The CITT’s Toronto Area Council hosted an exclusive speaker event on September with a presentation about where the trucking industry is heading.
‘Fast Forward: An Inside Look at the Future of Trucking’, examined the future of trucking and the use of that information towards negotiating equitable rates and contracted service agreements.
This event was sponsored by Mobil Delvac with the support of M-O Freightworks, Fleet Executive Magazine and the CITT Toronto Area Council.
Part of the presentation centered on what role shippers can play in making drivers’ lives better.
Jason Libralesso, Senior Director, Transportation, with Sobeys, stressed building a relationship with the carrier.
“It’s that relationship of going to the customer and basically working with them. A lot of shippers are making those strides-whether it’s having the right facilities for drivers to take a break in while they’re waiting for a load,” he said.
Jonathan Wahba, Chief Operating Officer, with Kriska, noted that shippers should be more wary and respectful of drivers’ time.
“Unfortunately drivers are paid by the mile and waiting time is ‘free.’ Waste in supply chain is downloaded to the drivers, which is not a good way to endear ourselves to them. Whether it’s drop trailers or no waiting time, it’s a big deal for a lot of our drivers,” he said.
Elias Demangos, President of Fortigo Freight, said that everyone wants cost containment, and everyone wants to lower their overall supply chain budget.
“There are a few different ways to do that. In and out gate times. Pricing is already pretty low. It’s not so much a pricing thing as it is, let’s figure out all the different pinpoints of inefficiency. Let’s start working together. We’re finding, at least in our business, a lot more partnerships, and partnerships that are longer term in nature now. So we’ll do that hard negotiation of pricing and then every day let’s figure out ways to save money. Let’s work together, let’s collaborate, let the teams be almost one, with the same goal of, let’s lower the supply chain cost. In 2008, 2009 it was, ‘give me your lowest price,’” he said.
What’s the general character of the shipper-carrier relationship right now?
“With the economy a little unstable right now it’s just going to create more and more challenges. The demands of the customer are going to be unrelenting, and it’s going to be survival. The way that carriers and shippers partner-it’s just a matter of survival to get through it,” said Libralesso.
“If we use 2008, 2009 as a reference, it’s certainly a lot better or improving. In ‘08, ‘09 we experienced large shippers running bids every six months-a true race to the bottom from a price perspective, which is not sustainable over time. Today, especially if we look at North American environments including large U.S.-based shippers, we deal mostly with the level of awareness around the big challenges in the industry being a lot more acute.
“The driver shortage, the coming EOBR ELD mandate, which is a big deal in the U.S., and for crossborder carriers, hair follicle drug testing, and the drug and alcohol clearing base. There’s a wave of regulatory challenges coming at our industry, and all of them are going to take capacity out of the system. And I think large, sophisticated shippers are aware of this,” said Wahba.
2014 was a brutal winter and really put a squeeze on the supply chain, and there was pain felt by shippers.
“In 2015 our experience has been it’s pretty flat-it’s one load for one truck give or take depending on the markets. So there is available capacity in the market today but all of these issues are just under the surface and they’re coming at us, they’re not going away,” he said.
“Sophisticated shippers recognize us, see us, and want to work with carrier partners so they don’t experience a winter of 2014, or a spring 2015 port strike in Los Angeles affecting their business. We’re optimistic it’s going in the right direction,” Wahba added.
Going forward, things that will affect capacity will drive shipper-carrier relationships, said Libralesso of long-term relationships,
“It’s critical that we head in that direction. It’s kind of like a marriage-there’s good times and bad, and the carriers and shippers need to share in those moments. Having those combined and collaborative targets, be it financial, be it performance, be it ensuring they are getting in and out of the gate, those service level components, is something that you work with and it’s going to benefit both,” he said.
Why haven’t some carriers and shippers developed a better understanding?
“My two cents’ worth is that over the past seven to eight years there’s been lots of capacity in the marketplace, and transportation has been largely commoditized. You read about it in the paper every day. Your vendors are pushing for lower prices because the consumers are pushing for lower prices. It just flows through the purchasing supply chain, and until there’s a capacity crunch somewhere in that stream, there hasn’t been a significant event to push two people together,” Wahba said.
“We can go with the opportunistic type pricing and we can get the lowest but when it’s not there, then what, and that’s not going to help us make sure that we’re delivering to our customers and it’s going to affect us long-term,” said Libralesso.
“I also think that we are our own worst enemies. Most trucking companies, most transportation companies, it’s easier just to go in there with your best price. Work a bit harder. Look at value. Look at what else you can do for the customer other than just price. We as carriers need to do more to add value other than just going in there with a price,” said Demangos.
Looking further into the future, and at changes in how we manufacture and distribute things, changes such as 3D printing and omnichannel retailing could call for smaller, more regionally-based orders.
How does that affect the selling of transportation?
“Being in retail, and seeing the patterns of what that customer wants, they don’t necessarily want to go into the store. They want to click it, collect it, or have it delivered. So whether it’s a move toward smaller fleets that can move around the city, and do home deliveries, that’s where we could see some of that come into play,” Libralesso said.
“I think that the folks in our industry who will feel it first are the small pack guys, like UPS, FedEx, Purolator. They are the folks that are most challenged on day one by a real-time one hour later type of delivery. Recently the folks at Onmitrax and Shaw had a roundtable to discuss how Uber has revolutioned and disrupted the taxi industry and there’s a lot of little supply chain technology groups trying to figure out how can we make that work in transportation. If Omnitrax, the former Qualcomm-which is the biggest provider of mobile truck technology in the world-if their senior folks are thinking about it, you know it’s going to come at us somehow, some way. We’re not all quite sure how it’s going to look yet,” Wahba said.
Would more regional type distribution patterns help towards easing the driver shortage?
“Yes, if you’re a driver now who’s going and making a delivery and at the same time printing on a 3D printer, you’re no longer just a driver. It all becomes a little bit more sexy. If you have autonomous trucks, you’re not just a driver. Maybe now you’re an engineer, managing this truck that’s moving down the road on its own. By the fact of having the drivers home every night, having them doing more local, higher touch type stuff, it’s more of a customer service rep type environment,” said Demangos.
Will technology such as Uber move inside the cab as far as a driver doing more of an operations, dispatch, driving role?
Demangos thinks this is something that will take some time to evolve.
“I think there’s a lot of legalities, a lot of insurance cobwebs that need to be unravelled before some major shipper goes and says, here I’ll put this on Uber and good luck if it ever gets there. It’s certainly coming. We asked FedEx senior execs about it and they said they know about it but they are more concerned about drones and how to use them to help our final mile deliveries,” he said.