Adaptability now crucial for truckers

Adaptability now crucial for truckers

Adaptability now crucial for truckers – Continuing economic recovery, inventory replenishment, and e-commerce growth will “clash with capacity constraints to keep rates high this year,’’

Continuing economic recovery, inventory replenishment, and e-commerce growth will “clash with capacity constraints to keep rates high this year,’’ according to the Council of Supply Chain Management Professionals(CSCMP) 32th annual State of Logistics Report.

“After a steep drop in March and April 2020, freight volumes made a steady recovery through the summer. By early this year, the Cass Freight Index showed year-over-year growth,’’ the report says.

The recovery pushed increased demand for full truckload, less-than-truckload (LTL) and intermodal alike. But, as the report points out, “there were imbalances across sectors, and challenging weather conditions further scrambled the winter picture.” All told, rates in 2020 were “more volatile than ever, tender acceptance was at record lows, and more freight was pushed to the spot market.”

The report also delves into structural issues affecting trucking. For one, poor carrier finances in 2019 and early 2020 reduced carrier investments in new equipment. So, fewer new trucks were available to meet the rising demand in late 2020 and early this year. Carriers are now increasing their orders for Class 8 trucks, with 2021’s first-quarter orders already at 45 percent of all 2020 orders.

“However, additional structural and cyclical headwinds may continue to constrain capacity” the authors contend. One factor is the availability of new trucks as pandemic shutdowns slowed production, even to the point that aftermarket parts supplies have been constrained.

Sunset on Semi Truck - Photo by Caleb Ruiter on Unsplash, Adaptability now crucial for truckers

Adaptability now crucial for truckers – …rates in 2020 were “more volatile than ever, tender acceptance was at record lows, and more freight was pushed to the spot market.”

On top of that, the authors expect the Biden administration to revisit hours of service and other driver rules, such as mandating that drivers be paid for detention, likely at the cost of the shippers.

“Reducing detention could merely drive up prices for end consumers,’’ the report states “But ideally, it will increase overall capacity, as shippers will be forced to adjust their behaviors rather than incur costs. Drivers can then spend their time in more direct trucking functions rather than waiting at a facility.”

Of course, the driver shortage hasn’t gone anywhere. Early in the pandemic, carriers downsized to stay afloat but later some struggled to rehire enough truck drivers. In addition, the launch last year of the federal drug and alcohol clearinghouse reduced available drivers. The report notes that “initial studies show that a large majority of the nearly 30,000 drivers in the clearinghouse do not quickly complete the steps required to allow them to get back behind the wheel.’’



Good news

On the good news side of the ledger is refrigerated freight. Increased demand for refrigerated goods will cause the reefer sector, especially the multi-zone truck segment, to grow faster than the industry average. “The growth creates opportunities for investments that could benefit refrigerated trucking companies and perishable food manufacturers.”

Another positive is that the pandemic-driven desire for more “no touch” processes “broke through some of the longstanding resistance to digitization. Electronic communication has gone from desirable to necessary.” The authors see the most promising aspect of digitization being greater efficiency of LTL loads. In addition, the market continues to move to online brokers and online freight booking.

“Online platforms allow shippers and carriers to do their transactions in a shared access space. New digital matching functions give carriers the ability to place offers on loads, as well as increasing their flexibility. The brokerage market size is expected to more than double by 2024, largely due to the increased digitization,’’ according to the report.

Adaptability now crucial for truckers

Adaptability now crucial for truckers – …thanks to COVID-19, parcel and last-mile delivery volumes have exploded. In 2020, the U.S. e-commerce market expanded by 33 percent, to $792 billion.

Also thanks to COVID-19, parcel and last-mile delivery volumes have exploded. In 2020, the U.S. e-commerce market expanded by 33 percent, to $792 billion. That represents 14 percent of total U.S. retail sales.

“This change in consumer behavior categorically disrupted parcel and last-mile delivery networks,’’ the report says.

In response to demand, last-mile delivery models are rapidly evolving. For example, crowd-sourced delivery solutions, such as Instacart or Amazon Flex, are expanding. Also, fully autonomous delivery options, such as Nuro and General Motor’s BrightDrop, are growing. The expanding number of last-mile delivery solutions continues to attract increasing investment and acquisition interest.

One way to sum up the report is to consider a key point made by the authors:

“No logistics professional was able to simply stay the course in 2020, and conditions ahead will require even greater adaptability and nimbleness, a context we summarize as change of plans.”


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