2018 is quickly coming to a conclusion, and it would be easy at this point to simply close the books and move into the New Year with a clean slate. However, much like the 2017 conclusion, there is much baggage carrying over into 2019 that must be factored into preparations, planning and execution. Let’s take a quick look at some of the notable industry developments that were prominent this past year and remain in focus for the new year.
The U.S. economy, which began to rally earnestly in mid-2017, pushed forcefully ahead with nearly 4% GDP quarterly growth in some periods during 2018. This increased industrial output and demand for transportation services across all sectors quickly erased the over-capacity situation that was pronounced during 2015 and 2016, and placed increased demands on service providers to meet customer volume expectations.
The surging economic conditions during 2018 quickly pushed what were previously lingering concerns regarding long-term capacity into the immediate forefront. All things related to the professional truck driver such as compensation, associated benefits, equipment maintenance, Hours of Service utilization and ultimately retention became organizational priorities for nearly all employee-driver fleets. The usual weather suspects including hurricanes and winter storms exacerbated regional capacity shortages during the autumn and winter months. These concerns remain elevated at year-end; however, some 3PLs offer a combination of asset-connectivity and non-asset capacity across a vast network of carriers. The value proposition of having the right 3PL within a shipper’s routing guide has never been more clearly demonstrated than during 2018.
In an effort to achieve the higher utilization and productivity of the working trucks and drivers, most carriers began deeper examination of opportunities to improve turn time at the loading or receiving docks. Inefficient use of trucker time has surfaced as an important opportunity for dialogue between shippers and carriers. The revised Hours of Service and Electronic Logging Device (ELD) requirements are now enabling more data-driven review of origin or destination concerns, which could help drive better long-term solutions that benefit all parties. The idea of customers becoming more carrier friendly has begun to further permeate the industry and could have lasting positive impacts in 2019 and beyond.
Significant breakthroughs in technology that help drive efficiency, improve communication and ultimately achieve better synchronization of the supply chain made big splashes during the year. These advancements will fill carrier and customer organizations. However, their implementation will require broader industry participation, investment and time to connect technology across various modes.
Nearly every business has experienced an increase in cost during 2018 and transportation has not been spared either. The rising combination of direct (equipment, labor, fuel) and indirect costs (insurance, IT, overhead) in the continuous operation of a trucking fleet has translated into higher rates for freight transportation. The carrier bankruptcies slowed significantly during the year, and although there has been improvement in return on invested capital for truckers, it remains well behind other industries.
While there is not much freight 3PLs can do to combat some of the rising costs in the industry, now is a good time to review other expenses that can be controlled more easily. Working toward improving carrier unitization will help reduce this cost over time. Additionally, reducing other costs associated with business operations, such as technology solutions and equipment, can also help during a time where rates are on the rise.
Although challenges remain, the right 3PL provider can help supply capacity, technology and modal solutions that reach well beyond the capabilities of singular asset-type players. The new year will certainly be something unlike what we have experienced in 2018, however, with the capabilities of a valuable 3PL ally, navigating the marketplace with confidence is a certainty.
The England Logistics Full Truckload division offers a range of services for companies of all sizes. Dedicated team members are available day and night to offer solutions and assistance with all logistical needs. Regardless of the transportation mode, our market and seasonal specialists provide flexible shipping solutions and are committed to help every step of the way.