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A little over a year ago, I wrote a blog entitled “How do you know when it is time to conduct a freight bid?” ( ). In that blog, I outlined a set of general conditions that shippers can use as a guide to reach this decision point. Half way through the first quarter of 2017, I find myself thinking about this issue again. Here’s why.

The stock markets in North America are hitting record levels on an almost daily basis. Usually this is a sign of good economic times ahead. The US Consumer Confidence Index in December of 113.7, reached its highest level since 2001, a sure sign that people are ready to open their wallets and buy things. The National Purchasing Manager’s Index increased to 54.7% in December 2016, an increase of 150 basis points over the previous month and the 91st consecutive month for growth in the overall US economy.

The Shippers Conditions Index for October 2016 increased to a neutral reading of 0.4. FTR, an American transportation consulting service, expects that shippers will see a couple more months of neutral market conditions before they may be impacted in the latter half of 2017. The impact would in part be due to potential capacity issues stemming from the Electronic Logging Device (ELD) implementation scheduled for the end of 2017.

ACT Research’s For-Hire Trucking Index sees freight rising faster than capacity, increasing the gap to levels not observed since 2014. January freight volumes for TransCore’s Link Logistics continue an upward trend after a surge in freight volume in December 2016. Although the record for highest load volumes for January was set in 2014, last month’s load volumes are the second highest recorded for the month of January, and compared to last year load volumes have leaped 43% year-over-year.

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Over the past few weeks, there are a couple of items that have come to my attention that inspired me to write this blog. First, I had the pleasure of sitting in on the annual Masters of Logistics webcast, sponsored by Logistics Management. This is the 23rd year that these high quality researchers have surveyed a large sample of shippers and carriers to get a “read” on the current state of the industry. As always, the study produced a number of interesting findings. The one that caught my eye is the disconnect between shippers and carriers. The researchers labelled it a “tug of war.”

The results highlight that shippers and carriers, at this point in time, have conflicting business objectives. On one side we find freight carries looking to recover from the economic downturn and offset the rising costs of driver wages, higher fleet costs and regulatory changes. With capacity tight and drivers in short supply, trucking companies are seeking to maximize profitability.

At the other end, shippers are trying to reduce their costs while managing increasing demand uncertainty from all customer levels. “In fact, many shippers are asking for cost reductions at the same time that they’re asking for improvements in service,” says Karl Manrodt, one of the lead researchers. How do you reconcile these opposing views?

Some companies are coming up with white papers to educate the shipping public on the challenges that carriers are facing. Within the past few weeks I received two good ones, “Industry Challenges” from JB Hunt and “Truckload Capacity in 2014, What’s Causing the Capacity Crunch and What Can Shippers Do About It?” from DAT Solutions. These are useful, well written documents. They do help create an understanding of the issues being faced by shippers and carriers. They also contain some helpful tips on how to obtain additional capacity and secure competitive rates. Unfortunately, written documents have limited value.

The key to bridging the gap between shippers and carriers is face to face communication. As I think back over the years, the current “tug of war” brings back memories of 1999. Some of you may remember the concerns over Y2K and the worries that the year 2000 would bring a meltdown in computer systems throughout the world. As President of a large freight broker at the time, I remember the conversations I had with our top 10 carrier partners. While addressing the Y2K issue, we had an opportunity to discuss various aspects of our business relationship. This was very productive and is clearly what is required now.

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This year, all signs point to rising freight rates. With driver shortages across North America, driver wages are on the rise. On an almost daily basis, there are reports of trucking companies offering signing bonuses and pay for performance (productivity) packages to attract more drivers (at a higher cost) to their firms. Capacity shortages, government regulations and increases in fleet costs are all driving upward pressure on costs. In addition, economic growth is increasing the demand for transportation services as freight carrier consolidation, particularly in Canada, reduces the range of carrier choices.  New pricing methodologies (e.g. Dimensional Pricing) will also serve to push up freight rates, particularly for low density LTL shipments.

Shippers have been using Freight RFPs or Freight Bids for years in an attempt to keep freight rates under control. The question is whether FRPs still work effectively in a climate of rising freight rates? As a company that has been conducting freight bids for over ten years, the answer is yes, but they take more thought, more planning and more work than is the past. Here are a few tips to ensure your company achieves the best value for its transportation dollars.

