Three things are driving change in the motor carrier industry, said Doug Duncan, CEO of FedEx Freight. Logistics professionals are compressing supply chains, driving demands that carriers speed up networks and improve reliability. External factors are also pushing the industry, he continued. These include Environmental Protection Agency (EPA) requirements that led to stricter emissions standards on truck engines. And, he cautioned, the aging infrastructure is an increasing problem for shippers and carriers alike. We’ve over used and under invested in the infrastructure, said Duncan, and the lack of a national transportation policy threatens to constrain supply chains.
Tom Escott, president of Schneider Logistics, agreed on the growth of imports and noted the dynamic of the U.S. network is changing with the shift of imports away from congested West Coast ports. He added that Mexico is bringing some diversified production into play within a one-day transit to the U.S. market.
Capacity constraints, especially regarding drivers, have changed the definition of a “core carrier,” Escott continued. A brokerage is now often treated as a core carrier capable of bringing more capacity to the market. Continuing on that theme, he said the driver issue is one of economics and lifestyle.
While globalization, technology, shifts in shipper patterns and inventory fluctuation are all important factors driving change in the industry, said Wayne Spain, chief operating officer of Averitt Express, it still takes people to move freight. The emphasis on people continues to be important, he noted, expanding that discussion beyond driver recruiting and retention.
With driver pay, insurance, safety issues, technology and new engines driving carrier costs, Duncan said rates will likely rise, but not necessarily as high as some discussions speculate. There are ways to mitigate some of the carrier costs, he said, getting ready agreement from the other carriers on the panel. Rates aren’t the answer to everything, said Spain, pointing to better training as one means to improve efficiency. Shippers can help, added Escott, by helping to improve the efficiency of the network. Shippers are more attuned to that now and both carrier and shipper must concentrate on productivity.
Continuing on the theme of improved productivity, Spain revived the issue of size and weight limits. There is a need for more highways, he said, but there is also a need to use current highways more efficiently. Escott agreed, saying it doesn’t fit everywhere, but where increased size and weight fits, it should be supported.