It used to be as easy as picking up the phone. But these days, finding a trucker to move your freight calls for creativity, flexibility and all the powers of persuasion you can muster.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
There's one thing everybody can agree on: it's getting harder to find atruck to move your freight these days. As the economy gathers steam, factories across America have been pumping outwashing machines, kitchen cabinets andauto parts at a furious pace. But at thesame time, industry consolidation and asevere shortage of drivers have conspiredto limit, if not shrink, truck capacitynationwide. As goods pile up on shipping docks, it's fast becoming clear that U.S. corporations face a full-blown business crisis. What's less clear is what theyand their logistics departments can do about it.
One thing they can't afford to do is stand by and hope for a return to better times. There's no relief in sight. True, the crunch eased somewhat following the peak holiday shipping season. But Mark Rourke, vice president and general manager of brokerage for Schneider National, reports that the manufacturing boom and driver shortage "are continuing to create challenges for large and small carriers. That has not changed," he says, ìnor do we see that changing." And in any event, the dynamics of the trucking industry appear to have shifted in ways that make it unlikely we'll see a return to the kind of buyer's market that dominated most of the last two decades anytime soon.
It's not that carriers aren't doing what they can to ease the crunch. Truckers are taking a variety of steps internally to get more out of the assets they have, as well as adding capacity where it makes business sense to them.
Some are relying on technology. "The only way to do it is with a tightly engineered network," says Doug Duncan, president and CEO of FedEx Freight. "We are absolutely dependent on technology to help us."
Peter Latta, president of A. Duie Pyle, a regional carrier based in New Jersey that has both LTL and truckload operations, says his company will roll out a dynamic route planning tool this summer for its pickup and delivery drivers. "I think it will improve operations by limiting miles and making the driver more efficient."
Others are making efforts to create physical capacity. One company that has continued to expand, adding trucks and new facilities, is Con-Way Transportation, which operates three large regional LTLs with coast-to-coast coverage. Edward Moritz, vice president of marketing for Con-Way, says that outside of the two years of the most recent economic downturn, Con-Way has invested heavily in expansion and continues to do so. Con-Way also launched a truckload operation in February to buttress its long-distance linehaul operations.
Some are even taking the acquisition route. Pitt-Ohio Express, a Pittsburgh-based regional LTL carrier, recently acquired interest in a regional truckload carrier, ECM. Geoff Muessig, vice president of sales for Pitt-Ohio, says the goal is to provide greater flexibility for large shipments and to supplement the LTL linehaul operation.
the free ride is over
Even shippers lucky enough to find trucks to move their freight these days know there'll be a price to pay—and it will be a lot higher than what they paid a year ago. The balance of power has shifted; today's freight market is a seller's market. And now that carriers are in the driver's seat, so to speak, they've been able to make most of their rate increases stick.
Although those rate hikes may be bolstering carriers' profits, they're also offsetting higher costs. Not only are driver wages up, especially among truckload carriers, but other costs—fuel and insurance, in particular—show little sign of abating. At the same time, many truckload carriers have taken productivity hits as a result of hours-of-service regulations. (Those are still up in the air, but no one is betting that they're going to provide additional flexibility.) Carriers are also shouldering the costs of complying with new security rules and the very real costs of road congestion in major corridors.
Shippers have pretty much reconciled themselves to paying more for freight. "Our transportation customers are resigned to taking price increases that they never would have considered before," says Bruce Abels, president and COO of Saddle Creek, a third-party logistics service provider. "They know every cost consideration—be it fuel, insurance or driver costs—is going in the wrong direction. The customer knows the free ride they've been getting in the transportation sector is definitely coming to an end."
Though shippers may say they're resigned to higher rates, their actions would indicate otherwise, says Michael Regan, CEO of TranzAct Technologies. Regan, who often speaks to groups of shippers, makes it a practice to ask his audiences how many budgeted for transportation costs to rise by more than 5 percent over the past year. Usually, he says, few people raise their hands. When he asks how many saw increases of 5 percent or more, most hands in the room go up. Yet, he says, few of the shippers he talks to are planning for a similar run-up in spending this year. Does that mean they're optimistic? Perhaps, he says. But a better word might be shortsighted.
Squeezed at both ends
The fact remains, however, that it's shippers who are feeling the squeeze right now. The capacity crunch notwithstanding, they're still feeling corporate pressure to accelerate cycle times—often across long and complex sourcing networks—and reduce costs.
"Our customers are trying to squeeze the supply chain for all it's worth," says James Welch, president and CEO of Yellow Transportation, a major national LTL carrier. Welch notes that it's no coincidence that the expedited portion of Yellow's business is growing faster than its regular LTL business. The extra cost of expedited delivery is often cheaper than the carrying costs for holding inventory—or the chargebacks for late deliveries.
Doug Duncan of FedEx Freight agrees. "Our perception is that the market is embracing fast cycle logistics more and more every day," he says. "What customers want is speed and reliability. They want certainty."
It's safe to say that for shippers, it's anything but business as usual right now. Given the new reality, Michael Regan, CEO of TranzAct Technologies, whose company markets a variety of transportation and logistics software and offers freight payment services, urges shippers to look hard at the way they do business with carriers. "You really need to step back and challenge your assumptions," he says.
One of those assumptions, he says, is that the lowest available rates are those negotiated through core carrier programs, in which shippers offer the bulk of their freight to a select group of carriers in return for favorable freight rates. "We've seen proof that while there are still some advantages to leveraging purchasing power, it's not anything like it was in the '90s," he says. "Now the issue you're trying to get at is running your most effective and efficient business."
