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.
When you look at the truckload portion of the motor carrier industry as a single entity, you see the segment—the word segment hardly does it justice—that handles the vast majority of for-hire tonnage in the United States. According to the Truckload Carriers Association (TCA), the major trade association for the industry, truckload carriers handled 97 percent of the for-hire tonnage in 2002—the latest numbers available. That makes the truckload business, as fragmented as it is, a substantial part of the nation's economy.
But examine just a bit further, and you see one of the most fragmented portions of the industry, with thousands of carriers, big and small, and where even the giants, the best-known names, control only a small portion of the overall market. Thus, generalizations about the industry can be misleading. What is almost universally true, though, for truckload carriers big and small, is that business has been tough, but it is getting better.
Over the last four years, the industry has gone through substantial turmoil. Chris Burruss, president of TCA, describes it as a "perfect storm."
"The industry will face cost pressures at any time," he says. "It might be fuel or insurance, or new engines, or you might have to deal with drivers. Over the last four years, all of those have come to bear at once."
Lately, though, as the economy has recovered and trucking volumes have risen— and truckload rates along with them—truckload carriers, or at least the larger carriers, have shown strong signs of recovery. J.B. Hunt, for instance, the largest publicly traded truckload carrier, reported both record revenues and earnings in the first quarter of this year. Werner Enterprises, another large truckload carrier, reported its first-quarter revenues increased by 11 percent and profits by 31 percent over 2003's first quarter. (Schneider National, the nation's largest truckload carrier, is privately held and does not break out its financial results. However, for all of 2003, the company said its truckload services revenue grew by 6 percent.)
Rates on the rebound
For shippers, that opens several issues. First, rates are up and certain to rise. Carriers have had to absorb substantial increases in insurance and fuel costs; increase driver compensation; and take on the higher acquisition and maintenance costs of new cleaner-burning engines.With capacity tight, carriers will pass those costs on to customers and attempt to improve their margins as well. But with costs being particularly volatile, getting a grip on exactly how far rates will rise is difficult.
William Rennicke, a managing partner with Mercer Management Consulting's transportation practice, says, "While rates have gone up—most carriers have seen much higher rates and the rates are sticking—there's a built-in uncertainty in the cost structure. It gets hard for the carriers to find out if they are pricing the right way, or you end up with contingency-based pricing. "Many carriers have been successful in passing on at least a portion of the steep run-up in diesel fuel prices, but constant changes in rates can also cause tensions between shippers and carriers. Rennicke describes the pricing environment as "crazy and unsettled." (An example of the cost issues: Diesel fuel in early May averaged $1.71 a gallon across the country, 23 cents a gallon higher than a year earlier.)
Even with tight capacity, Rennicke believes that shippers still have most of the leverage because of the number of competing carriers in the truckload market.
The driver dilemma
Attracting and retaining drivers has long been an issue for truckload carriers, and the pool of available drivers may be as great or greater a restraint on capacity as equipment. "Drivers are as big a problem as before the downturn," Rennicke says. "The ability to serve the market is capped by the ability to attract drivers."
Speaking to the International Association of Refrigerated Warehouses conference in April, Lance Craig, chairman of TCA and president of Craig Transportation in Perrysburg, Ohio, said,"By every standard measurable, the issue of drivers is particularly worrisome."
Tight capacity and the issue of driver retention have led more carriers than ever to consider using rail intermodal services for linehauls. J.B. Hunt and Schneider National, the largest truckload carriers, have used intermodal for portions of their business for several years, but Rennicke says that even relatively small carriers are considering that option. But even intermodal capacity is getting tight, Craig warns.
Another factor whose consequences are still imperfectly understood: Carriers are also continuing to learn how the new driver hours-of-service rules that took effect in January will affect productivity. Already, major carriers have gotten more serious about imposing detention charges on shippers or receivers that tie up equipment.
Be late, get detention
Craig says detention billings by his company are more than double what they were before the rules came into effect.
"This is not a 'hurrah' thing," he says,"but it highlights for shippers and receivers that there is a cost to inefficiency."
Perhaps even more important heading into the peak shipping season is that capacity is getting tight. "There's definitely going to be a problem as we wind into the busy season," Craig says. Shippers without contracts with carriers may find trucks difficult to find as volume picks up—especially those shippers who carriers perceive as operating inefficient docks.
Craig says, "It's not a secret that it's swung back the other way. There's a much higher demand for trucking. It is more of a carrier's market now."
But the pain inflicted on the industry over the last four years—plus questions about driver availability—has caused many carriers to invest in new capacity cautiously, which suggests that capacity is not likely to expand in step with demand. "Expansion has to be done in a careful manner," Craig says. He says his own company could move as much as 50 percent more freight every day, based on the demand he's seeing. Yet major investments won't come quickly.
"Trucking companies have learned from the last recession what it takes to be a profitable company," Craig says. "They are going to be cautious about who they deal with and how they do business. A lot of carriers now have tools that tell them who their good customers are and who the bad customers are."
Shippers aware of the coming tight capacity have been making efforts to expand their base of contracted carriers. Craig reports a sharp increase in requests for bids from shippers. "They are trying to gain specific commitments knowing that things are ready to bust loose," he says. "The only way to gain capacity is to roll out those bids and issue awards for traffic."
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.