While the ELD mandate itself is not expected to have a dramatic effect on capacity in the short term, the impact will come in combination with stable economic growth, the natural disasters, growth in eCommerce and driver shortages. Shippers should take a proactive, holistic, carrier-sensitive approach to protect the integrity of your supply chains. This is the time to clearly identify your true carrier business partners and formalize relationships with them.
Damco defines supply chain risk management as “attempts to identify risks and quantify their commercial financial exposures as well as mitigate potential disruptions at each node and lane in the supply chain.” Supply chain risk models can vary from the rudimentary to the sophisticated. In the case of the latter, complex “what if” analyses can be performed. This allows the shipper and/or receiver to identify potential trouble spots and map out alternative supply chain strategies.
The muted demand for freight services has not put undo pressure on truck capacity; rate increases have been limited in recent years. This may be about to change. The net result of the improvements in technology is that small parcel, LTL and truckload carriers can be much more accurate in tailoring their freight rates to the “carrier friendliness” of their clients. How can shippers become more “carrier friendly”? Here are a few items to consider.
There are about 3.5 million truck drivers in the United States; the comparable number for Canada would be in the range of 350,000 people. Drivers face difficulties both from their employers and from the customers for whom they pick up and deliver freight. Drivers perform a very valuable service that is essential to the smooth functioning of our economy. They deserve our respect, in words and action.
The “bricks and mortar” grocery store delivery model and the online shopping model are quite different. Whole Foods is still a relatively small player in the overall food distribution market in both Canada and the United States. To be successful, Amazon will need to fix Whole Foods’ current business as it seeks to identify the synergies from this acquisition, while capitalizing on and mastering the supply chains from these two related but different businesses.
The field of Logistics is more complex than it has ever been. Senior logistics professionals must possess a variety of business skills and possess a depth of knowledge in a range of areas such as supply chain design and management, warehouse and inventory control, customer service, transportation and information management. This leads to a fundamental question for every organization. Does the company have a set of leaders who possess this range of skills and knowledge?
The strong surge in revenue that less-than-truckload carriers enjoyed in 2014 stalled in 2015 and 2016, as weak demand and low fuel surcharges dragged down American LTL trucking’s top line. In Canada, low oil prices suppressed freight volumes in some western provinces while a weak Canadian dollar did not ignite exports from the major manufacturing provinces, Ontario and Quebec.
There is no quick fix for a poorly managed Freight Transportation department. Saving money on freight costs takes leadership, discipline, hard work and follow through. The leadership team needs to view freight transportation as a competitive weapon and constantly monitor results to drive performance.
Driverless vehicles will change the nature of the freight industry. The challenges in finding qualified drivers, the hours of service regulations and the fact that drivers can represent one third of the cost of moving a truck will make the economics for moving freight in driverless vehicles very compelling.
At this point in time, there is ample competition in some sectors and not so much in others. It is not quite time to call in the Competition Bureau but shippers need to be alert to the competitive factors in each market and search out the available options (i.e. modes and carriers), to keep their freight costs in line with market levels.