demand picks up. Smaller LTL carriers don’t have this luxury, nor do TL com- panies that don’t have the terminal yard capacity to store equipment. Eliminating capacity is a double- edged sword that some carriers are ominously straddling. They are looking to uncover quick, short-term business and fill trucks by delivering competi- tive prices while also cementing existing relationships for the long term. But removing assets also jeopardizes mar- ket position and strength. “We’ve recently seen carriers shrink their fleets and/or expand their cus- tomer base to ride out this economic storm,” reports one trucker. “When overall freight volumes rebound, these carriers will find it difficult to honor commitments made to that expanded shipper base and experience extremely tight capacity. Shippers who take a lon- ger-term view will avoid the difficulties that come with having an oversold, overextended carrier on their side.” Shifting Into the Future Carriers have been proactive and vocal preaching the gospel of long-term collaboration to stir and awaken their customers to a looming reality: a return to “normalcy” will likely resurrect dor- mant issues such as driver shortages, Hours-of-Service regulations, capacity scarcity, congestion, and infrastructure neglect. And if that isn’t reason enough, both shippers and truckers are waiting with bated breath for the very real possi- bility of a major market event that could severely tip the capacity/demand scale in the truckers’ favor. Among carriers, 69 percent believe customers are aware of the potential capacity crunch when the economy rebounds, closely paralleling 2008 data. By comparison, only 58 percent of ship- pers identify this as a concern, a drop of three percent over last year. This divergence in opinion may sim- ply be attributed to an expectation gap. Shippers are concentrating on the here and now to massage stakeholder inter- ests. Carriers, with little else to hitch
FIGURE 3. Trucker IT Capabilities
82%
80
61%
57%
60
44%
40
32%
23%
19%
19%
20
Truckers satisfy a core need by transporting freight. But many shippers now depend on carrier partners to contribute more than just space. This year, 82 percent of surveyed carriers indicate they supply customers with email alerts and real-time visibility into shipment movement from origin to destination. Equally important, 61 percent offer online logistics services such as advance ship notices and claims filing, giving shippers actionable information they can convey to supply chain partners and customers; and 57 percent provide online pricing and routing information. Pinpoint shipment tracking is still taking time to develop. While 44 percent and 23 percent of carriers provide bar code and RFID capabilities respectively, only 32 percent and 19 percent offer item-level visibility for those solutions. Moreover, only 19 percent of surveyed trucking companies offer any-time visibility and communication to their drivers.
their tractors to in the current market, are selling customers on the future. “We have attempted to make cus- tomers aware of the inevitable capacity shrinkage,” says one carrier. “Most ship- pers, however, appear poised to take advantage of current rates as a result of capacity abundance and current produc- tion levels.” But as other trucking companies note, corporate blinders may exacerbate this anomaly, particularly when the executive level fails to weigh the impor- tance of transportation and logistics on
the bottom line. “We believe logistics departments’ decision-making is overridden by CFOs and CEOs, which will negatively impact their ability to gain capacity when vol- umes return,” says one carrier. If that’s not a sign that logistics and supply chain management are still tread- ing water in executive boardrooms, one carrier observes that some customers still don’t understand that supply chain solutions cannot be served though short-term reactions: “Collaborative and consultative relationships are vital cogs
56 Inbound Logistics • September 2009
FACING LOGISTICS CHALLENGES? USE IL’S 3PL EXPERTS AND
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