1. Leverage your volumes

Your company’s volume of freight, in the traffic lanes where your vendors and customers are located, is the deck of cards your company brings to the table. One of the keys to success is to leverage these volumes as effectively as possible. To do so, it is helpful to consolidate (for purposes of rate negotiations) the freight volumes you have across multiple plants, divisions, sister companies and/or even competitors, if possible. Larger freight volumes give you a bigger bargaining stick.

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Best Practices in Intermodal Transportation

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The term intermodal refers to moving a container or trailer by more than one mode of transportation—generally truck plus rail, ocean plus rail, ocean plus truck, or all three modes. Some recent freight industry trends—such as long-haul trucking capacity shortages, higher fuel costs, and a drive to reduce environmental impact—have sparked new interest in intermodal, especially pairing truck and rail as an alternative to over-the-road (OTR) trucking for domestic moves. For many years, shippers were reluctant to use Intermodal service. Memories of poor service, of containers or trailers stuck in a rail yard, coupled with the speed and flexibility of using over the road service on shorter distances, inhibited intermodal growth. That seems to be changing.

The American Association of Railroads is reporting record intermodal volumes in some months. Truck capacity and driver shortages, the investments made by the major railways on many key business corridors, the increasing use of Intermodal long haul service by truckers, along with improved technology are fueling a so-called “rail renaissance.” "Domestic intermodal is growing much faster than almost any other area of the U.S. economy or industry," says Scott Webb, senior vice president at NFI Intermodal, a carrier based in Cherry Hill, N.J.

What are some Best Practices that shippers and Logistics Service Providers can follow to take advantage of Intermodal service? Here are a few tips.

1. Educate yourself on how Intermodal service can benefit your company

Identify the railroads, drayage companies and IMCs (Intermodal Marketing Companies) that service your lanes of traffic. Learn about chassis, trailers and containers and the size and number of the containers (e.g. 20 foot, 40 foot and/or 53 foot) available in your area. Educate yourself on the head haul and back haul requirements of the intermodal providers serving your traffic corridors. Compare the transit times and costs against the over the road options across all lanes. Find out about their closest rail terminal and its hours of operation. Examine the length of haul on your major lanes and the hours of service it will take a driver to move your loads. Will an OTR driver hit the maximum hours of service in a day on some key corridors and then have to take a ”time out?” Would you be able to obtain essentially the same transit time by switching to intermodal service that can be competitive on lanes as short as 450 miles? If you are an import/export shipper, learn more about the locations of ports that serve your major locations. Meet with representatives of these companies, take some terminal tours and review your operational requirements with them. Find out what they can do for you.

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At the January 21 Driving for Profit Seminar in Mississauga, Ontario, the number 61 was placed on the screen. Glenn Caldwell, Vice President of Sales for NAL Insurance, asked the audience if they knew the significance of this number for the trucking industry. As we learned, the number 61 represents the average lifespan of a professional truck driver in the United States, a number that is significantly below the national average for the rest of population (76 for an American male, 80 for a Canadian male).

One of the handouts at the Seminar was a 144 page report entitled Research on the Health and Wellness of Commercial Truck and Bus Drivers, Summary of an International Conference from the Transportation Research Board of the American Trucking Research Institute of the Federal Motor Carrier Safety Administration, published in 2012. The study focused on a range of issues and actions that can have an impact on the health and wellness of truck drivers.

Some Common Driver Health Risk Issues and Potential Actions



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As the year 2013 winds down, it is time to reflect on the major transportation trends of the past year.  While I saw and read about a wide range of developments, these are the ones that resonated most with me.

1.Technology Comes to Freight Transportation

Last year I predicted that we would see a flurry of new technologies come to freight transportation.  They did and I wrote about some of these new companies on several occasions during the year.  Technology was successfully applied to the freight brokerage business, freight portals, LTL density calculations and to other segments of the industry., PostBidShip, Freightopolis, QuoteMyTruckload,  and Freightsnap were featured in various blogs during the year.  They are changing the way business is done in freight transportation.  Watch for more of these companies to surface in 2014.

2013 has been called the Year of the Network by numerous supply chain and transportation industry thought leaders.  Companies that built a successful supply chain trading partner network focused on three elements:

Connectivity— unite disparate systems and trading partners

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At the end of each year, I like to take stock of the major freight transportation stories of the past twelve months and look ahead to the trends that will drive the industry in the coming year.  The two blogs that I write are prepared from my perspective as a consultant to shippers and carriers.

This year I would like to hear from you.  Those of you who follow this blog observe trends in your segment of the industry.  Please take a minute to share them with me.  Please post them on this blog or send a private e mail to

Please feel free to select any major trend or trends that are having or will have a major impact on our industry, whether regulatory, economic, technological, demographic, consumer behavior, environmental, modal shifts or business strategy.

