If you reduce headcount faster than you reduce the amount of work, you’ll show a statistical improvement in productivity. Reduced capacity in the motor carrier industry is producing a similar effect on a small scale. As volumes pick up, manufacturers increase overtime for the existing workforce before bringing back full-time workers. Motor carriers are constrained by regulations governing drivers’ hours of service. And the rules just changed.
It’s good news for shippers and carriers that fleet utilization is improving and empty miles are going down. If there’s a down side to any of this, it’s on rates. Steady or improving demand on limited capacity will shore up carrier requests for higher rates. There’s still plenty of capacity out there, but there’s a price to pay for rate shopping, and most shippers will agree that they’ve been burned before on cut-rate carriers who couldn’t provide the service.
Drivers who are working for major carriers today are most likely the most senior, best qualified and safest. But carriers are reporting the supply of new drivers is getting tight. Background checks, especially for hazardous materials certificates, will hamper recruiting similar to the introduction of the commercial drivers license and drug testing a few years ago. We’ve gotten some relief on the implementation of those rules, but that’s only a delay — the rules will still go into effect.
A bigger question is raised by the new regulations governing drivers’ hours of service. Some sectors of the trucking industry are nearly unaffected. Less-than-truckload pick up and delivery runs typically don’t run up against the hour limitations. LTL carriers may have gained some linehaul productivity in the additional hour of driving that is part of the new rules.
What’s good for the LTL sector may be more of a challenge for truckload and private fleet operations. Requests by truckload and private fleet operators like Schneider National, Wal-Mart and Walgreens for modifications in the rules were turned down. Depending on the type of operation, the negative impact on productivity ranges from a 4% decline to 10% or more. Private fleets are coping by modifying operations or adding trucks to their mix. Commercial carriers will respond by charging shippers for their lost productivity.
There is something you can do: Improve dock productivity. Under the new hours of service rules, a driver’s on-duty time is measured in consecutive hours. This has reduced the amount of time drivers can spend waiting for a dock door to become available or in loading and unloading.
Before you start feeling like you are taking responsibility for the carrier’s problems, consider the fact this is one area where you can drive true gains in productivity — and see direct benefits.
Perry A. Trunick