Ron Giuntini discusses the capacity crunch many shippers face today

MH&L Editorial Advisory Board Roundtable--Part 2: The Infrastructure Capacity Crunch

Sept. 11, 2014
The second installment in our MH&L Roundtable Series: It’s getting harder to find sufficient capacity to move shipments down the road. It's up to shippers to be more creative in how they get transportation for rates they can afford. 

ANDEL: One of the challenges with rail and other modes is the capacity crunch many shippers face, as mentioned in this year's State of Logistics report. The biggest issue is with trucks, but with the health of agriculture and coal, that seems to be taking up a lot of rail infrastructure as well.

Joseph Andraski

JOE ANDRASKI (founder, Collaborative Energizer, participating remotely): Based on one of my sources who is into fracking in Colorado, there will be an ever growing demand for rail cars given the production improvements being made and the rail cars required to move their product.  Commensurate with the demand for rail cars is demand for skilled and unskilled labor.  The technology gains have far outpaced supply chain capabilities and this is happening in Ohio, Pennsylvania, and elsewhere.

Alex Scott

ALEX SCOTT (Senior research associate, Opex Analytics, and Ph.D. student in Supply Chain Management at Penn State University, participating remotely): I’ve always been confused because one would think the labor situation would be governed by basic economics: supply and demand.  With an increased demand for drivers, wages should rise to encourage more people to join the driving work force.  But, according to Bureau of Labor Statistics data, wages for over-the-road truck drivers has not increased over time (controlled for inflation).  In fact, drivers now are making less than they were in the 1990s.  If the supply of drivers is such a problem, why aren’t companies willing to pay people more to drive a truck? Well, they certainly don’t want to flood the market with drivers; that will hurt their profitability.  Add the fact that higher driver wages will obviously cost them more, and it seems obvious why they don’t.

GIUNTINI: The whole energy sector is exploding, and the capacity of the rail lines is being challenged for other goods. There's an increase in natural gas coming in from all over the country via tank car. And there is also export of coal which is taking up a lot of capacity. 

Listen to more from Ron Giuntini on the energy supply chain

ANDEL: Let's look at air freight. John Hill, you said last year, "it appears that the major air carriers are ready to move forward in a true partner relationship with producers, even though the costs are high." 

HILL: Not very much has changed in that arena, at least in terms of the people with whom I talk on the West Coast. We are trying to move berries, for example, to Europe in a timely fashion because of their shelf life.  They did collaborate with a number of European airlines over the past year or so and with a good deal of success. The big issue had to do with handling in such a manner that the goods wouldn't be damaged in transit or during the offloading process. These are two separate billion-dollar companies who have been pursuing relationships with the overseas carriers and we find in one case the domestic carriers are paying a lot more attention to those needs.

Ron Giutini discusses the potential "Uberization" of logistics.

In the first installment of MH&L's 2014 Roundtable Report, we focused on opportunities to make best use of logistics resources to strengthen a company's global presence.

About the Author

Tom Andel | Editor-in-Chief

Tom Andel is an award-winning editorial content creator and manager with more than 35 years of industry experience. His writing spans several industrial disciplines, including power transmission, industrial controls, material handling & logistics, and supply chain management. 

Latest from Global Supply Chain

25560070 © Yuliia Brykova |
Supply Chain Stability Improving