COMMENTARY: Dealing with the "3 D's" of transportation
Shippers and carriers face an exceptionally challenging time in a trucking market that is being shaped by three
significant forces: a rise in demand, a shortage of drivers, and increasing decrees from government.
Let's face it. There's been a lot of discussion about the future of transportation. Carriers are in the midst of the
long-predicted driver shortage, and capacity is increasingly constrained. Shippers are pressing for lower rates while experiencing
higher turndown ratios, higher costs, and reduced services. It's a potentially dismal state of affairs. One that is often
difficult to explain to your colleagues in procurement or to senior management.
Results of
the "23rd Annual Study on Logistics and Transportation" that we conduct each year for Logistics Management
magazine suggest shippers can point to three D's when discussing the forces impacting transportation: demand, drivers, and decrees
from the government.
Demand.The demand for transportation has been increasing. At the "State of the Union-Transportation Industry Executive Panel"
discussion held at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference, carriers expressed
cautious optimism that demand for transportation services will continue to grow, pointing to the U.S. Bureau of Economic Analysis'
estimate of 4.6 percent growth in gross domestic product (GDP) in the second quarter of the year. While more conservative
estimates suggest only 2-percent to 3-percent growth in GDP, it is seems reasonable to conclude the demand for transportation
will continue to rise.
Drivers.How long have we been talking about the driver shortage? (Here is a hint, it was before iTunes, gas cost $1.30
a gallon, and phones were getting smaller—not bigger.) It turns out, experts were not "crying wolf." The shortage is here,
and it is here to stay. The forces driving the driver shortage are a near "perfect storm." The pool of available drivers is
shrinking rapidly, while demand for their services is increasing. According to a recent American Trucking Associations (ATA)
study, 37 percent of carriers point to pending retirements as the biggest reason for the shortage, followed closely by industry
growth (36 percent).
What will it take to fix the shortage? Obviously, the answer is complex. However, Craig Harper from JB Hunt, speaking at the
CSCMP Annual Conference, provided an especially insightful response: "What would it take to get your child or nephew to become a
driver?"
Decrees from the government. Strong headwinds. Is that a polite enough way to describe the current legislative climate
in Washington and its impact on the transportation industry? It has been generations since we have experienced such an intense
regulatory environment. Hours of service rules are in flux. CSA is rolling out. All trucks were originally mandated to have
electronic on-board recorders by 2016; now it's been moved to 2017.
As daunting as these current regulations are, the more concerning fact may be the federal government's predilection for more
regulation. This is in sharp contrast to the late 1970s and early 1980s, when the shift was toward deregulation of the industry.
In fact, some have suggested the transportation industry is in the midst of a new era of re-regulation.
A DIFFERENT APPROACH
Add up the 3 D's, and shippers get higher costs! The cumulative effect of increases in demand, reduction in driver availability,
and regulatory changes resulting in productivity losses (such as from hours of service regulations) and increased equipment costs
(such as from converting to electronic on-board recorders) is estimated to be a 17-percent increase in transportation costs.
This is certainly a daunting challenge given today's increasingly demanding and cost-sensitive market. However, with great
challenge comes great opportunity. In fact, the incentives for carriers and shippers to work together have rarely been greater.
Shippers who embrace collaboration and seek strategic long-term relationships with carriers (rather than a one-year contract) will
be rewarded with improved service and availability. As shipper scorecards become as common as carrier scorecards, shippers who
treat a carrier's drivers (and administrative staff) professionally can expect to be given higher priority for available capacity
while those that don't may find themselves searching for another carrier.
By working together, shippers and carriers can face the 3 D's together and change the industry for the better.
Editor's Note: Karl Manrodt is a professor in the Department of Marketing and Logistics at Georgia Southern University,
located in Statesboro, Ga. He is also the Director of the Southern Center for Logistics and Intermodal Transportation.
Christopher Boone is an assistant professor of logistics in the Department of Marketing and Logistics at Georgia Southern
University.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”