Getting More Strategic about Transportation Sourcing
When faced with the logistical dilemma created by the truck driver shortage, increased traffic, and the increase from retail to e-commerce, challenges can't be fixed by doing what's always been done. At Dupré Logistics, we see many organizations continuing to source tactically, based on price or as needed on the brokerage market; changes to that mindset may be required to remain successful going forward.
The truck driver shortage is a problem for the entire supply chain as 70.6 percent of all freight tonnage is moved on the nation's highways, according to the American Trucking Associations. The relatively high average age of the existing workforce of truck drivers is one of the largest factors in the current shortage—and as time passes, that factor will increase. If current trends hold, the driver shortage could swell to over 174,000 by 2026.
Most of America's highway and interstate systems are at full capacity and at a near-breaking point. Statistics show that there is no end in sight to the general traffic on the roads, not to mention the increase in trucking. In fact, in the next 30 years, the population of the United States is expected to grow by 70 million—that's more than the population of New York, Texas, and Florida combined.
As the nation grows, so does the demand for travel. How will infrastructure accommodate 70 million more people and growing amounts of freight? And, due to aging and physical deterioration, some of the busiest roads and infrastructure experience weight restrictions and require emergency repairs with greater frequency, leading to even more congestion on existing or alternate routes—creating even more delays.
To put in perspective the strain and congestion, the average American driver spends about 42 hours a year stuck in congested traffic with the annual cost in fuel consumption due to congestion at $160 billion per year. The annual cost for truck congestion alone is about $28 billion.
As the logistical storm continues to brew, organizations that rely on the trucking industry may be forced to consider new solutions for reliable logistics services. The new normal will require a shift in thinking—Dupré Logistics believes that trucking is no longer a nameless, faceless commodity that will always be there as long as a company is willing to pay for it.
As trucking becomes a scarcer resource, organizations who want better access to the resource will have to be more strategic. The questions are:
- Is access to reliable, qualified truck transportation important to the success of your organization?
- As the scarcity of trucking capacity continues to alter the supply chain landscape, are shippers willing to alter their view of trucking in the supply chain value hierarchy?
- How does an organization figure out how to protect the value of trucking services in their sourcing activities and at their facilities?
- How does an organization become a shipper of choice?
Dupré Logistics suggests that shippers who think strategically and build closer relationships with carriers are in better stead to meet their capacity concerns. Already, signs of commodity-based organizations figuring out how to have more meaningful long-term relationships with logistics companies are strengthening some shippers' relationships with logistics companies.
Dupré Logistics is beginning to witness shippers that have recognized that access to quality truck transportation is important to their success, are now approaching the market with that value in mind. These organizations report that while access to quality trucking capacity remains tight, they consistently find trucks and experience less cost escalation than what is reported by market observers.