Subscribe to our free, weekly email newsletter!



NASSTRAC speaker cites how market and capacity conditions can factor into modal selection

By Jeff Berman, Group News Editor
May 15, 2013

A balanced United States transportation market has been highlighted fairly often of late. But since 2009 business activity has continued to increase and been steady while capacity has not changed materially.

This observation was laid out by Shelley Simpson, Chief Marketing Officer-EVP, President of ICS at J.B. Hunt, at last month’s National Strategic Shippers Council (NASSTRAC) Annual Conference.

“If you look at the number of trucks on the road you really need to go back 2004 to get about the same number of trucks purchased as there were in 2011,” she explained. “But capacity has remained the same and shipments continue to move forward and you are starting to see pockets in the industry particularly where seasonal demand will happen and where people may look for alternative modes of transportation.”

That development, coupled with rising fuel costs since 2004-2005, said Simpson, has been a key component of supply chains and led a lot of shippers to really think about intermodal as a significant way to curb costs and cost increases that happen. That is how it was viewed initially and now, she noted, it is more of a new wave in the industry and shippers have moved to it and become more comfortable and see how much the industry has spent from an intermodal perspective so that intermodal has really shortened its length of haul by about 250 miles from 2,000 miles to about 1,750 and therefore truckers length of haul has gone from about 800 to about 600 miles in the last 5 years.

What this really means, explained Simpson, is that the larger carriers have reduced their total truck count available in the marketplace by about 60 percent over the last 5 years.

“We see small- and medium-carrier capacity really coming into play as a more viable option, and we then see more shippers moving into the 3PL space and brokerages—and a movement into intermodal and small carrier capacity using 3PLs inside both of those spaces over all,” she said. “So you think about what is left. We believe the large carriers will be very focused on shorter length of haul where they can run a consistent regional network in areas where intermodal is not a good option and also where they can attract drivers to get the proper return on invested capital with utilization.”

Simpson also pointed out that medium-sized carriers are likely to follow the same path as they have been historically focused on more of a regional freight mix overall and that a seasonal surge that happens in the marketplace for any longer length of haul shipments will move to smaller carriers over time and primarily through 3PLs.

 

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

So far, so good may be the best way to describe the current state of progress in the negotiating process regarding the announcement made last month by FedEx that it plans to acquire Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion.

A new study, “Understanding Risk Assessment Practices at Manufacturing Companies,” uncovers complex business risks and disruptors facing manufacturers, and a pressing need for the industry to evolve its risk assessment capabilities.

Led by perennial earnings champ Old Dominion Freight Line, the nation’s LTL carriers as a group are enjoying a particularly strong earnings season—especially when one considers the first quarter usually is the slowest period for trucking in general with harsh winter weather bearing down on earnings.

A mixed bag may be the most appropriate way to characterize the current state of manufacturing based on the most recent edition of the April edition of the Manufacturing Report on Business issued by the Institute for Supply Management today.

The Department of Transportation’s Federal Railroad Administration and Pipeline and Hazardous Materials Safety Administration (FRA) issued its long-awaited Final Rulemaking for “Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains.”

Article Topics

Blogs · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA