Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Subscribe to this list via RSS Blog posts tagged in Dedicated Trucking

 

b2ap3_thumbnail_Stifel-2018-rate-increase-projections.jpg

On October 11, my company co-hosted the 2017 Surface Transportation Summit with my partners at Newcom Business Media. I am very pleased to report that we had another packed house for what has become the premier educational and networking event in Freight Transportation in Canada.

The day was again kicked off by one of Canada’s leading economists, Carlos Gomes of Scotiabank and by two investment analysts, Walter Spracklin, CFA, Equity Research Analyst - Transportation Sector, RBC Capital Markets and John Larkin, CFA, Managing Director and Head, Transportation Capital Markets Research, Stifel Financial Corp., who provided an American perspective. These gentlemen highlighted that 2018 will be a year of economic growth. This economic growth, coupled with the ELD mandate and the limited supply of quality drivers in the United States, will translate into tight capacity and higher freight rates.

One of the slides that caught my eye was the one inserted above from the John Larkin presentation. John’s views are consistent with what one of the largest US trucking operators, J.B. Hunt Transport Services, is telling its shipper customers. They are advising them to budget for transportation cost increases as high as “10 percent or more” as the peak fall distribution season and electronic logging mandate intensify a driver shortage. “This is one of the highest periods of turbulence and volatility in supply we have ever experienced, and we don’t think it will abate any time soon,” John Roberts, president and CEO, and Shelley Simpson, chief commercial officer, said in a letter to J.B. Hunt customers.

...
Hits: 203
0
Continue reading 0 Comments

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 dan@dantranscon.com

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.

 

...
Hits: 22827
0
Continue reading 0 Comments

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").

...
Hits: 14280
0
Continue reading 0 Comments

 

Freight Transportation Adjusts to a Resetting World Economy

The year 2011 was another momentous one that was shaped by events on all continents of the world.  Uprisings in the Middle East and the overthrow of Hosni Mubarak and Muammar Gadhafi, the European debt crisis, the Occupy Wall Street Movement, the assassination of Osama Bin Laden, the earthquake and tsunami in Japan, the wedding of Prince William to Kate Middleton, and the premature passing of Steve Jobs were just a few of the signature events of another action-packed year. 

Closer to home, the three countries in North America all faced significant challenges.  The powerful drug cartels in Mexico are threatening its very existence as a democracy as the country gears up for elections in 2012.  The untimely death of Jack Layton, the very popular leader of the New Democratic party and the demise of Michael Ignatieff and the Liberal Party have given Steven Harper a majority government and a free hand at steering the Canadian economy over the next four years.  The U.S. situation is exactly the opposite as Democrats and Republicans cannot reach agreement on almost anything and as a result the country is in gridlock on most economic initiatives to spark its economy. 

Against a background of 8.6 percent unemployment in the U.S., millions more underemployed, one in four homes is worth less than the value of the mortgage, tight credit, anxiety over job security and a possible relapse into another recession, the economy is resetting.  Americans are saving more.  As various generations of families live together to better withstand the current economic uncertainties, home builders are erecting homes with two master bedrooms to address the social consequences of these challenging times.   Smartphones, tablets and the internet are reshaping so many of our day to day activities.  The economies of North America and around the world are being reset by this confluence of forces and by the rise of China and other developing nations around the world.

...
Hits: 30019
0
Continue reading 1 Comment

On several occasions I have commented in this blog about a looming truck capacity shortage.  A soft North American economy coupled with political uncertainty and concerns about Europe and China, are discouraging carriers from making investments in their fleets.  Truckers are seeking to maximize the utilization of their existing assets and improve yields, particularly with rising equipment costs, increasingly burdensome government regulations, and a shrinking pool of qualified drivers. However, the on demand truckload model creates uncertainty as truckers wait for shippers to book a load and/or to balance a lane.   

Shippers are becoming increasingly concerned about finding the capacity they need to move their freight.  They are also concerned that tight capacity will lead to rising freight costs.   Capacity shortages in various North American markets this year have caused shippers to seek out options to current transportation processes.

A “Mutually Beneficial Antidote” to Securing Capacity and Rate Stability

One solution to these problems is dedicated contract carriage—the practice whereby, as the name implies, a trucker dedicates equipment and drivers to serving an individual shipper, allowing that customer to lock in rates and capacity with that carrier for a multi-year period.  John G. Larkin, lead transport analyst for investment firm Stifel, Nicolaus & Co., calls dedicated trucking the "mutually beneficial antidote" for carriers that want to get paid for capacity and shippers that want to know it's available.