To broaden the range of inputs and perspectives, I will also post this request on Facebook, LinkedIn and Twitter.  In the coming weeks I will be preparing my two lists.  The lists will include a blend of my observations and yours.  Look for these two blogs in mid-December.  Thank you to those of you who take the time to share your observations with me.


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Last week the Council of Supply Chain Management Professionals released its 24th annual State of Logistics Report. Last year, business logistics costs were once again 8.5 percent of U.S. Gross Domestic Product (GDP), the same level they hit in 2011, the new report says. That means freight logistics was growing at about the same rate as the GDP. Inventory carrying costs and transportation costs rose "quite modestly" in 2012, said the report's author Rosalyn Wilson. Year-over-year, inventory carrying costs (interest, taxes/obsolescence/depreciation/insurance, and warehousing) increased 4% y/y as inventory levels climbed to a new peak. Meanwhile, transportation costs were up 3% y/y predominantly from an increase of 2.9% in overall truck transportation costs.

This "new normal" is characterized by slow growth (GDP growth of 2.5% to 4.0%), higher unemployment, slower job creation (which will primarily be filled by part-time workers due to higher healthcare costs), increased productivity of the current workforce from investment in machinery/technology (and not human capital), and a less reliable or predictable freight service (as volumes rise but capacity does not increase fast enough to meet demand). Wilson noted that slow growth and lackluster job creation has caused the global economy to wallow in mixed levels of recovery. "This month will mark the fourth year of recovery after the Great Recession, and you're probably thinking that here has not been much to celebrate," said Wilson. "Is it time to ask, 'Is this the new normal?'"

For logisticians, the "new normal" means less predictable and less reliable freight services as volumes rise but capacity does not. In areas such as ocean transport, Wilson said, this can mean slower transit times. "I do believe the economy and logistics sector will slowly regain sustainable momentum, but that we'll still experience unevenness in growth rates," Wilson predicted.

For cutting-edge logistics managers, however, the current environment also means great opportunities to secure increasingly tight capacity in an era of shrewd rate bargaining. This is partly because the trucking industry, in particular, is facing a lid on capacity because of higher qualifications for drivers while top carriers are becoming increasingly selective in their choice of customers and in the allocation of their assets.

"Truck capacity is still walking a fine line—few shortages, but industry-high utilization rates," Wilson explained. Truckload capacity continues to remain stagnant (with the majority of new equipment orders for replacement or dedicated fleets and the copious amount of truckload capacity sapping regulations coming down the pipeline) and the assumption that freight demand will continue to modestly increase (as the economy continues to muddle along at low single digit GDP growth in combination with population growth), a less predictable and less reliable freight market is developing (as described in the "new normal").

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Today we received some unexpected good news in the United States as the unemployment rate fell to 8.6%.  In Canada the news wasn’t as good as the unemployment rate increased to 7.4 percent.  Without counting those people who have given up looking for work or who are underemployed (e.g. performing a job below their level of expertise and education at a wage inferior to what they should be earning), there are about 14 million people unemployed in North America (e.g. 13.3 million in the United States and 1.3 million in Canada). 

FTR Associates estimated that there was a shortage of 200,000 drivers in the United States in the first quarter of 2011.  How does one explain the fact that out of a pool of 13.3 million unemployed people (plus millions more if you include those who are underemployed), we cannot find 100,000 to 200,000 individuals to fill these jobs?

Here are some thoughts on this apparent anomaly.  There were 3.2 million commercial drivers in the United States in 2008, including 1.8 million heavy haul or tractor-trailer drivers, according to the U.S. Labor Department.  By May 2010, the number of big rig drivers had dropped 18.4 percent to about 1.5 million.  In other words, there are 300,000 drivers that left the labour force that should be available to fill the available jobs.  Why is it so hard to convince them to come back to work?

One of the most frequently mentioned reasons is compensation.  In the United States, experienced truck drivers can make $50,000 a year at some truckload carriers.  According to a BLS survey, the average wage was $39,450 in 2010 while the median wage was $37,770.  The survey indicated that 75% earn less than $47,000 per annum. 

The trucking industry has a long term practice of paying its drivers by the mile.  While there is certain fairness to this approach since it correlates directly with the amount of miles driven and hours worked, it also injects a level of uncertainty into the driver’s weekly pay package.  Inconsistent load availability translates into inconsistent pay. 

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