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

During the Great Recession, the LTL freight industry experienced a “near death” experience as declining freight volumes, excess capacity and falling rates conspired to dramatically reduce revenues and profits. The LTL market shrank from more than $33 billion U.S. at the peak in 2006 to $25.2 billion at the recession's trough in 2009. As we approach the mid-point of 2015, the fortunes of this industry look much brighter. Here’s why.

The industry has consolidated

Looking back over the past 25 years, only 4 of the top 50 carriers are still in operation. Over the past 10 years, there has certainly been a changing of the guard at the top. As noted in a recent Stifel transportation report, “Old Dominion has replaced FedEx Freight/Con-way Freight as the most profitable carrier in the industry. USF was bought by Yellow Roadway to become YRC Worldwide before it nearly went the way of Consolidated Freightways, Overnite became UPS Freight, Central Freight Lines went public then private, Vitran was sold in pieces, Saia sold Jevic (which then went bust), and Roadrunner acquired Dawes and Bullet to become the only national asset-light general commodity LTL carrier. The industry is more concentrated than ever . . . “

The report goes on to report that “the top-5 (U.S.) carriers have roughly 55% of the market. And those top-5 - FedEx Freight, YRC Worldwide, Con-way Freight, UPS Freight, and Old Dominion Freight Line - are all either historical disciplined pricers or have been burned in the past by their undisciplined ways or have no choice but to push price to improve margins.” The Canadian market is quite similar with TransForce, Day & Ross and Manitoulin dominating the LTL sector. Unlike the truckload sector, consolidation means more leverage and pricing power for the top LTL players.

Today’s LTL Carriers are leaner and meaner

...
Hits: 3893
0
Continue reading 0 Comments

In a recent Stifel report, it was noted that the “mother” of all capacity shortages is expected to hit the United States in 2017 as a series of government regulations reduce the supply of fleet equipment by five to fifteen percent. Despite the efforts of carriers to raise pay, upgrade facilities and improve the lifestyle of drivers, annual turnover stubbornly remains at close to one hundred percent in many fleets. On the rail side, a huge upswing in the movement of energy products by this mode has had a deleterious effect on intermodal capacity and service. Wise shippers realize that trying to secure carriers on the spot market is a risky endeavor since this leaves them open to capacity shortages and rate volatility.

What can your company do to protect itself if there are capacity shortfalls?

Is your company ready for even tighter freight capacity? Will the integrity of your company’s supply chain be maintained in this ever-changing environment? What can your company do to protect itself if there are capacity shortfalls?

1. Bring your top performing carriers under contract

An important first step is to view your major carriers as business partners. As such, it makes good sense to negotiate formal multi-year contracts with capacity commitments and service guarantees. As you engage in these types of discussions, find out how your business fits within the parameters of their operation. Does your freight move on their primary traffic lanes? Do they have head haul or back haul in the reverse direction? Are you a valued customer?

...
Hits: 1676
0
Continue reading 0 Comments

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.

...
Hits: 1667
0
Continue reading 0 Comments

Thankfully, the first quarter of 2014 is behind us. The challenging winter across Canada and the northeastern USA and capacity shortages, brought on, in part by the weather, created a difficult environment for both carriers and shippers. Are we in the clear now? With the winter behind us and with the economy improving, can we expect freight supply and demand to come into balance? Here are some thoughts to ponder.

1. Climate Change will continue to produce Bad Weather

Because of its near-total dependence on petroleum fuels, the U.S. transportation sector is responsible for about a third of America’s climate-changing emissions. Globally, about 15 percent of manmade carbon dioxide comes from cars, trucks, airplanes, ships and other vehicles. A National Research Council report states that America’s transportation infrastructure is at risk due to the effects of global warming. Severe weather and rising water levels will impact roadways, railroads, and airports. Climate change will affect transportation primarily through increases in several types of weather and climate extremes. Climate warming over the next 50 to 100 years will be manifested by increases in very hot days and heat waves, increases in Arctic temperatures, rising sea levels coupled with storm surges and land subsidence, more frequent intense precipitation events, and increases in the intensity of strong hurricanes. The impacts will vary by mode of transportation and region of the country, but they will be widespread and costly in both human and economic terms and will require significant changes in the planning, design, construction, operation, and maintenance of transportation systems.

In other words, get used to it. The next winter may be worse than the last one.

2. Capacity Shortages May Increase and Get Worse

...
Hits: 2006
0
Continue reading 0 Comments

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

 H-and-W-ChartV3

 

...
Hits: 2299
0
Continue reading 0 Comments

The world of freight transportation is changing rapidly.  The signs are there and they are unmistakable.  Recognizing and responding effectively to these signals may help determine which shippers and carriers will survive in the years ahead.  Let’s examine the components of the new paradigm of freight transportation.

The Era is Cheap Oil is Over

The steep escalation in fuel prices this year is a harbinger of things to come for shippers and carriers.  This time there will likely be no major recession to bring energy prices down.  The sad fact is that 95 percent of transportation modes, passenger and freight, run on petroleum products and the likelihood of finding new sources of supply or of shrinkage in global demand is highly unlikely. In fact the use of petroleum in countries such as China and India is on the rise.

The result will be tighter truck capacity, greater use of intermodal rail services, the electrification of transportation systems, the relocation of factories and distribution centres and the slow shift to cleaner, cheaper fuels.  It will drive more LCV’s (long combination vehicles) or “turnpikes” and more triple trailer configurations.  This may be the impetus to harmonize our laws throughout North America to remove barriers to the movement of the most energy efficient vehicle combinations across our highways.   To curb use, many countries will have to begin looking at the Danish example of higher taxes on fuel inefficient vehicles and higher taxes on petroleum.  Get used to it.

The Driver Shortage is Real

...
Hits: 21721
0
Continue reading 1 Comment

Some thoughts on the Driver Shortage Issue

Posted by on in General

This past week I had the opportunity to speak with some of North America’s leading truckers.  Other than the “head shots” in this year’s National Hockey League playoffs, the other number one topic of discussion on everyone’s mind is the issue of driver shortages.  I also had an opportunity to read what the Canadian Trucking Alliance labels “a new, eye-opening report” from the Blue Ribbon Task Force they established in 2011 to address the impending shortage of qualified commercial drivers in Canada. 

In this blog, I would like share a few thoughts on this hot topic.

The problem is real

There are some shippers who believe that this issue is manufactured by the trucking industry to help sell freight rate increases.  Let me assure my shipper friends that this is not correct.  Trucking companies all over North America are having difficulty attracting “qualified drivers.”  By this term we mean skilled professional drivers or people interested in becoming professionals. 

This shortage is being created by an aging workforce, lifestyle issues (e.g. having to spend time away from home), a lack of interest from women, the challenges of the work, the level and structure of the compensation and the fact that driving truck is not viewed as a profession.  The fact is that while there are millions of Americans and Canadians out of work, driving truck is not considered an option for most people.

...
Tagged in: Driver Shortage
Hits: 15757
0
Continue reading 2 Comments

Most Recent Posts

Search


Tag Cloud

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

Blog Archives