Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Posted by on in General
  • Font size: Larger Smaller
  • Hits: 23682
  • 1 Comment
  • Print

A Look at the New Paradigm of Freight Transportation

The world of freight transportation is changing rapidly.  The signs are there and they are unmistakable.  Recognizing and responding effectively to these signals may help determine which shippers and carriers will survive in the years ahead.  Let’s examine the components of the new paradigm of freight transportation.

The Era is Cheap Oil is Over

The steep escalation in fuel prices this year is a harbinger of things to come for shippers and carriers.  This time there will likely be no major recession to bring energy prices down.  The sad fact is that 95 percent of transportation modes, passenger and freight, run on petroleum products and the likelihood of finding new sources of supply or of shrinkage in global demand is highly unlikely. In fact the use of petroleum in countries such as China and India is on the rise.

The result will be tighter truck capacity, greater use of intermodal rail services, the electrification of transportation systems, the relocation of factories and distribution centres and the slow shift to cleaner, cheaper fuels.  It will drive more LCV’s (long combination vehicles) or “turnpikes” and more triple trailer configurations.  This may be the impetus to harmonize our laws throughout North America to remove barriers to the movement of the most energy efficient vehicle combinations across our highways.   To curb use, many countries will have to begin looking at the Danish example of higher taxes on fuel inefficient vehicles and higher taxes on petroleum.  Get used to it.

The Driver Shortage is Real

The driver workforce in North America is aging.  The “route 66” lifestyle of the long haul truck driver no longer appeals to most people.  Like everyone else, truck drivers want to be home with their families most nights of the week.  After all these years, driving truck is not a certified recognized profession.  The compensation for truck drivers (e.g. $40,000 to $50,000) is not great.  The relentless push for freight cost reductions makes it difficult for trucking companies to raise driver wages and remain competitive.  There is no “quick fix” and the problem will get worse before it gets better.  Like the energy problem, the solution to this problem will take time.

Driver compensation and as a result, freight rates will have to increase.  Immigration policies will have to change to bring more foreign existing and potential drivers to North America.  Driver training programs will have to improve to expedite the process of providing the new pool of drivers with the required skill sets to perform as professional drivers.  Shippers will have to look at their supply chains and seek out cheaper modes (e.g. rail intermodal) and more local sources of supply.  The time to plan for driver shortages is now.

The key word for Shippers and Truckers will be Efficiency

Modern computer and communications technologies have revolutionized many industries and they are in the process of revolutionizing freight transportation. TMS (Transportation Management Systems) for shippers and FMS (Freight Management Systems) for carriers allow for the efficient and optimized movement of freight. An electronic on board recorder (EBOR) is an electronic device attached to a commercial motor vehicle, which is used to record the amount of time a vehicle is being driven.  The relatively new Hours of Service (HOS) legislation in the United States and Canada are rules intended to prevent driver fatigue, by limiting the amount of time drivers spend operating commercial vehicles. Modern asset tracking devices can provide information on the precise location of every tractor and trailer so as to maximize their utilization.  In other words, tools are now available to manage the activities of every driver and company asset.  They can pick up on the time worked by each driver, identify drivers who are not energy efficient or spot trailers sitting in a yard for more than 48 hours.  Not all fleets have or can afford the new technologies.  In the case of some tools such as trailer tracking, they are significantly underutilized and undervalued. 

The effective use of technology will separate the “men from the boys.”  It will accelerate the exodus of poorly managed, inefficient fleets.  It will drive down costs.  The market will dictate that freight business will go to the carriers that have the most efficient networks utilizing the most efficient technology.  It will go to the modes and carriers that best manage people and assets. 

Social Media are revolutionizing how we Communicate with one anther

For some people, Facebook is a place with their children connect with their friends and share pictures of the daily life.  LinkedIn is that annoying service that sends you invitations to connect to the networks of people you barely know, don’t want to know or don’t know at all.  Twitter is a service that allows people to send out short trivial messages about where they are having dinner or their favourite singer on American Idol.  You Tube is the place to find rare video clips of James Brown signing different versions of “Sex Machine.”

For those of you who think this way, you have missed the boat.  These so-called social media are changing entire industries including transportation.  This is the places where truckers communicate.  This is where people go to hire and be hired.  This is the location to find prospects and to obtain business.  It is the tool to use to provide demos of your service.  It is where to find loads and carriers and to learn about Best Practices in Freight Transportation.  To sum up, social media are not just the place where your granddaughter posts her prom pictures; it is where your employees and customers are discussing your business.  Find a tutor, read a book (online) and then get involved.  

These trends are unmistakable.  Avoid them at your peril.  This is where the transportation business is today.

