The whole idea of supply chain management is centered on making strong connections, and when there's an obvious disconnect between two or more partners or entities, then the end result is, well, supply chain mismanagement. And right now, there's not just a profound disconnect but in fact a gaping chasm between the U.S. Government and the U.S. trucking industry.
According to Rosalyn Wilson in her annual State of Logistics Report, the trucking industry is currently short by about 30,000 drivers. While the U.S. Labor Department is projecting an impressive growth rate for truck drivers in the next few years (43% of all logistics jobs in the coming years will be drivers, the agency predicts), Wilson asks, quite rightly, "Where will these drivers come from? Truck drivers represent a job category with the fewest potential workers trained to fill them." As she points out, young people are shying away from driver jobs even in the face of tough economic conditions and a shriveling job market because, quite simply, these jobs just aren't very desirable.
But that's just the beginning of the disconnect between industry and government. Take the Hours of Service debate (please). As of July 1, the new regulations from the Transportation Department's Federal Motor Carrier Safety Administration (FMCSA) took effect, which among other things reduces the maximum work week for a truck driver by 12 hours per week. Explaining the motivation for the reduction in hours, U.S. Transportation Secretary Ray LaHood says, "Safety is our highest priority." Anne Ferro, FMCSA administrator, adds that the new rules "will result in an estimated $280 million in savings from fewer large truck crashes and $470 million in savings from improved driver health."
Not quite, says Steve Williams, chairman of the American Transportation Research Institute and a past chairman of the American Trucking Associations (in addition to his regular day job as chairman and CEO of trucking company Maverick USA). Pointing out that the FMCSA's rules changes were based on flimsy if not downright nonexistent data, the industry will lose operating flexibility and productivity, and the rules will increase driver stress and frustration.
That's just the tip of the iceberg, though, as some estimates suggest an overall reduction in productivity from 1.5% to 4%, costing between $500 million and $1.4 billion in lost productivity. "It is difficult, bordering on impossible, to accept FMCSA's suggestion that corresponding benefits will result from these changes and that they will somehow offset all the costs," Williams says.
In the latest Freight Pulse survey of shippers conducted last month by Morgan Stanley and MH&L, respondents indicate that they expect capacity to tighten severely for truckload freight. On a scale from 0-7, with 0 representing abundant capacity and 7 characterized as very tight capacity, shippers project truckload capacity to be at 6.6 within the next six months, mostly due to the Hours of Service (truckload being the transportation mode most directly impacted by the new rules).
Transportation forecasting firm FTR Associates believes trucking productivity will drop by 3% due to the new HOS rules, which "will tip the balance of supply and demand significantly away from shippers, assuming the economy continues to maintain at least the anemic growth levels seen recently," according to senior consultant Lawrence Gross. "This will usher in an extended period of difficulty for shippers, as there is an array of new regulations lined up behind the HOS change that will further impact trucking in the months and even years to come."
So there's something to look forward to—even more regulations (particularly of an environmental nature) that could make it even more difficult and expensive for shippers to move their freight on a diesel-powered vehicle. Clearly some government agencies view the trucking industry with the same disdain that they have for tobacco, fast food and firearms, and their long-term goal appears to be nothing less than to regulate motor carriers into irrelevance. If your supply chain is heavily dependent on freight transportation—and 70% of all goods are transported on a truck, so that includes most if not all of you—then it's in your best interests to ensure there will always be a truck at your dock when you need it.
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