That may also mean doing things that are counterintuitive. For example, Regan urges shippers to consider whether it might make sense in some cases to increase inventory levels. "The concept everyone has been talking about is that ëless is more.' But one thing we're seeing is that 'less is more' only if you can operate without incurring significant problems." You have to look at the whole procurement and inventory management process.
That opinion is shared by Duncan of FedEx Freight. "It is not productive to look at one piece of the supply chain," he asserts. "I could tell you not to make delivery appointments and take delivery when we back up to dock [as a way to give the carrier flexibility]. That's all well and good if you just look at the part of the supply chain between me and my customer. But that may suboptimize the DC resources. We have to understand our role in the supply chain. We have to look at improvement in the total supply chain."
Thinking outside the, uh, box
As for other options open to shippers with freight to move, Regan says alternatives include reviving or expanding a private fleet, paying for dedicated carriage, or looking into pool distribution or intermodal service. He acknowledges, however, that it's tough for logistics departments hit hard by layoffs in recent years to summon the talent needed to explore all the options. "I have one customer who used to have 25 people in logistics and transportation," he says. "It went to 13, then to four."
In fact, those staffing shortages have prompted fresh interest in brokerage services. Rourke of Schneider National's brokerage operation says he's found shippers are open to ideas that they would have rejected only a short time ago. "For the last 10 percent of volume, customers are trying to manage 50 carriers," he says. "Do you want to manage that level of complexity, or are you better off having a large aggregator?" In other words, by using a broker, the shipper can deal with a single business, which in turn manages the full array of smaller carriers.
Still other shippers are taking more extreme steps to assure that they have the trucks they need. Scott Wolf, vice president of corporate services for Averitt Express, which has LTL, truckload and dedicated operations, notes that some larger customers are committing to capacity, reserving as much as they believe they will need, and paying for it even if it's unused. "They're asking us to commit drivers to them and paying the tab for that utilization," he says. "We're turning into their dedicated fleet."
Wolf tells of one large customer that's attempting to set up a cooperative agreement with another shipper that has substantial freight moving in the opposite direction—one has a lot moving into Nashville; the other, a lot out. "They're trying to improve utilization. What we're seeing is shippers getting really creative."
Spotlight on collaboration
But as more shippers are learning, it's one thing to locate a truck; it's another to persuade the carrier to accept your freight. Now that they can afford to turn away business, carriers have gotten downright choosy. They're no longer accepting freight that's not profitable for them to haul. Nor are they willing to put up with the inaccurate documents, poorly staged freight and shipping dock delays that shippers got away with in a buyer's market.
What can shippers do to make their freight attractive to carriers? The key is getting their own operations in order, says Latta of A. Duie Pyle. "We believe it would be helpful if transportation buyers had the processes in place to quantify .. 'transportation value' by factoring in all the costs presented/imposed by the carrier, including price, freight claims, late/inconsistent service, invoicing accuracy, information access cost and ease of use (i.e. staff cost of multiple shipment tracing phone calls and return call delays versus real-time, in-transit Web site shipment visibility ...)."
He says that many shippers have recognized just that. "The trend I've seen is improved collaboration between the purchasers of transportation services and the providers, driven by common recognition of tightening capacity, especially driver availability," he says. "We find ourselves working with customers, so that if there are adverse circumstances with one of their customers, they are more willing to get involved to remediate problems." For example, he says, his customers will work with the carrier to reduce driver delays at customer docks, a potentially major productivity killer.
Welch speaks for many truckers when he emphasizes that the flow of information from shipper to carrier is crucial to improving the freight system's efficiency. He cites inaccurate bills of lading as one particularly vexing issue. "It's amazing the number of times the bill of lading either has the wrong address or the wrong ZIP code, or the weight or description is not right," he says. "That causes us a lot of headaches.
"The other thing is, when you say the freight is going to be ready, it needs to be ready."
Duncan makes a similar argument. "We can no longer wait for the freight to show up," he asserts. "We have to know when it's coming." He says electronic transmission of bills of lading has been a big benefit for FedEx. But he acknowledges that many shippers are unlikely to have the technological savvy to manage those transmissions.
For that reason, FedEx has outfitted drivers with handheld devices they can use to capture data upon pickup. That information is uploaded to the freight terminals, allowing load and route planning to take place before the trucks return at night.
Muessig of Pitt-Ohio Express says shippers that are willing to collaborate with carriers may even see returns in the form of lower rates. "One of the things we communicate to all our customers is that we're dispensing with general rate increases. We're looking where possible to get rate stability, even rate reductions, if we can take cost out of the business."
Once again, one of Pitt-Ohio's particular goals is to work with customers to get early notice on shipments to help dispatchers plan the night's linehaul operation. "For those customers providing projections, we're minimizing their rate increases and in some cases forgoing them," Muessig says. "We recognize orders are cancelled or things change, but if we get 90 to 99 percent certainty, that can go a long way to improve linehaul efficiency."
He emphasizes the importance of two-way communication. "The key is for shippers to have IT resources to make information available to carriers," he says. "We see shippers that want information from carriers, but they are less willing to share with us. That's an opportunity moving forward."
Mark Walker, vice president of transportation for C.H. Robinson, which offers both truckload and LTL service, adds that shippers that do a better job of forecasting what they will require will have greater success getting the trucks they need than those that make calls at the last minute.
That's the core of the issue in the tight market. "If you're normally moving 10 truckloads a day and now you want 30— that's not happening today," Walker says. "Carriers are demanding that shippers do a better job of planning. With capacity fully utilized, you cannot expect to find another truck a couple of miles away."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.