Getting freight from point A to point B effectively and affordably has gotten a lot tougher over the last few years, with transportation disruptions, equipment shortages and a lack of drivers—among other things—all contributing to the problem. In response, shippers are shifting their motor freight strategies, exploring new services and using technology to both offset the challenges and leverage new opportunities.
“Freight costs continue to climb, even though fuel costs have momentarily leveled off,” says George Swartz, vice president and distribution logistics transformation practice lead at Capgemini Invent. “A lot of shippers are trying to figure out how to control those costs in an environment where everyone from the long-haul over the road carrier to the local parcel delivery provider is adding surcharges for fuel and specific services.”
The cost hikes don’t end there. Swartz also expects to see higher accessorial charges levied in the near future and says that the combined increases are driving shippers to be more intentional and creative with their mode and carrier selections. Some want to move their distribution networks closer to their end customers, for example, while others are leveraging more regional and local carriers to handle outbound deliveries.
“We’re going to see more companies making these moves as they look at how to get their distribution networks closer to market,” says Swartz, “and how to remove days from the distribution and shipping process.” With those types of moves in mind, here are six trends that logistics experts see coming next for shippers managing motor freight.
During the pandemic, the less-than-truckload (LTL) market “blew up” as companies rushed to accommodate a booming e-commerce market. This dramatically drove down capacity in a market that once had “unlimited capacity,” says Chris Caplice, senior research scientist at the MIT Center for Transportation and Logistics. “LTL capacity is scarcer now.”
This and other market shifts forced shippers to get more creative with their freight selection, with many of them beginning to use more of a “portfolio” freight management approach. “Shippers are expanding their portfolios from just dedicated contract, dynamic or spot, and they’re now using all three,” says Caplice, who reminds us that use of private fleets jumped by 39% in 2021—likely in response to the more limited LTL capacity.
Looking ahead, Caplice expects the portfolio freight management approach to stick, with an emphasis on looking at every lane individually and finding the best way to cover each and every one of them. For some, dedicated fleets or contract may make the most sense. For others, it may be spot or dynamic. As we wait to see whether more business shifts back to retail brick-and-mortar stores versus e-commerce, Caplice expects more companies to adopt this diverse freight management strategy.
The American Trucking Associations (ATA) says that the national truck driver shortage hit a historic high of just over 80,000 drivers in 2021 and that the deficit could surpass 160,000 by 2030.
The problem existed before the pandemic emerged, but it worsened as e-commerce order volumes increased and the overall national labor shortage took hold. “The fact that the driver shortage could double over the next eight years should be a huge concern for shippers,” says Brian Whitlock, senior director analyst at Gartner, “and mainly because the trucking market itself will also grow during that time period.”
So, what’s the solution? Whitlock is encouraging better collaboration between the shippers that need their freight moved and the carriers that need drivers to handle those loads.
“A lot of shippers are trying to figure out how to control those
costs in an environment where everyone from the long-haul over the road carrier to the local parcel delivery provider is adding surcharges for fuel and specific services.”
“Shippers have to get more active in their roles with their freight partners to figure out how to solve this problem,” Whitlock says. He points to working conditions as the main deterrent for certified drivers who just don’t want to spend all of their time on the road, and who opt for other jobs.
“Shippers should be working with their carriers to improve conditions at pickup and delivery, reduce empty miles, and make conditions better for drivers,” says Whitlock. “At some point, shippers and carriers will have to work together and get more serious about this.”
Better internal collaboration at the shipper location could also help reduce dwell and detention times while reducing loading and unloading times at the dock or out in the yard.
This is where hours are often added to the schedule, and without much fear of retribution or penalty. Caplice sees better internal collaboration across departments as one way to alleviate some of these problems.
“If a driver has to wait an hour or two for a pickup, it eats up a lot of time in their day, but the individual working on the dock doesn’t always ‘feel’ that pain,” says Caplice. “A lot of work has been going into trying to solve that problem, and I expect that to continue.”
Who was it that said if you want something done right you have to do it yourself? This appears to be one school of thought in the motor freight space right now as more shippers shift over to using their own fleets for some or all of their shipments.
According to the ATA, more than half of U.S. operated fleets are private. Many companies that operate private fleets are doing so to meet new customer demands with the right level of service.
Doing so creates advantages for the end customer, who benefits when shippers can quickly expand their own portfolio of services to meet changing customer needs in near real-time.
Swartz says that the increased interest in private fleets is being driven by carriers’ own difficulties hiring drivers, increasing their available capacity and managing cost increases. As a result, more companies are looking at how they can do it themselves.
As part of the private fleet trend, there has also been more interest in connected fleet applications that help shippers manage their newly-acquired or expanded fleet operations.
The fact that the driver shortage could double over the
next eight years should be a huge concern for shippers, and
mainly because the trucking market itself will also grow
during that time period.”
Swartz says some of the popular choices include IoT, telematics, geofencing and GPS devices that are used for tracking and for gathering fleet data.
“Using technology, shippers can keep better track of their drivers, vehicles and freight,” says Swartz, “and then use that information to reduce the incidence of accidents or violations that occur within the private fleet.”
Looking ahead, Swartz expects to see more of that on-the-road technology paired up with yard management systems (YMS), container-mounted GPS devices and even drones (i.e., for yard surveys and asset tracking). This will help create a closed data loop that companies can use to better manage their own fleets, keep drivers safe on the road and more efficiently get freight from point A to point B.
The picture of the autonomous truck has been coming into focus over the last few years as software developers work together with vehicle manufacturers to bring the idea to life.
Between the persistent driver shortage, an uptick in e-commerce orders and the need to reduce “empty” miles and other transportation challenges, the time when trucks can drive on their own—at least in theory—can’t really come soon enough.
Progress is being made: this past March, a self-driving 18-wheeler spent more than five days hauling goods between Dallas and Atlanta. According to the New York Times, the truck ran around the clock, traveled more than 6,300 miles, made four round trips and delivered eight loads of freight.
“Autonomous trucking will start slowly and you’re going to see it in the next two to five years, depending on where you are,” says Caplice, who expects the “high-powered” freight lanes in the Southwestern portion of the United States to be the early movers on the autonomous front. The regulatory environment, flat terrain and general good weather make this the most obvious frontier for autonomous trucking, he adds, while the rest of the nation may have to wait 10 years or so.
“We’re seeing a lot of pilots taking place,” says Caplice, who sees UPS and the USPS as two potentially large users of these innovative vehicles.
Swartz is also bullish on the autonomous truck’s place in the future of motor freight, but says some things still need to be worked out for that to happen. For example, making an AV tractor-trailer or AV cargo van that’s able to safely and efficiently travel all over the country is complicated.
“For those of us who live in the Midwest or the North, one sudden snowstorm that blows in could completely mess up the technology that you’re using to drive an autonomous vehicle,” Swartz points out. “Not that human error isn’t just as unpredictable, but we have to get the infrastructure right before AV actually takes over.”