Unlike the flower song Peter Paul and Mary performed with a similar title, the answer is not as final, however it still portrays challenges for the trucking industry, and subsequently your freight.
It’s an interesting time in trucking, a phrase I’ve often repeated over several decades of participation. We have come through so many phases, they all are very interesting. What’s different today?
The driver shortage remains.It was not as noticeable during and following the recession with less freight demand required. That gave a false sense of confidence to those not actively engaged in finding qualified drivers. Those that are in the driver work force are aging, the Bureau of Labor Statistics states average age of most drivers is 55. Further, they say we began the year with a 50,000 shortfall of operators. As we baby-boomers age out, that number will blossom dramatically. As an industry, we are looking for ways to train the new generations to master the skills our shippers require, adding another cost layer to our company’s services. Lifestyle, regulation, congestion and proper remuneration all play an increasingly important role in solving this
Freight at peak levels, spot market pricing at all-time highs. John Larkin, a well know transportation economist from Stifel, Nicolaus states spot markets are up 15%, and contract rates are seeing 5 – 10% year over year increases. Haven’t heard those works together probably since early this millennium. With the ISM manufacturing index as high as 60 recently, conditions are very strong.
Construction boom attracts drivers who want to make a good living, and be home. Unemployment is said to be the lowest ever. We all know how tough it is to hire good people. So the driver who wants to be home every day can find alternatives to fighting the road.
FEMA has hired a lot of trucks for disaster relief. 3 major hurricanes and now wild fires all require relief. Hundreds of trailer loads of shipments are being delivered to various staging areas around the gulf coast, each requiring a truck and driver. It is said that FEMA rates are among the highest, and as with any government operation, the dwell time for each load can be extensive but is well compensated. I have not yet seen a number on the volume of trucks pulled from the system, but know that it is significant.
ELD mandate remains in force for 12/18/17. Formal enforcement deadlines seem to be being pushed back, however it’s merely a matter of time. Most Serious company fleets have begun or are well on their way to compliance, although it is surprising how many have not yet begun. The implementation of these rules does reduce utilization some, even a 5% decline in truck availability exacerbates an already challenging truck environment. Interesting that some large fleet, and many smaller have not yet begun. There have been some protests against this law, as protests seem to be the way these days. Interesting to watch is a myriad of supposedly “ELD Compliant” options out there, even though the final specifications are only now being flushed out. Even the largest suppliers are challenged to meet the many nuances of the requirements. Many of the less costly options that I know carriers are now implementing will not in the end be compliant. Not all carriers responding positively to shipper ELD polls will end up viable when the dust settles.
For good news, it appears that pending regulatory challenges going forward will slow down some from the past flurries. The administration has activated the JAKE BRAKE (You’ll have to ask) to things long in development. Many upcoming regulatory deadlines have been drastically altered or completely eliminated. At least the frantic pace of regulatory change will take a breather.
And last I would be remiss not to mention the ever increasing congestion. Increased demand equals increased congestion. During a recent road trip it took me 45 minutes to fuel my auto along the interstate south of Atlanta. No breaks, I just had to get off, refuel and return to the interstate. For my drivers, that’s an hour added to the delivery schedule.
So is there a solution? Yes.
At Buchheit we are engaged at continuing our efforts to heighten our customer service. Several steps include;
Maintaining our specific lane commitments, as mutually agreed. The issue will be for our customers who are used to giving us a quick call Friday afternoon for those surge weekend or holiday needs above and beyond our capacity commitments, or rail fill-in deliveries that historically have satisfied unfulfilled plant requirements from other carriers, suppliers or transport modes. Given the decline in utilization ELD’s create, and the heightened hours of service compliance levels of the safest fleets, that extra capacity of available drivers at the end of the week is significantly minimized along with the ability of our 3PL group to provide outside compliant carriers for these unforeseen events.
Developing a driver centric model that compensates drivers for ALL their time spent on our customer loads. As I’ve mentioned before, carriers historically have only been able to base rates on miles between A & B. With the technological advances that we all have experienced, there is visibility on the entire load timeline. Focusing on the driver centric model, drivers are compensated not only for the miles travelled, but for all the activities in handling the load. Collectively carriers and our customers are working together on improvements. Carriers are paying higher driver wages, recognizing waiting time, congestion and more, along with providing newer, safer driver friendly equipment with more job specific specifications. Top shippers are working to decrease detention times so these drivers can spend their time making deliveries, rather than sitting and waiting to load or unload.
We are working with our receptive customers to identify roadblocks for improved efficiencies for customer deliveries. It takes a collaborative effort to meet the delivery requests our customers expect, and that was more easily achievable prior to this economic upturn, with the real life challenges of the road.
We are focusing our efforts on expand our service offerings to clients that realize the importance of good utilization of trucking assets and driver’s time.
Offering alternative solutions should our customers unforeseen urgent moves require unusual mileage additions or costs in preparation, and fulfillment of needs outside our commitment levels.
It would be easy to follow the heard, and move to the robust and highly paid spot market, with rates significantly higher than historically aggressive contract rates in place. We realize that is short sighted, and will focus on improving and enlightening our existing base customers. Right sizing the compensation based on the realities of the existing lanes.
We will strive to communicate timely rate adjustments sorely needed to continue the top level of services that you require. Substantiation by means of open communications of carrier costs, driver remuneration enhancements, equipment and insurance cost increases and the loading unloading realities of your shipments. Together we will collaborate on solutions.
Notice of load offerings should be expanded as far as possible in order for us to assure equipment and driver availability. As I told one of my long time shippers, gone are the days where customers can drop orders on the fax on their way out of the office at 4PM. And expect next day service. It may still be possible, but should be verified.
This will likely last into 2019, and we want to work with our existing shippers through this and long into the future. We know that shippers are also under increasing pressure to fulfill orders and remain competitive. Together we can address & improve productivity in the supply chain and maintain the high standards we both desire.
Have an idea for an improvement we can develop to improve your supply chain? Give us a call and we can explore the opportunity.
London to New York City in 29 minutes? Tesla CEO Elon Musk is well known for electric cars, solar panels and his penchant to discuss space travel. But rocket travel around the earth? Discussing this idea, passengers take a large boat from a dock in New York City to a floating launchpad out in the water. There, they board the same rocket that Musk wants to use to send humans to Mars by 2024. But instead of heading off to another planet once they leave the Earth’s atmosphere, the ship separates and breaks off toward another city — London. 29 minutes and 3,466 miles later, the ship reenters the atmosphere and touches down on another floating pad. Hardly enough time for the beverage service!
Don’t fall for always taking the lowest price. Give Buchheit Logistics, Inc. a call, we can offer a material handling and storage solution that protects and secures your products for you and your customers.