Capacity Concerns Are Clear

If You Know What to Look For, the Signs are Everywhere

When it comes to our ability, coast-to-coast, to move product in a timely and efficient manner, we have been stretching the supply chain as thin as a rubber band at its snapping point.

That’s no exaggeration.

In fact, it’s almost an understatement, because many pivot points in our traditional North American supply chain already have snapped under stress. In particular, shippers large and small are struggling today to find full-service carriers within a reasonable distance. If the only options within a region are mega-3PLs or parcel-focused entities, there’s already a serious capacity gap in that region. The shippers already are at the mercy of transport choices that don’t meet all their needs.

Add to that growing problem of limited carrier choice the usual culprits of capacity shortage … and you’ve got a perfect storm brewing in our supply chain.

The lingering capacity worries of the past decade or so are only getting worse, and I’ll address those in just a minute, but first I’d like to resurrect the longtime beef I’ve had on this subject of capacity. We have it in our power to meet and exceed capacity … and we keep sticking our heads in the sand instead!

Here’s the beef, plain and simple: “We” don’t optimize, industry-wide.

Whole swaths of “us” in the marketplace – carriers large and small – pretend to ship efficiently and, in reality, waste fuel on bad loads, waste precious driver hours on those runs, and prematurely wear out rigs and roads by hauling under-optimized loads.

There, I’ve said my piece on our wasteful ways … and shared in a nutshell how we think and behave differently at Zip Xpress Inc. and its long-haul sister company Green Transportation Inc. It’s our middle name, in fact, that word “Optimization.” It’s thrown around so much in the marketplace – and practiced so little!

Big Carriers Missed Their Big Moment

This could have been a whole lot easier… the whole transition to better logistics and load management. North America’s top three or four asset-based carriers – you know who they are – had a clear shot about a decade ago at serving their shipper-customers better.

  • They needed to build and aggressively “sell” to their shippers a modernized, trustworthy system of optimizing inappropriate, inefficient “truckloads” into more affordable and earth-friendly headloads.
  • They needed to sit down with those shipping department managers and their CEOs to pull out that company’s cash savings and dramatically return the money on the spot. Show the shippers that they didn’t need anonymous 3PLs to realize substantial savings per load.
  • They needed to strongly market their optimization program throughout the industry (in “Transport Topics,” Trucks.com, The Trucker newspaper, their own websites) and to the general public as well. Instead of fighting modernization, they could have embraced it and told the world all about it.

Just imagine the difference in perception: People in their little sedans smiling every time a big rig rolls by because they know it’s safely, efficiently packed to the gills with the products everyone needs.

In this “What If?” world of transport, 3PLs would remain only a niche in the system while the big carriers would be admired for their attention to detail and service.

The public perception of trucking would be a positive and a plus all around.

Long-Standing Capacity Issues

Back to the real world.

The web of beneficial interdependence in the North American supply chain is not what it used to be. Not to imply that “the good old days” were all that great, but there really was a greater sense of connectedness between most shippers and their over-the-road partners in transport.

Actually, the very notion of partnering seems to have diminished over the past 15 years or so, as 3PLs have roared into prominence. That trend toward brokers has added to the uncertainties about near-term capacity. With so little stability in the remaining ranks of asset-based carriers, it’s harder than ever to get a handle on who are the players for shipping and how much freight they can handle during this quarter or the next or the next.

In an industry article from late last year, Trucks.com put it like this: “Truck manufacturers are laying off workers, carriers are canceling orders for new vehicles, and shipping rates and volumes are slumping. Put it all together and you get a challenging environment for the American trucking industry.”

“A litany of forces dragged business down (in 2016),” the Trucks.com article stated, including “sinking demand, excess stock, port bottlenecks, a capacity overload, a worsening driver shortage, tightening regulations and more.”

One More Time: We Have the Solution

Even with older equipment and driver populations, even with a (hopeful) surge in manufacturing and an uptick in the economy … the industry could bridge the gap and meet the capacity demands if it simply and finally modernized its freight services. These things remain rare in our business: truly full “Truckload” trailers, including appropriately filled vertical spaces, and honest billing practices for shipper-shared partial loads.

Yes, we wring our hands in worry over a looming capacity meltdown. And yet we outbound and return valuable drivers wasting their time pulling trailers with air to spare. What’s the sense in that?

 

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