As 2017 fast approaches, shippers are hard at work forecasting what the new year may bring. Unfortunately, with this planning comes a host of trends and challenges that leave supply chain professionals feeling uneasy. Pressure to reduce transportation costs, adapt to changing customer demands and a constantly changing, uncertain market are constantly on the minds of shippers, but here are a few trends and challenges that are keeping supply chain professionals up at night.
- The Ever-Changing World of Legislation and Regulation: The short-term and the long-term impact of new regulations has been a hot topic in recent years. Whether it’s FMCSA’s regulations for Hours-of-Service and CSA standards or the Food Safety Modernization Act, those in the transportation industry have concerns regarding how they will reduce productivity and capacity. The ELD mandate seems to be a particular concern for many, with the implementation deadline looming. While created to improve safety within the transportation industry, many shippers and carriers are concerned about the potential negative impact it could have. In fact, some carriers are holding out on implementing ELDs in hopes that the mandate will be overturned in court. And while a lot can happen between now and when the mandate takes full effect on December 16, 2017, most carriers anticipate a noticeable impact to utilization and capacity, making this a big industry priority to tackle. Shippers must always be keeping abreast of the latest happenings and take steps to ensure compliance.
- Tightening of Capacity: Capacity is a word that’s constantly on the minds of many shippers. Is there enough capacity available to handle my freight? When will capacity become tight? What strategies can we implement to prepare for and actively cope with a capacity shortage? Shippers must be proactive in implementing strategies that create an agile supply chain that can adapt to changes in the market and maintain efficient operations. It’s critical for shippers to strategically plan for this challenge to ensure access to truck capacity and avoid disruptions in the transportation of goods. This includes optimizing their transportation management by consolidating shipments when possible to increase truck utilization, expanding their mode mix to include intermodal, or trying to schedule appointments for more efficient deliveries. Furthermore, expanding your carrier base or utilizing dedicated fleets can introduce additional capacity to your network, and establishing carrier-friendly practices that improve efficiency and driver productivity will help shippers become a “shipper of choice” for carriers.
- The Truck Driver Shortage: With the current driver shortage estimated to be around 50,000 drivers¹ and expected to grow as a result of decreased productivity due to regulations and older drivers, which make up a large portion of the industry, retiring, the driver shortage is a problem that the trucking industry will continue to struggle with in the coming years. Carriers are focused on recruiting and retaining truck drivers, but what should shippers be doing? As addressed above, expand your mode mix to be less reliant on truck capacity and work closely with your carrier partners in order to secure the capacity you need.
- Reducing Costs and Optimizing the Supply Chain: Companies are continuing to put added focus on identifying ways to enhance supply chain visibility in order to improve efficiency and cost savings. This can be even more difficult for those that have already taken the low hanging fruit. Others don’t know where to begin. Whether they are looking to optimize shipment costs or rebalance time versus cost to stay competitive, leveraging the industry expertise, logistics technology and innovative processes of a 3PL might be a good way to start.
- Compliance with Retailer Demands: To help maintain efficient and smooth operations, retailers are establishing a strict delivery regimen with rigidly scheduled appointments, tight delivery windows and penalties for suppliers not meeting requirements. Trucks arriving outside of the scheduled delivery window are then forced to wait behind other trucks on-site, which can be hours or days. Additionally, monetary penalties are charged to the shipper, who then passes them along to the carriers in the form of a deduction from line-haul and freight charges. This puts added pressure on their refrigerated and frozen food and beverage suppliers to meet their ever-increasing demands of their retail customers. To address the challenge of tight and highly regimented delivery windows, shippers need to closely track all appointments and establish alerts indicating if a driver has not provided an arrival status update within two hours of the delivery appointment time
- The Supply Chain Talent Shortage: Good talent can be hard to find, especially in the supply chain industry. But great mentoring and a solid talent program can give your business a serious boost. And, not only do you benefit from investing in your own talent to shore up experience and knowledge, but your customers also benefit by gaining fresh perspectives on their business.
- Leveraging the Next Generation of Transportation Management Systems: What if you wake up one morning to find out that there is a blizzard about to hit the Midwest, and you have 100 time-sensitive shipments heading into Chicago that day? Shippers want to know what’s going to happen before it actually does. Fortunately, today’s next gen transportation management systems (TMS) now feature web crawlers, weather and traffic data along with a graphical view of shipments and key KPIs. As technology advances and provides more and more visibility into the supply chain, it’s important not to forget the value of industry expertise to effectively apply the power of tech. What’s as critical as a “TMS 2.0” is the deep understanding of key processes within the specific verticals in which a shipper resides.
- Emerging Technology Trends: With big buzzwords like drone delivery, the Industrial Internet of Things and autonomous vehicles, supply chain professionals are keeping a close eye on what these developing trends mean to their companies, their suppliers, their customers and the industry as a whole. Partner with those in the industry that have a pulse on these emerging trends and be forward-thinking about how your company may need to evolve.
As shippers look to address these – and many more – challenges, it’s important to examine all of the proactive steps they can take – from investing in logistics technology and human capital to strengthening partnerships with 3PLs and carriers. While there are a lot of things keeping supply chain professionals up at night, the latest innovations and capabilities available will allow shippers to continue to evolve and optimize their supply chains and drive their businesses forward.
¹“Truck Driver Shortage: Is it Self-Inflicted?” Trucks.com. https://www.trucks.com/2016/06/14/truck-driver-shortage-self-inflicted/
Frank McGuigan brings more than 25 years of experience in executive, operations and sales leadership to Transplace. He is currently the President and Chief Operating Officer for Transplace. Prior to this Mr. McGuigan served as the President of Transplace’s Transportation Management and Software as a Service business (SaaS). Mr. McGuigan joined Transplace during the acquisition of SCO Logistics in April 2011, where he was President and CEO. Mr. McGuigan has certifications as a GE Six Sigma Green Belt and in GE Project Management, and in 2012, he was recognized as a “Pro to Know” by Supply and Demand Chain Executive. Mr. McGuigan is a graduate of the United States Merchant Marine Academy at Kings Point and is a retired Lieutenant in the United States Naval Reserve.