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

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: 16043
0
Continue reading 0 Comments

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. 

...
Hits: 16788
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

peak season Inbound Transportation NCC transportation news Packaging trucking company acquisitions Yield Improvement US Election Online grocery shopping Distribution TransForce Electric Vehicles derailments Omni Channel Sales David Tuttle freight agreements 2014 freight volumes small parcel Freight Management Toronto NS USA Truck NMFC Otto Microsoft business security BlueGrace Logistics Comey Railway Association of Canada Surety bond Scott Monty freight payment freight audit Rate per Mile Leadership natural disasters Dedicated Contract Carriage Horizontal Supply Chain Collaboration FCPC UP freight cost savings Infrastructure Search engine optimization Success failure entrepreneur University of Tennessee Value Proposition cars EBOR robotics Transportation service driver Canadian freight market Canadian truckers professional drivers Masters in Logistics ProMiles US Economy routing guide Hockey CSX Climate Change computer protection Transportation Buying Trends Survey Loblaw Cleveland Cavaliers pipelines selling trucking companies freight forwarders Werner President Obama Dedicated Trucking freight costs technology Regina autonomous vehicles Digitization IANA Entrepreneur Failure Broker Stephen Harper Trade Vision freight transportation in 2011 Sales Training broker security 2015 Economic Forecast Job satisfaction 3PLTL CSA scores Load Boards home delibery Management computer security home delivery capacity shortage driver pay Associates ShipMax business start-up Tariffs Retail Dan Goodwill MPG Whole Foods BNSF Rail YRCW last mile delivery Life Lessons Derek Singleton economy rail safety dark stores small business Right Shoring driver shortages 2013 Economic Forecast Business skills 3PL Canada's global strategy CRM e-commerce Global Transportation Hub Map-21 Transloading Fire Phone automation $75000 bond shipping Shipper energy efficiency Canada-U.S. trade agreement YRC Sales Management Hudsons Bay Company Colilers International Twitter Retail transportation employee termination dimensional pricing Outsourcing Sales Driver Shortage Donald Trump TMP Worldwide NAFTA hiring process network optimization Crude Oil by Rail Social Media KCS Doug Davis Consulting US Manufacturing capacity shortages CN Education Truckload 2012 Transportation Business Strategies. Jugaad New York Times computer Global experience drones broker bonds freight RFP 2014 economic forecast driverless LinkedIn Blockchain Facebook Driving for Profit transportation newspaper freight marketplace Government Emergent Strategy CP Rail intermodal Trucking Trump JB Hunt Canadian economy FCA Transportation Amazon Uber Freight truck drivers future of freight industry Anti-Vax shipping wine fuel surcharge Geopolitics Habs Freight Warehousing supply chain management truck capacity Reshoring recession RFP China US Housing Market customer engagement Accessorial Charges Social Media in Transportation dynamic pricing the future of transportation digital freight matching Grocery consumer centric Bobby Harris Carriers buying trucking companies Freight Capacity APL transportation audit coaching freight audit freight transportation MBA Celadon TMS Canadian Protests asset management US Auto Sales Freight Shuttle System Adrian Gonzalez Muhammad Ali Digital Freight Networks Transplace Career Advice trade Training New Hires cheap oil risk management 2014 freight forecast CSA shipper-carrier roundtable marketing Rotman School of Business Tracy Matura freight payment laptop Freight contracts Transport Capital Partners (TCP) Justice autos Canada Conway Deferred Packaging bulk shipping Freight Matching USMCA Impeachment Schneider Logistics FuelQuest Sales Strategy Training Harper Davos speech Crisis management freight transportation conference Leafs Politics FMS CITA Shipper Pulse Survey Trucker Protest Transcom Fleet Leasing Freight Rates Freight Carriers Association of Canada ELD economic outlook online shopping shipper-carrier contracts 360ideaspace Spanx Blogging mentoring economic forecasts for 2012 General Motors Business Development Doug Nix Canadian Transportation & Logistics cyber security carrier conference LTL freight bid Finance and Transportation Canada U.S. trade freight broker Business Strategy Keystone Pipeline CN Rail freight rate increases Covid-19 Freight Recession financial management Montreal Canadiens Toronto Maple Leafs Business Transformation Strategy tanker cars truck driver Wal-Mart solutions provider Ferromex Swift Success Software Advice shipper-carrier collaboration FMCSA Load broker LCV's Coronavirus

Blog Archives

March
February
December
October
September
August
June
May
April
March
January