"Both shippers and carriers are increasingly realizing that dedicated trucking may be just the solution that meets both their needs," Larkin wrote in early October.  He stated that shippers who own and operate private fleets could "see 10-percent savings right off the bat" from switching to dedicated service. That's because specialized operators can usually manage fuel, insurance, maintenance, equipment utilization, and driver schedules more efficiently than a shipper that operates its own trucks can, Larkin notes.  What's more, companies that outsource their fleet needs can free up their balance sheet capacity and reinvest more of their cash into their core business, which is generally not transportation, Larkin says.

...
Hits: 19652
0
Continue reading 1 Comment

Most Recent Posts

Search


Tag Cloud

2014 freight forecast Retail Adrian Gonzalez Social Media in Transportation trucking company acquisitions CRM Load broker freight audit small business professional drivers TMS Transportation Buying Trends Survey driver Entrepreneur bulk shipping ELD freight payment University of Tennessee online shopping CN carrier conference US Housing Market Driver Shortage Life Lessons 2014 freight volumes marketing routing guide JB Hunt customer engagement Masters in Logistics NCC truck drivers Sales Management Transport Capital Partners (TCP) Training fuel surcharge CSA natural disasters Grocery Business skills APL Bobby Harris Management solutions provider Associates Rate per Mile Success failure entrepreneur intermodal capacity shortage Emergent Strategy New York Times Dedicated Contract Carriage Amazon KCS 360ideaspace LinkedIn Leadership FMS autonomous vehicles Doug Nix FMCSA FuelQuest EBOR Loblaw buying trucking companies BNSF Politics CN Rail the future of transportation freight transportation in 2011 Transloading Blockchain shipping Truckload risk management shipper-carrier collaboration 3PL Reshoring Keystone Pipeline cheap oil peak season TMP Worldwide Rotman School of Business freight cost savings freight rate increases freight payment freight audit Canada's global strategy Canada Search engine optimization Omni Channel transportation newspaper dimensional pricing Swift Failure Broker UP Freight Matching Outsourcing Sales Career Advice Canadian Transportation & Logistics Distribution Muhammad Ali truck driver Regina freight forwarders ProMiles Retail transportation Deferred Packaging Education Twitter Ferromex President Obama Load Boards 2014 economic forecast Social Media selling trucking companies US Election Transportation FCA US Auto Sales Yield Improvement Infrastructure Inbound Transportation RFP Wal-Mart $75000 bond Global Transportation Hub Job satisfaction Business Transformation Strategy NAFTA Harper Davos speech 2013 Economic Forecast Canadian economy USA Truck LTL coaching Freight Rates Canadian truckers dynamic pricing derailments NMFC Dedicated Trucking Schneider Logistics Facebook Dan Goodwill Celadon Sales shipper-carrier roundtable Crude Oil by Rail freight transportation drones Canada U.S. trade Freight Shuttle System Finance and Transportation Software Advice BlueGrace Logistics last mile delivery Warehousing CSX hiring process Global experience energy efficiency Whole Foods Consulting Training New Hires Otto Freight Capacity freight broker Werner MBA Transcom Fleet Leasing robotics 2012 Transportation Business Strategies. Jugaad employee termination trade Climate Change technology Cleveland Cavaliers Hudsons Bay Company Freight Recession broker bonds MPG LCV's freight costs CP Rail future of freight industry 2015 Economic Forecast Success Accessorial Charges 3PLTL Microsoft TransForce transportation audit business start-up Conway driverless Freight Management home delivery Sales Training Transportation service Comey Colilers International Horizontal Supply Chain Collaboration US Economy freight RFP NS Donald Trump driver shortages US Manufacturing Map-21 network optimization Packaging tanker cars supply chain management home delibery broker security shipper-carrier contracts Trucking Railway Association of Canada economic forecasts for 2012 freight bid CSA scores Doug Davis Shipper David Tuttle IANA financial management CITA Shipper Pulse Survey Canada-U.S. trade agreement YRC Freight consumer centric Stephen Harper Trade Vision freight agreements Carriers transportation news Spanx e-commerce mentoring freight transportation conference pipelines Crisis management Freight Carriers Association of Canada Business Strategy Trump Scott Monty automation Blogging shipping wine Surety bond Canadian freight market rail safety Fire Phone Tracy Matura Toronto Freight contracts Driving for Profit FCPC economy ShipMax Right Shoring Transplace Derek Singleton capacity shortages Rail

Blog Archives