freight-Economy.