What Shippers Can Do To Stay Competitive
The e-commerce boom is driving up demand for consumer goods and creating new jobs, which was great news for logistics companies and carriers around the country. The trucking sector of the logistics industry was significantly affected, and ground carriers are seeing an increase in demand for the transportation of smaller loads. While this should result in higher bottom lines, the trucking capacity shortage is making it difficult for ground carriers to meet the demands of their customers. With not enough capacity to go around, shippers must be more competitive about reserving trucking capacity. Learn more about how shippers are being affected by the trucking capacity shortage and how they can remain competitive in the industry.
Raised Shipping Rates
Shippers are being affected by the shortage of capacity in raised shipping rates. Unlike years prior where they were able to shop around for the best package deal on their ground transportation needs, they now must choose from limited options at higher prices. In fact, transportation costs rose about 7% for U.S. companies. Compared to the 4% average over the years of 2012-2017, this is a substantial increase.
Unfortunately, the rise in costs will not be temporary, meaning that shippers must adjust to the change of allocating a significant amount of their budget to transportation costs. If shippers don’t change their ways soon, they may face the consequences of being pushed out of the market.
Truck Driver Shortage
The growth in demand partly causes the truck capacity storage, but it is also caused by the shortage of truck drivers. Truck drivers are a crucial part of the supply chain and will continue to be necessary until the technologies for drones and autonomous vehicles are ready to hit the market. While they are making significant progress, we will still have to wait years for these technologies, and must find solutions for the truck driver shortage in the meantime. The driver shortage will not decrease anytime soon; in fact, the shortage may even triple in the next decade if nothing changes. Truckers can gain a trucking license in a few weeks and are being offered high salaries, yet carriers can’t find enough drivers to keep up with their demands.
Part of the reason for the truck driver shortage is the electronic logging device (ELD) mandate, which is a main point of controversy in the industry. Between drivers and CEOs, those in the trucking industry have strong opinions as to whether or not the federal requirement of ELDs is a good idea. While the mandate was established in an attempt to decrease the number of accidents and fatalities that occur from overworking or sleep deprivation while driving, many drivers don’t appreciate the new version of hour logging and see it as a disrespect to privacy. Executives are also against the mandate as they are warry about the high cost of implementation and the associated learning curve for their truck drivers.
How Shippers Can Stay Competitive
While industry professionals are working to find solutions to fix the truck driving shortage and attract drivers, companies are rethinking their supply chains to prepare for the expensive freight market. Shippers should start by optimizing inefficiencies in all areas and minimize costs wherever possible to compensate for raised shipping rates. By implementing strategies like defining business rules around factors such as weight, time constraints, and cargo sensitivity of their shipments, shippers can gain a strong understanding of their costs and know how to minimize them. In this competing environment, it’s also crucial for shippers to invest in software that allows them to purchase capacity and plan shipments. It is essential for shippers to take the time and effort to change their ways and remain competitive; if not, they may be nudged out of the market completely.
AFP Global Logistics
For any and all of your freight shipping and warehouse storage needs nationwide, look no further than AFP Global Logistics. We provide a full range of shipping and logistics services, and our 25 years in the business have given us the tools we need to create customized logistics solutions that are tailored to the needs of each client we serve. We have what it takes to provide the superior shipping and logistics solutions that your business needs to thrive. For more information or to start designing your own logistic solutions today, get in touch with AFP Global Logistics at 410.590.1234 (toll-free 800.274.1237), email us at email@example.com, or fill out our quick and easy contact form here!