 

The 2012 American Trucking Association (ATA) Leadership Meeting will take place in St. Petersburg, FL during the period May 20-23.  DDC FPO will be sponsoring Neil Newhouse, Partner & co-founder of Public Opinion Strategies.  Neil will address the 2012 ATA Leadership attendees at the ATA Advocacy & Government Affairs Luncheon on Monday, May 21.

0

Comments

Leave your comment

Guest Thursday, 28 March 2024

Most Recent Posts

Search


Tag Cloud

Reshoring Retail transportation US Auto Sales freight marketplace 360ideaspace freight cost savings Broker Twitter Digital Freight Networks Packaging BNSF pipelines derailments Colilers International Otto marketing Werner Ferromex Yield Improvement Freight Carriers Association of Canada Schneider Logistics Montreal Canadiens natural disasters Fire Phone Stephen Harper Trade Vision online shopping buying trucking companies truck drivers ELD Horizontal Supply Chain Collaboration Distribution Warehousing Wal-Mart dynamic pricing freight forwarders digital freight matching EBOR Toronto drones Dedicated Trucking FMS Inbound Transportation Railway Association of Canada freight transportation David Tuttle FCPC coaching freight bid Celadon Geopolitics business security Success failure entrepreneur trade freight payment freight audit driver shortages Doug Nix Social Media in Transportation future of freight industry network optimization Tariffs Keystone Pipeline Accessorial Charges 3PLTL USMCA Global Transportation Hub US Election Omni Channel bulk shipping shipper-carrier collaboration shipping Habs CSA Transport Capital Partners (TCP) customer engagement Regina Uber Freight Finance and Transportation intermodal Sales Strategy 2015 Economic Forecast TransForce computer Sales Management FuelQuest driver professional drivers Retail Rate per Mile the future of transportation Freight Management Rotman School of Business risk management selling trucking companies NMFC broker bonds Scott Monty mentoring Driving for Profit Canada-U.S. trade agreement YRC Hockey ShipMax 3PL MBA Business skills economic outlook Value Proposition freight costs transportation audit Business Transformation Strategy LinkedIn Canadian truckers Transplace small business laptop e-commerce freight agreements supply chain management shipping wine Blockchain energy efficiency Tracy Matura transportation news China trucking company acquisitions Grocery Transportation service shipper-carrier roundtable Entrepreneur Right Shoring Comey 2014 freight forecast Amazon dark stores Business Strategy cheap oil Truckload JB Hunt Business Development Swift Coronavirus cars Freight dimensional pricing Canadian Protests US Housing Market Impeachment KCS Whole Foods employee termination Hudsons Bay Company Anti-Vax Climate Change Freight Shuttle System NS Dedicated Contract Carriage freight RFP General Motors broker security computer protection Associates Map-21 NAFTA business start-up Management home delivery hiring process Politics Freight contracts Trucking Life Lessons autos CSA scores routing guide Dan Goodwill Transportation Leadership Donald Trump President Obama Training New Hires Blogging Facebook freight audit automation Infrastructure IANA Electric Vehicles Education computer security shipper-carrier contracts Loblaw solutions provider Trucker Protest Canadian Transportation & Logistics rail safety CP Rail YRCW CN Rail Freight Matching University of Tennessee Consulting Digitization Cleveland Cavaliers capacity shortages Derek Singleton Outsourcing Sales Justice truck driver LTL 2013 Economic Forecast US Manufacturing Covid-19 technology Shipper financial management USA Truck LCV's Job satisfaction Search engine optimization consumer centric Spanx Freight Rates freight rate increases CITA Shipper Pulse Survey cyber security Canada U.S. trade driverless CSX New York Times truck capacity Transloading driver pay asset management Canada CN autonomous vehicles Crude Oil by Rail Load broker CRM Carriers Global experience capacity shortage Load Boards Government Transcom Fleet Leasing Microsoft UP economic forecasts for 2012 2012 Transportation Business Strategies. Jugaad FMCSA recession Rail freight broker freight payment Software Advice tanker cars Freight Capacity freight transportation conference 2014 economic forecast freight transportation in 2011 Crisis management peak season Emergent Strategy MPG Online grocery shopping RFP Freight Recession transportation newspaper Canadian economy Bobby Harris Trump Failure Conway Canada's global strategy 2014 freight volumes Sales Training Sales fuel surcharge Social Media Driver Shortage Harper Davos speech carrier conference TMP Worldwide NCC $75000 bond small parcel Transportation Buying Trends Survey Deferred Packaging TMS FCA home delibery Surety bond Career Advice economy Muhammad Ali ProMiles Masters in Logistics Canadian freight market BlueGrace Logistics last mile delivery Leafs Adrian Gonzalez Doug Davis Training US Economy Toronto Maple Leafs robotics Success APL

Blog Archives

March
February
December
October
September
August
June
May
April
March
January